ASSUMPTION AND RECOGNITION AGREEMENT
Relating to the Master Loan Agreement dated September 15, 2020, as amended (Loans 1-A through 1-H)
Effective Date: June 6, 2024
PINNACLE FEDERAL BANK, N.A. ("Lender")
FAIRWATER REAL ESTATE INVESTMENT TRUST ("Assuming Party" or "New Guarantor")
GREYSTONE MERIDIAN PARTNERS FUND III, L.P. ("Original Borrower Parent" / "Transferor")
THE BORROWER ENTITIES (as defined herein)
TABLE OF CONTENTS
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ASSUMPTION AND RECOGNITION AGREEMENT
This ASSUMPTION AND RECOGNITION AGREEMENT (this "Agreement") is made and entered into as of June 6, 2024 (the "Effective Date"), by and among:
(1) PINNACLE FEDERAL BANK, N.A., a national banking association organized under the laws of the United States of America, having its principal office at 600 Travis Street, Suite 4400, Houston, Texas 77002 (the "Lender");
(2) FAIRWATER REAL ESTATE INVESTMENT TRUST, a real estate investment trust organized under the laws of the State of Maryland, having its principal office at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044 (the "Assuming Party" or "New Guarantor");
(3) GREYSTONE MERIDIAN PARTNERS FUND III, L.P., a Delaware limited partnership, having its principal office at 3300 Peachtree Road NE, Suite 2200, Atlanta, Georgia 30326 (the "Original Borrower Parent," the "Original Guarantor," or the "Transferor"); and
(4) THE BORROWER ENTITIES (as defined herein), each acknowledging and consenting to the terms and conditions of this Agreement as set forth on the signature pages hereto.
RECITALS
A. The Loan. Pinnacle Federal Bank, N.A., a national banking association with its principal office located at 600 Travis Street, Suite 4400, Houston, Texas 77002, is the lender under that certain Master Loan Agreement dated as of September 15, 2020 (as amended, restated, supplemented, or otherwise modified from time to time, the "Master Loan Agreement"), by and among Pinnacle Federal Bank, N.A. and each of the following borrower entities (each individually, a "Borrower," and collectively, the "Borrowers"):
(i) GMP Fairfield I LLC, a Delaware limited liability company (EIN 84-2310561), as borrower under Loan 1-A;
(ii) GMP Fairfield II LLC, a Delaware limited liability company (EIN 84-2310578), as borrower under Loan 1-B;
(iii) GMP Westlake LLC, a Delaware limited liability company (EIN 84-2415693), as borrower under Loan 1-C;
(iv) GMP Katy LLC, a Delaware limited liability company (EIN 84-2415710), as borrower under Loan 1-D;
(v) GMP Alliance LLC, a Delaware limited liability company (EIN 84-2415728), as borrower under Loan 1-E;
(vi) GMP Lakeland LLC, a Delaware limited liability company (EIN 84-2527834), as borrower under Loan 1-F;
(vii) GMP Southport LLC, a Delaware limited liability company (EIN 84-2527849), as borrower under Loan 1-G; and
(viii) GMP Murfreesboro LLC, a Delaware limited liability company (EIN 84-2527856), as borrower under Loan 1-H.
B. Loan Terms. The Loans made pursuant to the Master Loan Agreement are evidenced by eight (8) individual promissory notes and loan supplements to the Master Loan Agreement (each, a "Loan Supplement," and together with the Master Loan Agreement, the promissory notes, and all other documents, instruments, and agreements executed and delivered in connection therewith, the "Loan Documents"). As of February 28, 2024, the aggregate outstanding principal balance under Loans 1-A through 1-H is Four Hundred Twenty-One Million Six Hundred Thousand and No/100 Dollars ($421,600,000.00). The Loans bear interest at a fixed rate of 4.22% per annum and mature on July 1, 2028. The Loans are secured by deeds of trust, mortgages, deeds to secure debt, security agreements, assignments of leases and rents, and fixture filings encumbering the following properties (each, a "Property," and collectively, the "Properties"):
(i) Loan 1-A: Fairfield Logistics Center I, located at 4200 Fairfield Industrial Boulevard, Fairburn, Georgia 30213, consisting of approximately 412,000 rentable square feet of industrial warehouse and distribution space;
(ii) Loan 1-B: Fairfield Logistics Center II, located at 4300 Fairfield Industrial Boulevard, Fairburn, Georgia 30213, consisting of approximately 387,000 rentable square feet of industrial warehouse and distribution space;
(iii) Loan 1-C: Westlake Distribution Hub, located at 11500 Westlake Parkway, Houston, Texas 77082, consisting of approximately 624,000 rentable square feet of industrial warehouse and distribution space;
(iv) Loan 1-D: Katy Freeway Logistics Park, located at 22600 Katy Freeway, Katy, Texas 77449, consisting of approximately 538,000 rentable square feet of industrial warehouse and distribution space;
(v) Loan 1-E: Alliance Commerce Center, located at 2800 Alliance Gateway Boulevard, Fort Worth, Texas 76177, consisting of approximately 485,000 rentable square feet of industrial warehouse and distribution space;
(vi) Loan 1-F: Lakeland Crossings Industrial, located at 7100 Drane Field Road, Lakeland, Florida 33811, consisting of approximately 372,000 rentable square feet of industrial warehouse and distribution space;
(vii) Loan 1-G: Southport Logistics Park, located at 3200 Southport Connector Road, Jacksonville, Florida 32218, consisting of approximately 410,000 rentable square feet of industrial warehouse and distribution space; and
(viii) Loan 1-H: Murfreesboro Distribution Center, located at 1600 Joe B. Jackson Parkway, Murfreesboro, Tennessee 37127, consisting of approximately 502,000 rentable square feet of industrial warehouse and distribution space.
C. Existing Guarantor. Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership (EIN 83-1647205), whose sole general partner is Greystone Meridian Capital LLC, a Delaware limited liability company (EIN 83-1520984), is the current carve-out guarantor under that certain Guaranty Agreement dated as of September 15, 2020, executed and delivered in connection with the Master Loan Agreement (the "Original Guaranty"), pursuant to which the Original Guarantor has guaranteed certain recourse carve-out obligations of the Borrowers under the Loan Documents. Greystone Meridian Partners Fund III, L.P. is, as of immediately prior to the Effective Date, the sole member of each Borrower.
D. The Transfer / Change of Control. Reference is hereby made to that certain Purchase and Sale Agreement dated as of February 28, 2024 (the "Purchase Agreement"), by and between Greystone Meridian Partners Fund III, L.P. (in its capacity as "Seller" thereunder) and Fairwater Real Estate Investment Trust, a Maryland real estate investment trust (in its capacity as "Buyer" or the "Assuming Party" thereunder), pursuant to which the Assuming Party is acquiring one hundred percent (100%) of the membership interests in each Borrower (collectively, the "Transfer"). The Transfer constitutes a "change of control" under Section 9.3 of the Master Loan Agreement, requiring the prior written consent of Lender.
E. Lender Consent. Reference is hereby made to that certain Consent Letter dated June 4, 2024 (the "Consent Letter"), executed by Pinnacle Federal Bank, N.A., pursuant to which Lender consented to the Transfer subject to the terms, conditions, and requirements set forth therein, including, without limitation, (i) the execution and delivery of this Assumption and Recognition Agreement, (ii) the execution and delivery of the Replacement Guaranty (as defined below), (iii) the payment of a consent fee in the amount of One Million Fifty-Four Thousand and No/100 Dollars ($1,054,000.00), representing twenty-five basis points (0.25%) of the aggregate outstanding principal balance of $421,600,000.00 as of February 28, 2024, and (iv) satisfaction of certain other closing conditions. The consent fee has been paid to Lender, allocated equally between the Assuming Party and the Transferor, with each party contributing Five Hundred Twenty-Seven Thousand and No/100 Dollars ($527,000.00).
F. Replacement Guaranty. Simultaneously with the execution and delivery of this Agreement, the Assuming Party is executing and delivering to Lender a Replacement Carve-Out Guaranty (the "Replacement Guaranty"), pursuant to which the Assuming Party is replacing Greystone Meridian Partners Fund III, L.P. as the carve-out guarantor under the Loan Documents, subject to the terms and conditions set forth in the Replacement Guaranty and in Section 7.1 of this Agreement.
G. Purpose. The parties hereto desire to evidence and confirm the terms upon which (i) Lender has consented to the Transfer, (ii) the Assuming Party assumes certain obligations of the Controlling Party, Principal, and Sponsor under the Loan Documents, (iii) the Assuming Party delivers the Replacement Guaranty in favor of Lender, (iv) Lender releases the Original Guarantor from its obligations under the Original Guaranty to the extent described herein, and (v) the Borrowers' obligations under the Loan Documents continue in full force and effect following the Transfer.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Agreement" means this Assumption and Recognition Agreement, including all exhibits and schedules attached hereto, as it may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Assuming Party" means Fairwater Real Estate Investment Trust, a real estate investment trust duly organized and validly existing under the laws of the State of Maryland, having its principal office at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044 (EIN 52-2198437; NYSE: FREIT).
"Borrowers" has the meaning set forth in Recital A, and means, collectively, GMP Fairfield I LLC, GMP Fairfield II LLC, GMP Westlake LLC, GMP Katy LLC, GMP Alliance LLC, GMP Lakeland LLC, GMP Southport LLC, and GMP Murfreesboro LLC, each a Delaware limited liability company and a special-purpose entity formed for the purpose of owning and operating its respective Property.
"Consent Letter" means that certain letter dated June 4, 2024, from Pinnacle Federal Bank, N.A. to Greystone Meridian Partners Fund III, L.P. and Fairwater Real Estate Investment Trust, confirming Lender's consent to the Transfer, subject to the satisfaction of certain terms and conditions set forth therein.
"Effective Date" means June 6, 2024, which is the closing date of the Transfer pursuant to the Purchase Agreement.
"Lender" means Pinnacle Federal Bank, N.A., a national banking association organized under the laws of the United States of America, having its principal office at 600 Travis Street, Suite 4400, Houston, Texas 77002, and its successors and assigns.
"Loan Documents" means, collectively, (a) the Master Loan Agreement dated as of September 15, 2020, by and among Lender and the Borrowers, (b) all Loan Supplements (1-A through 1-H), (c) the promissory notes delivered pursuant thereto, (d) all deeds of trust, deeds to secure debt, mortgages, security agreements, and fixture filings encumbering the Properties, (e) all environmental indemnity agreements, (f) all assignments of leases and rents, (g) all UCC-1 financing statements, (h) the Original Guaranty, (i) the Replacement Guaranty, (j) this Agreement, and (k) all amendments, modifications, supplements, restatements, and replacements of any of the foregoing, in each case as listed on Exhibit A attached hereto and incorporated herein by reference.
"Master Loan Agreement" means that certain Master Loan Agreement dated as of September 15, 2020, by and among Lender and the Borrowers, as amended, restated, supplemented, or otherwise modified from time to time prior to the date hereof.
"Minimum Liquidity" has the meaning set forth in Section 6.3 of this Agreement.
"Minimum Net Worth" has the meaning set forth in Section 6.3 of this Agreement.
"Original Guarantor" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership (EIN 83-1647205), whose sole general partner is Greystone Meridian Capital LLC, a Delaware limited liability company (EIN 83-1520984).
"Original Guaranty" means that certain Guaranty Agreement dated as of September 15, 2020, executed and delivered by the Original Guarantor in favor of Lender in connection with the Master Loan Agreement and the Loan Documents.
"Properties" means the eight (8) real properties described in Recital B hereof, each of which secures the applicable Loan as further described in the Loan Documents.
"Purchase Agreement" means that certain Purchase and Sale Agreement dated as of February 28, 2024, by and between Greystone Meridian Partners Fund III, L.P. (as "Seller") and Fairwater Real Estate Investment Trust (as "Buyer"), pursuant to which the Transfer is being consummated.
"Replacement Guaranty" means that certain Replacement Carve-Out Guaranty dated as of the Effective Date, executed and delivered by the Assuming Party in favor of Lender simultaneously with the execution of this Agreement, replacing the Original Guaranty in accordance with the terms and conditions set forth herein and therein.
"Transfer" means the acquisition by the Assuming Party of one hundred percent (100%) of the membership interests in each Borrower, as contemplated by the Purchase Agreement.
"Transferor" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership.
Section 1.2 — Interpretation
(a) Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Master Loan Agreement.
(b) References in this Agreement to sections, articles, exhibits, and schedules are to sections, articles, exhibits, and schedules of and to this Agreement, unless the context otherwise requires.
(c) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation" whether or not so stated.
(d) Unless the context otherwise requires, (i) words in the singular include the plural and vice versa, (ii) words importing a specific gender include the other genders, and (iii) the terms "herein," "hereof," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular section or provision.
(e) References to any statute, law, rule, or regulation shall include all amendments, supplements, and successor provisions thereto.
(f) The recitals set forth above are incorporated into and made a part of this Agreement by this reference.
ARTICLE II — ASSUMPTION OF OBLIGATIONS
Section 2.1 — Assumption by Assuming Party
As of the Effective Date, the Assuming Party hereby unconditionally and irrevocably assumes and agrees to perform, observe, and be bound by all of the covenants, obligations, duties, and liabilities of the "Controlling Party," "Principal," "Sponsor," or any similar designee under the Loan Documents, to the extent such obligations apply to the direct or indirect owner of the Borrowers or to any person or entity that controls or has the right to control the management, operations, or affairs of the Borrowers, including, without limitation:
(a) All obligations of the Controlling Party, Principal, and Sponsor under the Master Loan Agreement and each Loan Supplement, including, without limitation, all obligations with respect to transfers, encumbrances, and changes of control;
(b) All obligations relating to single-purpose entity covenants applicable to the Borrowers, including the obligation to cause each Borrower to maintain its status as a single-purpose entity in accordance with the organizational documents of such Borrower and the requirements of the Loan Documents, and to refrain from causing or permitting any Borrower to take any action that would be inconsistent with the assumptions made in connection with any non-consolidation opinion delivered in connection with the Loans;
(c) All reporting and financial disclosure obligations of the Controlling Party, Principal, and Sponsor, including, without limitation, the obligation to deliver quarterly and annual financial statements of the Assuming Party (and, to the extent required, of the Borrowers) to Lender in accordance with Section 6.2 of this Agreement and the applicable provisions of the Loan Documents;
(d) All obligations to cause each Borrower to maintain and operate its respective Property in accordance with the Loan Documents, including, without limitation, all obligations with respect to capital expenditures, tenant improvements, environmental remediation, and compliance with applicable laws, rules, regulations, and ordinances;
(e) All obligations with respect to insurance, environmental compliance, and property management requirements under the Loan Documents, including, without limitation, the obligation to cause each Borrower to maintain all required insurance coverages and to comply with all environmental laws and regulations applicable to the Properties; and
(f) All other obligations, duties, and liabilities of the Controlling Party, Principal, Sponsor, or any similar designee under the Loan Documents, whether arising before, on, or after the Effective Date, to the extent such obligations relate to the ownership, management, or control of the Borrowers and their respective Properties.
The Assuming Party acknowledges and agrees that, from and after the Effective Date, it shall be deemed the "Controlling Party," "Principal," and "Sponsor" under the Loan Documents for all purposes, and all references in the Loan Documents to such terms shall be deemed to refer to the Assuming Party.
Section 2.2 — Assumption of Guarantor Obligations
The Assuming Party's obligations as the replacement guarantor under the Loan Documents are set forth exclusively in the Replacement Guaranty executed and delivered simultaneously herewith. Nothing contained in this Agreement shall be deemed to expand, modify, or otherwise alter the scope of the Assuming Party's obligations as guarantor beyond those obligations expressly set forth in the Replacement Guaranty. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Replacement Guaranty with respect to the Assuming Party's obligations as guarantor, the terms of the Replacement Guaranty shall control and govern.
Section 2.3 — Borrower Obligations Continue
The obligations, covenants, representations, and warranties of each Borrower under the Loan Documents shall remain in full force and effect and are not modified, released, diminished, or otherwise affected by (a) this Agreement, (b) the Transfer, (c) the Replacement Guaranty, (d) the release of the Original Guarantor as provided in Article VII hereof, or (e) any other action taken or document executed in connection with the transactions contemplated hereby. The Loan Documents shall continue to be binding upon each Borrower in accordance with their respective terms, and each Borrower shall continue to be primarily liable for all obligations arising under the Loan Documents to which it is a party.
Section 2.4 — No Novation
This Agreement does not constitute, and shall not be construed to constitute, a novation of any Borrower's obligations, or of any other party's obligations, under the Loan Documents. The Loans, as evidenced by the Loan Documents, shall continue in full force and effect, and nothing herein shall be construed to extinguish, release, discharge, impair, or otherwise affect any obligation of any Borrower under the Loan Documents, or to create a new or different obligation in substitution for or replacement of any existing obligation. All liens, security interests, and encumbrances created or granted pursuant to the Loan Documents shall continue in full force and effect, and the priority of such liens, security interests, and encumbrances shall not be affected by this Agreement or by the Transfer.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE ASSUMING PARTY
The Assuming Party hereby represents and warrants to Lender as of the Effective Date as follows:
Section 3.1 — Organization and Authority
Fairwater Real Estate Investment Trust is a real estate investment trust duly formed, validly existing, and in good standing under the laws of the State of Maryland. The Assuming Party is registered with the Securities and Exchange Commission as a reporting company, and its common shares of beneficial interest are listed on the New York Stock Exchange under the ticker symbol "FREIT." As of the fourth fiscal quarter of 2023, the Assuming Party had a market capitalization of approximately Four Billion Eight Hundred Million Dollars ($4,800,000,000). The Assuming Party has the requisite power and authority to execute, deliver, and perform this Agreement and the Replacement Guaranty, and to consummate the transactions contemplated hereby and thereby.
Section 3.2 — Authorization
The execution, delivery, and performance by the Assuming Party of this Agreement, the Replacement Guaranty, and all other agreements, instruments, and documents to be executed and delivered by the Assuming Party in connection with the transactions contemplated hereby have been duly authorized by all necessary trust action of the Assuming Party, including, without limitation, resolutions duly adopted by the Board of Trustees of the Assuming Party at a meeting duly called and held or by unanimous written consent in lieu of such meeting. No further consent, approval, authorization, or other action by any trustee, officer, shareholder, beneficiary, or other person or entity is required in connection with the execution, delivery, or performance of this Agreement or the Replacement Guaranty by the Assuming Party.
Section 3.3 — Enforceability
This Agreement constitutes, and the Replacement Guaranty when executed and delivered will constitute, a legal, valid, and binding obligation of the Assuming Party, enforceable against the Assuming Party in accordance with its respective terms, subject in each case to (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws of general applicability affecting the enforcement of creditors' rights generally, and (b) general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law.
Section 3.4 — No Conflicts
The execution, delivery, and performance by the Assuming Party of this Agreement and the Replacement Guaranty, and the consummation of the transactions contemplated hereby and thereby, do not and will not:
(a) violate, contravene, or conflict with the declaration of trust, bylaws, or any other organizational or governing document of the Assuming Party;
(b) violate, contravene, or conflict with any applicable law, statute, rule, regulation, order, judgment, decree, or injunction of any governmental authority applicable to the Assuming Party or any of its properties or assets;
(c) result in a breach of, constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, require any consent under, give rise to any right of termination, amendment, acceleration, or cancellation under, or result in the creation or imposition of any lien upon any property or asset of the Assuming Party pursuant to, any material agreement, contract, indenture, or instrument to which the Assuming Party is a party or by which the Assuming Party or any of its properties or assets may be bound, including, without limitation, that certain $750,000,000 unsecured revolving credit facility agreement dated as of August 14, 2022, by and among the Assuming Party, as borrower, and Aldgate National Bank, N.A., as administrative agent, and the lenders party thereto (the "Revolving Credit Facility"), and all related loan documents and ancillary agreements; or
(d) result in any violation of any order, writ, injunction, or decree of any court, arbitrator, or governmental authority applicable to the Assuming Party.
Section 3.5 — No Litigation
There is no action, suit, proceeding, claim, arbitration, or investigation pending or, to the knowledge of the Assuming Party, threatened against or affecting the Assuming Party or any of its subsidiaries or affiliates before any court, arbitrator, or governmental authority that (a) would reasonably be expected to have a material adverse effect on the business, financial condition, or operations of the Assuming Party, or (b) would reasonably be expected to materially and adversely affect the ability of the Assuming Party to perform its obligations under this Agreement, the Replacement Guaranty, or any other Loan Document to which it is or will become a party.
Section 3.6 — Financial Condition
The Assuming Party has, as of the Effective Date, (a) a tangible net worth (determined in accordance with generally accepted accounting principles consistently applied, excluding goodwill and other intangible assets) of not less than Five Hundred Million and No/100 Dollars ($500,000,000.00) (the "Minimum Net Worth") and (b) liquid assets (consisting of unrestricted cash, cash equivalents, and marketable securities that are freely tradeable without restriction) of not less than Fifty Million and No/100 Dollars ($50,000,000.00) (the "Minimum Liquidity"), each as defined in and measured in accordance with the Replacement Guaranty. The Assuming Party is not insolvent (as such term is defined under any applicable federal or state bankruptcy, insolvency, or similar law), and the execution and delivery of this Agreement and the Replacement Guaranty, and the consummation of the transactions contemplated hereby and thereby, will not render the Assuming Party insolvent or unable to pay its debts as they become due in the ordinary course of business.
Section 3.7 — ERISA
The Assuming Party is not an "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the assets of the Assuming Party do not constitute "plan assets" within the meaning of the regulations promulgated by the U.S. Department of Labor at 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA. No Borrower is, or as a result of the Transfer will become, a party-in-interest or disqualified person (as such terms are defined in ERISA and/or Section 4975 of the Internal Revenue Code of 1986, as amended) with respect to any employee benefit plan maintained by or on behalf of the Assuming Party.
Section 3.8 — Anti-Money Laundering / OFAC
Neither the Assuming Party nor any of its officers, trustees, directors, partners, members, or, to the knowledge of the Assuming Party, its affiliates, is a "Prohibited Person" (as such term is defined in the Loan Documents) or is otherwise in violation of (a) the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., (b) the Trading with the Enemy Act, 50 U.S.C. app. §§ 1 et seq., (c) Executive Order 13224, dated September 23, 2001, as amended from time to time, (d) the USA PATRIOT Act of 2001, Public Law 107-56 (the "Patriot Act"), (e) the regulations of the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury, or (f) any other applicable anti-money laundering law, executive order, or regulation. The Assuming Party is in compliance with all applicable anti-money laundering laws, rules, and regulations, and has implemented and maintains policies, procedures, and internal controls reasonably designed to ensure ongoing compliance therewith.
Section 3.9 — Acknowledgment of Loan Terms
The Assuming Party acknowledges and confirms that it has received and reviewed complete copies of the Loan Documents, including, without limitation, the Master Loan Agreement, each Loan Supplement, each promissory note, each deed of trust, mortgage, or deed to secure debt, each security agreement, each assignment of leases and rents, each environmental indemnity agreement, and the Original Guaranty. The Assuming Party confirms its understanding and acknowledgment that the Loans bear interest at a fixed rate of four and twenty-two hundredths percent (4.22%) per annum, mature on July 1, 2028, and have an aggregate outstanding principal balance of Four Hundred Twenty-One Million Six Hundred Thousand and No/100 Dollars ($421,600,000.00) as of February 28, 2024. The Assuming Party further acknowledges that its obligations under this Agreement and the Replacement Guaranty have been undertaken with full knowledge of the terms, conditions, and provisions of the Loan Documents, and the Assuming Party has been represented by independent legal counsel in connection with the negotiation, execution, and delivery of this Agreement and the Replacement Guaranty.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
The Transferor hereby represents and warrants to Lender and the Assuming Party as of the Effective Date as follows:
Section 4.1 — Organization and Authority
Greystone Meridian Partners Fund III, L.P. is a limited partnership duly formed, validly existing, and in good standing under the laws of the State of Delaware. Its sole general partner is Greystone Meridian Capital LLC, a Delaware limited liability company (EIN 83-1520984), whose co-founders and managing partners are Victor Lansdell and Elise Rathborne. The Transferor has the requisite power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.
Section 4.2 — Authorization
The execution, delivery, and performance by the Transferor of this Agreement have been duly authorized by all necessary partnership action, including, without limitation, the authorization and approval of its general partner, Greystone Meridian Capital LLC. No further consent, approval, or authorization of any limited partner or any other person or entity is required in connection with the execution, delivery, or performance of this Agreement by the Transferor. The general partner of the Transferor has all requisite power and authority to execute this Agreement on behalf of the Transferor.
Section 4.3 — No Default
As of the Effective Date, to the actual knowledge of the Transferor (such knowledge being limited to the actual knowledge of Victor Lansdell, Elise Rathborne, and Sean Kilpatrick, each after reasonable inquiry), (a) no Event of Default (as defined in the Master Loan Agreement) has occurred and is continuing under any of the Loan Documents, and (b) no event has occurred and is continuing that, with the giving of notice, the passage of time, or both, would constitute an Event of Default under any of the Loan Documents. For purposes of this Section 4.3, "reasonable inquiry" means inquiry of those employees and agents of the Transferor and its general partner who have direct responsibility for the management and administration of the Loans and the Properties.
Section 4.4 — Outstanding Balance Confirmation
The Transferor confirms that, as of February 28, 2024, the aggregate outstanding principal balance under Loans 1-A through 1-H is Four Hundred Twenty-One Million Six Hundred Thousand and No/100 Dollars ($421,600,000.00), as reflected on Exhibit B attached hereto. The Transferor further confirms that, as of the Effective Date, all interest, fees, charges, and other amounts due and payable under the Loan Documents through the Effective Date have been paid in full, and no amounts remain outstanding or past due, other than those amounts that are to be paid by the Assuming Party pursuant to the terms of the Purchase Agreement and this Agreement.
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF LENDER
Lender hereby represents and warrants to the Assuming Party and the Transferor as of the Effective Date as follows:
Section 5.1 — Authorization
Pinnacle Federal Bank, N.A. has the requisite power and authority under its charter, bylaws, and applicable law to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement by Lender have been duly authorized by all necessary corporate action on the part of Lender.
Section 5.2 — Consent
Lender hereby confirms its consent to the Transfer as set forth in the Consent Letter dated June 4, 2024, subject in all respects to the terms and conditions set forth therein and in this Agreement. Lender's consent to the Transfer shall not be deemed to constitute a consent to, or a waiver of any right with respect to, any future transfer, assignment, encumbrance, or other disposition of any direct or indirect interest in any Borrower or any Property, which shall continue to require Lender's prior written consent in accordance with the applicable provisions of the Loan Documents. Nothing contained in this Agreement or the Consent Letter shall be construed to impose upon Lender any obligation to grant any such future consent.
ARTICLE VI — COVENANTS OF THE ASSUMING PARTY
The Assuming Party hereby covenants and agrees with Lender as follows:
Section 6.1 — Compliance with Loan Documents
From and after the Effective Date, the Assuming Party shall cause each Borrower to comply fully and in a timely manner with all of the terms, covenants, conditions, obligations, and requirements of the Loan Documents. The Assuming Party shall not permit, cause, or suffer any Borrower to take any action, or to fail to take any action, that would constitute or give rise to an Event of Default under any of the Loan Documents. The Assuming Party shall exercise all rights and powers as the sole member of each Borrower in a manner consistent with the obligations of the Borrowers under the Loan Documents, and shall not amend, modify, or waive any provision of the organizational documents of any Borrower without the prior written consent of Lender to the extent such consent is required under the Loan Documents.
Section 6.2 — Financial Reporting
The Assuming Party shall deliver, or cause to be delivered, to Lender each of the following:
(a) Annual Financial Statements. Within one hundred twenty (120) days after the end of each fiscal year of the Assuming Party, audited annual financial statements of the Assuming Party, prepared in accordance with generally accepted accounting principles consistently applied, audited by a nationally recognized independent certified public accounting firm, and accompanied by an unqualified opinion of such accounting firm (or an opinion with qualifications acceptable to Lender in its reasonable discretion);
(b) Quarterly Financial Statements. Within sixty (60) days after the end of each fiscal quarter of the Assuming Party (other than the fourth fiscal quarter), unaudited quarterly financial statements of the Assuming Party, prepared in accordance with generally accepted accounting principles consistently applied, certified by the chief financial officer or other authorized officer of the Assuming Party as presenting fairly, in all material respects, the financial condition and results of operations of the Assuming Party as of and for such period;
(c) Other Financial Information. Within thirty (30) days after receipt of a written request from Lender, such other financial information and reports regarding the Assuming Party, the Borrowers, or the Properties as Lender may reasonably request from time to time; and
(d) Property-Level Reports. Within ninety (90) days after the end of each fiscal year of each Borrower, annual operating statements and certified rent rolls for each Property, in form and substance reasonably satisfactory to Lender, together with a comparison of actual operating results to the approved annual budget for such Property.
The Assuming Party acknowledges and agrees that, to the extent the Assuming Party is required to file periodic reports with the Securities and Exchange Commission, including annual reports on Form 10-K and quarterly reports on Form 10-Q, the delivery of copies of such filings to Lender shall satisfy the Assuming Party's obligations under clauses (a) and (b) of this Section 6.2, provided that the Assuming Party shall provide prompt written notice to Lender of the filing of each such report and shall deliver a compliance certificate in substantially the form attached hereto as Exhibit C concurrently therewith.
Section 6.3 — Net Worth and Liquidity Maintenance
The Assuming Party shall at all times maintain (a) a tangible net worth (determined in accordance with generally accepted accounting principles consistently applied, excluding goodwill and other intangible assets) of not less than Five Hundred Million and No/100 Dollars ($500,000,000.00) (the "Minimum Net Worth") and (b) liquid assets (consisting of unrestricted cash, cash equivalents, and marketable securities that are freely tradeable without restriction) of not less than Fifty Million and No/100 Dollars ($50,000,000.00) (the "Minimum Liquidity"), in each case as measured and defined in the Replacement Guaranty. The Assuming Party shall deliver a compliance certificate in substantially the form attached hereto as Exhibit C, certifying compliance with the Minimum Net Worth and Minimum Liquidity requirements, concurrently with the delivery of each set of annual and quarterly financial statements under Section 6.2 above.
Section 6.4 — SPE Covenants
From and after the Effective Date, the Assuming Party shall cause each Borrower to continue to comply in all respects with all single-purpose entity covenants set forth in the Master Loan Agreement and in the organizational documents of each Borrower, including, without limitation:
(a) maintaining separate books and records from those of any other person or entity;
(b) maintaining separate bank accounts in the name of such Borrower;
(c) not commingling the assets, funds, or accounts of such Borrower with those of any other person or entity, including the Assuming Party or any affiliate thereof;
(d) conducting the business of such Borrower in its own name, and not in the name of, or as a division or unit of, any other person or entity;
(e) maintaining adequate capitalization in light of its contemplated business operations;
(f) holding itself out to the public as a legal entity separate and distinct from any other person or entity;
(g) not guaranteeing or otherwise becoming liable for the debts or obligations of any other person or entity, except as expressly permitted by the Loan Documents;
(h) not acquiring or holding any direct or indirect ownership interest in any other person or entity, except as expressly permitted by the Loan Documents; and
(i) maintaining at least one (1) independent manager or independent director, as applicable, satisfying the requirements set forth in the organizational documents of such Borrower and the Master Loan Agreement.
Section 6.5 — Insurance
The Assuming Party shall cause each Borrower to maintain, at all times during the term of the Loans, all insurance coverages required under the Loan Documents, including, without limitation, comprehensive general liability insurance, property insurance (including "all risk" coverage), business interruption and loss of rental income insurance, flood insurance (if applicable), earthquake insurance (if applicable), environmental liability insurance, and terrorism insurance, in such amounts, with such deductibles, and from such insurers as required by the Loan Documents. As of the Effective Date, replacement insurance policies have been issued by Ironclad Indemnity Insurance Company, as arranged by Hartwick Gunderson & Associates, Inc., insurance broker of record, and are effective as of the Effective Date. The Assuming Party shall deliver, or cause each Borrower to deliver, evidence of such insurance coverages to Lender in accordance with the requirements of the Loan Documents. Lender shall be named as an additional insured, loss payee, and/or mortgagee, as applicable, on all such insurance policies to the extent required by the Loan Documents.
Section 6.6 — Property Management
The parties acknowledge that, as of the Effective Date, Argyle Property Services LLC, an affiliate of the Transferor, is the property manager for each of the Properties under property management agreements currently in effect. Pursuant to that certain Transition Services Agreement dated as of the Effective Date, by and between the Transferor (or its applicable affiliate) and the Assuming Party (or its applicable affiliate), Argyle Property Services LLC shall continue to serve as property manager for a transition period of ninety (90) days following the Effective Date (the "Transition Period"), during which time property management responsibilities shall be transferred to Fairwater Property Management LLC, a wholly-owned subsidiary of the Assuming Party. The Assuming Party shall provide Lender with prior written notice of no less than fifteen (15) business days before effecting any change in property manager for any Property, and shall cause any replacement property manager to execute and deliver a subordination of management agreement in form and substance reasonably satisfactory to Lender, if and to the extent required under the Loan Documents. The Assuming Party shall at all times cause each Property to be managed by a qualified, experienced, and reputable property management company in accordance with the requirements of the Loan Documents and prudent commercial real estate management practices.
Section 6.7 — Notices
The Assuming Party shall promptly notify Lender in writing (and in any event within five (5) business days of obtaining knowledge thereof) of the occurrence of any of the following:
(a) any Event of Default or any event, condition, or circumstance that, with the giving of notice, the passage of time, or both, would reasonably be expected to constitute an Event of Default under any of the Loan Documents;
(b) any material litigation, proceeding, arbitration, investigation, or governmental action filed, commenced, or threatened against any Borrower, any Property, the Assuming Party, or any affiliate of the Assuming Party with respect to any Borrower or Property that could reasonably be expected to have a material adverse effect on the Properties, the Borrowers, or the ability of the Assuming Party to perform its obligations hereunder or under the Replacement Guaranty;
(c) any material casualty, loss, damage, or destruction affecting any Property, or any condemnation, eminent domain proceeding, or threat thereof relating to any Property;
(d) any material environmental condition, release, or violation of environmental laws at any Property; and
(e) any change in the financial condition of the Assuming Party that would reasonably be expected to result in a failure to satisfy the Minimum Net Worth or Minimum Liquidity requirements set forth in Section 6.3.
ARTICLE VII — RELEASE OF ORIGINAL GUARANTOR
Section 7.1 — Release
Effective as of the Effective Date, and subject to the terms and conditions of this Article VII, Lender hereby releases and discharges Greystone Meridian Partners Fund III, L.P. from all obligations, liabilities, claims, and demands under the Original Guaranty to the extent that such obligations, liabilities, claims, and demands first arise from acts, omissions, events, or circumstances occurring on or after the Effective Date. For the avoidance of doubt, the Original Guaranty shall remain in full force and effect with respect to any and all obligations, liabilities, indemnities, claims, and demands arising from or relating to acts, omissions, events, or circumstances occurring prior to the Effective Date, including, without limitation, any "bad boy" or "springing recourse" events that occurred or were triggered prior to the Effective Date, any breach of a representation, warranty, or covenant of the Original Guarantor that occurred prior to the Effective Date, and any obligation of the Original Guarantor with respect to losses, damages, costs, or expenses incurred by Lender as a result of acts, omissions, events, or circumstances occurring prior to the Effective Date, regardless of when such losses, damages, costs, or expenses are discovered or asserted.
Section 7.2 — Survival of Pre-Transfer Obligations
Notwithstanding the release set forth in Section 7.1 above, the Original Guarantor's obligations under (a) any environmental indemnity agreement executed in connection with the Loan Documents, to the extent arising from environmental conditions existing at, or environmental releases occurring at, any Property prior to the Effective Date, and (b) any "bad boy" guaranty, "springing recourse" guaranty, or similar carve-out provisions of the Original Guaranty, to the extent triggered by acts, omissions, events, or circumstances occurring prior to the Effective Date, shall survive the Transfer and shall not be released, discharged, or affected by this Agreement. The Original Guarantor acknowledges and agrees that the foregoing obligations shall continue to be enforceable against it in accordance with their respective terms, notwithstanding the execution and delivery of this Agreement and the Replacement Guaranty.
ARTICLE VIII — ADDITIONAL AGREEMENTS
Section 8.1 — Consent Fee Confirmation
The parties hereby acknowledge and confirm that a consent fee in the aggregate amount of One Million Fifty-Four Thousand and No/100 Dollars ($1,054,000.00), representing twenty-five basis points (0.25%) of the aggregate outstanding principal balance of $421,600,000.00 as of February 28, 2024, has been paid to Lender in immediately available funds in connection with Lender's consent to the Transfer. Such consent fee was allocated equally between the Assuming Party and the Transferor, with each party contributing Five Hundred Twenty-Seven Thousand and No/100 Dollars ($527,000.00), and has been received and accepted by Lender in full satisfaction of the consent fee requirement set forth in the Consent Letter. Such consent fee is non-refundable and has been fully earned by Lender upon receipt.
Section 8.2 — Loan Document Amendments
Except as expressly modified by this Agreement, the Consent Letter dated June 4, 2024, and the Replacement Guaranty, the Loan Documents shall remain unchanged, unmodified, and in full force and effect in accordance with their respective terms. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of any Loan Document (other than the Replacement Guaranty), the terms of this Agreement shall control and govern, but only to the extent of such conflict or inconsistency. All references in the Loan Documents to the "Guarantor," "Controlling Party," "Principal," "Sponsor," or any similar designation shall, effective as of the Effective Date, be deemed to refer to the Assuming Party, Fairwater Real Estate Investment Trust, and shall no longer refer to the Original Guarantor, Greystone Meridian Partners Fund III, L.P. (except to the extent provided in Article VII hereof with respect to surviving pre-Transfer obligations of the Original Guarantor).
Section 8.3 — Operating Account Banks
The Borrowers' operating and reserve accounts currently maintained at Magnolia Commerce Bank, N.A. (225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303) shall be maintained in accordance with the terms and conditions of the Loan Documents, including all existing deposit account control agreements, blocked account agreements, and cash management agreements. In the event the Assuming Party elects or is required to change the depository institution at which such accounts are maintained, the Assuming Party shall (a) provide Lender with prior written notice of such change, (b) cause the replacement depository institution to execute and deliver to Lender deposit account control agreements and such other agreements as may be required under the Loan Documents, in form and substance reasonably satisfactory to Lender and its counsel, and (c) ensure that no interruption in Lender's perfected security interest in such accounts occurs in connection with any such change.
Section 8.4 — Title Insurance
The Assuming Party shall cause to be delivered to Lender, promptly following the Effective Date, ALTA Owner's Policies of title insurance (2021 form), to be issued by Commonwealth National Title Insurance Company for each Property, together with such lender's endorsements, including without limitation date-down endorsements, as Lender may reasonably require confirming (a) the continued effectiveness and validity of the lien of each deed of trust, mortgage, or deed to secure debt encumbering the Properties, (b) the priority of such liens, and (c) the absence of any new exceptions to title arising in connection with the Transfer. The cost of such title insurance policies and endorsements shall be borne by the Assuming Party unless otherwise allocated pursuant to the Purchase Agreement.
Section 8.5 — Further Assurances
Each party hereto shall, from time to time and at the reasonable request of any other party, execute and deliver such further documents, instruments, certificates, opinions, and agreements, and take such further actions, as may be reasonably necessary or desirable to carry out the purposes and intent of this Agreement, the Consent Letter, and the Replacement Guaranty, and to give full effect to the transactions contemplated hereby and thereby. Without limiting the generality of the foregoing, the Assuming Party and the Borrowers shall execute and deliver such corrective or confirmatory instruments and documents as Lender may reasonably request to confirm or evidence the assumptions, covenants, and agreements set forth herein.
ARTICLE IX — DEFAULT AND REMEDIES
Section 9.1 — Events of Default
Any breach by the Assuming Party of any representation, warranty, covenant, or obligation of the Assuming Party under this Agreement that remains uncured after (a) five (5) business days' written notice from Lender, in the case of any monetary default, or (b) thirty (30) days' written notice from Lender, in the case of any non-monetary default (provided that such thirty (30) day cure period shall be extended for an additional reasonable period not to exceed sixty (60) days in the aggregate if (i) such default is not susceptible of cure within such thirty (30) day period, (ii) the Assuming Party has commenced and is diligently pursuing the cure of such default, and (iii) such extension would not materially and adversely affect Lender's interest in the Properties or the Loan Documents), shall constitute an Event of Default under the Master Loan Agreement. In addition, any Event of Default under the Replacement Guaranty shall constitute an Event of Default under this Agreement, and any Event of Default under this Agreement shall constitute an Event of Default under the Replacement Guaranty (cross-default).
Section 9.2 — Remedies
Upon the occurrence and during the continuance of an Event of Default under this Agreement (including any cross-default as provided in Section 9.1), Lender shall have all rights and remedies available to it under the Loan Documents, the Replacement Guaranty, this Agreement, and applicable law, including, without limitation, the right to accelerate the maturity of all outstanding Loans, to foreclose upon the Properties, to exercise any and all rights under the guaranty provisions of the Replacement Guaranty, and to pursue any other legal or equitable remedies available to Lender. All rights and remedies of Lender under this Agreement are cumulative and are in addition to, and not in limitation of, any other rights or remedies available to Lender under the Loan Documents, the Replacement Guaranty, or applicable law.
ARTICLE X — MISCELLANEOUS
Section 10.1 — Notices
All notices, demands, consents, requests, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered personally, (b) sent by registered or certified mail, return receipt requested, postage prepaid, (c) sent by nationally recognized overnight courier service (such as Severin Partners LLC, Halcyon Partners LLC, or Tarrant & Co.), or (d) sent by electronic mail (with confirmation of receipt), addressed as follows:
If to Lender:
Pinnacle Federal Bank, N.A. 600 Travis Street, Suite 4400 Houston, Texas 77002
Attention: Bradley Carston, Senior Vice President
Email: bcarston@pinnaclefederalbank.com
With a copy to Lender's Counsel:
Whitfield & Archer LLP 717 Texas Avenue, Suite 2500 Houston, Texas 77002
Attention: Sandra Whitfield, Esq.
Email: swhitfield@whitfieldarcher.com
If to the Assuming Party:
Fairwater Real Estate Investment Trust 7200 Chesapeake Parkway, Suite 1100 Columbia, Maryland 21044
Attention: David Elgin Park, General Counsel
Email: depark@fairwaterreit.com
With a copy to Buyer's Counsel:
Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, New York 10022
Attention: Douglas Fairchild, Esq.
Email: dfairchild@calderwoodharkness.com
If to the Transferor:
Greystone Meridian Partners Fund III, L.P. 3300 Peachtree Road NE, Suite 2200 Atlanta, Georgia 30326