ASSUMPTION AND RECOGNITION AGREEMENT
(Sycamore Life Insurance Company Loans)
Dated as of June 6, 2024
This ASSUMPTION AND RECOGNITION AGREEMENT (this "Agreement") is entered into as of June 6, 2024 (the "Effective Date"), in connection with that certain Purchase and Sale Agreement dated February 28, 2024 (as amended by that First Amendment to Purchase and Sale Agreement dated April 12, 2024, and that Second Amendment to Purchase and Sale Agreement dated May 28, 2024, collectively, the "Purchase Agreement"), by and between Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership, as seller, and Fairwater Real Estate Investment Trust, a Maryland real estate investment trust, as purchaser, by and among the following parties:
SYCAMORE LIFE INSURANCE COMPANY, a Connecticut stock life insurance company, having its principal place of business at 100 Constitution Plaza, Hartford, Connecticut 06103 (the "Lender");
GMP PEACHTREE LLC, a Delaware limited liability company (EIN 84-2741063) ("Borrower A" or the "Peachtree Borrower");
GMP MOUNT JULIET LLC, a Delaware limited liability company (EIN 84-2741070) ("Borrower B" or the "Mount Juliet Borrower" and, together with Borrower A, each a "Borrower" and collectively, the "Borrowers");
GREYSTONE MERIDIAN PARTNERS FUND III, L.P., a Delaware limited partnership (EIN 83-1647205), in its capacity as the sole member of each Borrower and as the guarantor under the Original Guaranty (as defined below) (in such capacities, the "Original Guarantor" and/or the "Transferor");
FAIRWATER REAL ESTATE INVESTMENT TRUST, a Maryland real estate investment trust, having its principal office at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044, and listed on the New York Stock Exchange under the ticker symbol "FREIT" (the "Assuming Party" or the "New Owner").
The Lender, the Borrowers, the Original Guarantor/Transferor, and the Assuming Party are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
A. The Loan Documents. Reference is hereby made to that certain Note Purchase Agreement dated as of November 22, 2019, as amended (the "Note Purchase Agreement"), by and among the Lender, Borrower A, and Borrower B, pursuant to which the Lender made two separate loans to the Borrowers: (i) a loan in favor of GMP Peachtree LLC designated as "Loan 3-A," which is secured by the property known as Peachtree Corners Logistics Center, located at 5900 Peachtree Industrial Blvd, Peachtree Corners, Georgia 30071, and (ii) a loan in favor of GMP Mount Juliet LLC designated as "Loan 3-B," which is secured by the property known as Mount Juliet Commerce Park, located at 400 South Mount Juliet Road, Mount Juliet, Tennessee 37122 (Loan 3-A and Loan 3-B, collectively, the "Loans"). As of February 28, 2024, the aggregate outstanding principal balance of the Loans was Forty-Eight Million One Hundred Thousand Dollars ($48,100,000). Each Loan bears interest at a fixed rate of 3.95% per annum and has a maturity date of December 1, 2030. The Note Purchase Agreement, together with each promissory note, deed to secure debt, deed of trust, security agreement, assignment of leases and rents, environmental indemnity agreement, guaranty agreement, and all other documents, instruments, and agreements executed and delivered in connection therewith, as the same may have been amended, restated, supplemented, or otherwise modified from time to time, are collectively referred to herein as the "Loan Documents." A complete list of the Loan Documents is set forth on Exhibit A attached hereto and incorporated herein by reference.
B. The Original Guaranty. In connection with the closing of the Loans, Greystone Meridian Partners Fund III, L.P., as the Original Guarantor, executed and delivered to the Lender that certain Guaranty Agreement (Carve-Out Guaranty) dated as of November 22, 2019, as amended (the "Original Guaranty"), pursuant to which the Original Guarantor guaranteed certain non-recourse carve-out obligations of the Borrowers under the Loan Documents, including, without limitation, obligations arising from fraud, misrepresentation, voluntary bankruptcy filings, prohibited transfers, waste, environmental liabilities, and violations of single-purpose entity covenants.
C. The Properties. The Loans are secured by first-priority liens on and security interests in two logistics facilities (collectively, the "Properties"):
(i) Peachtree Corners Logistics Center — an approximately 345,000 rentable square foot ("RSF") logistics facility constructed in 2020, located at 5900 Peachtree Industrial Blvd, Peachtree Corners, Gwinnett County, Georgia 30071, owned by Borrower A; and
(ii) Mount Juliet Commerce Park — an approximately 298,000 RSF logistics facility constructed in 2021, located at 400 South Mount Juliet Road, Mount Juliet, Wilson County, Tennessee 37122, owned by Borrower B.
D. Change of Control. The Transferor is the sole member of each Borrower and, accordingly, the sole indirect owner of each of the Properties. Pursuant to the Purchase Agreement, the Transferor has agreed to sell and transfer one hundred percent (100%) of the membership interests in each Borrower to the Assuming Party. Such transfer constitutes a "change of control" under Section 7.02 of the Note Purchase Agreement, requiring the prior written consent of the Lender.
E. Lender Consent. Reference is hereby made to that certain Consent Letter executed by Sycamore Life Insurance Company dated May 22, 2024 (the "Consent"), pursuant to which the Lender consented to the change of control described in Recital D, subject to, among other things, the execution and delivery of this Agreement and the Replacement Guaranty (as defined below), and the satisfaction of certain other conditions set forth therein and herein.
F. Consent Fee. In connection with the Consent, a consent fee in the amount of Sixty Thousand One Hundred Twenty-Five Dollars ($60,125), representing 0.125% of the aggregate outstanding principal balance of the Loans ($48,100,000), was paid to the Lender by wire transfer of immediately available funds. The Lender hereby acknowledges receipt of such consent fee in full.
G. Replacement Guaranty. Simultaneously with the execution and delivery of this Agreement, the Assuming Party is executing and delivering to the Lender a Replacement Carve-Out Guaranty (the "Replacement Guaranty") in substitution for and replacement of the Original Guaranty. A true and correct copy of the Replacement Guaranty is attached hereto as Exhibit B.
H. Purpose. The Parties desire to set forth the terms and conditions upon which (i) the Assuming Party assumes all obligations of the Transferor (as sole member of each Borrower) under the Loan Documents, (ii) the Lender recognizes the Assuming Party as the new indirect owner of the Borrowers, and (iii) the Original Guaranty is replaced by the Replacement Guaranty and the Original Guarantor is released from its obligations thereunder arising from and after the Effective Date.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the Parties, the Parties hereby agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 Defined Terms. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Note Purchase Agreement dated as of November 22, 2019. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings set forth below:
"Assuming Party" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust.
"Closing Date" means June 6, 2024, which is the date on which the closing under the Purchase Agreement occurs.
"Consent" means the Consent Letter dated May 22, 2024, executed by Sycamore Life Insurance Company, pursuant to which the Lender consented to the change of control contemplated by the Purchase Agreement.
"Effective Date" means June 6, 2024, which date is co-extensive with the Closing Date under the Purchase Agreement.
"Loan Documents" means all documents, instruments, and agreements listed on Exhibit A attached hereto, as the same may have been amended, restated, supplemented, or otherwise modified from time to time prior to the date hereof.
"Loans" means Loan 3-A and Loan 3-B, as described in Recital A.
"Note Purchase Agreement" means the Note Purchase Agreement dated as of November 22, 2019, by and among Sycamore Life Insurance Company, GMP Peachtree LLC, and GMP Mount Juliet LLC, as amended.
"Original Guarantor" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership.
"Original Guaranty" means the Guaranty Agreement (Carve-Out Guaranty) dated as of November 22, 2019, executed by the Original Guarantor in favor of the Lender, as amended.
"Properties" means, collectively, Peachtree Corners Logistics Center and Mount Juliet Commerce Park, as more particularly described on Exhibit C attached hereto.
"Purchase Agreement" has the meaning set forth in the preamble to this Agreement.
"Replacement Guaranty" means the Replacement Carve-Out Guaranty executed by the Assuming Party in favor of the Lender, dated as of the Effective Date, a copy of which is attached hereto as Exhibit B.
"Transferor" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership.
Section 1.2 Rules of Construction. The following rules of construction shall apply to this Agreement:
(a) Unless the context otherwise requires, all references herein to Articles, Sections, and Exhibits are to Articles, Sections, and Exhibits of or to this Agreement.
(b) The headings and captions of the Articles, Sections, and Exhibits of this Agreement are for convenience of reference only and shall not define, limit, or otherwise affect the meaning or interpretation of any provision of this Agreement.
(c) The terms "herein," "hereof," "hereunder," "hereby," and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, or other subdivision hereof.
(d) Unless the context otherwise requires, words importing the singular include the plural and vice versa, and words importing a gender include all genders.
(e) References to any statute, law, regulation, or rule shall be deemed to include references to such statute, law, regulation, or rule as amended, supplemented, or superseded from time to time.
(f) References to sections of the Note Purchase Agreement are to the sections of the Note Purchase Agreement as in effect on the date hereof, unless otherwise stated.
(g) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(h) The term "person" shall be construed broadly and shall include any individual, corporation, limited liability company, partnership, trust, real estate investment trust, joint venture, governmental authority, or other entity.
ARTICLE 2 — ASSUMPTION OF OBLIGATIONS
Section 2.1 Assumption by New Owner. As of the Effective Date, the Assuming Party hereby irrevocably and unconditionally assumes and agrees to perform, observe, and be bound by all of the obligations, covenants, representations, warranties, terms, and conditions imposed upon or applicable to the "Owner," the "Sponsor," or the direct or indirect owner of membership interests in the Borrowers under the Loan Documents, as though the Assuming Party were an original party thereto in such capacity, including, without limitation, the following:
(a) all single-purpose entity ("SPE") covenants applicable to the owner or indirect owner of each Borrower, including the obligation to maintain each Borrower as a single-purpose, bankruptcy-remote entity in accordance with the requirements of the Note Purchase Agreement and each Borrower's organizational documents;
(b) all obligations relating to the maintenance and preservation of the single-purpose entity status of each Borrower, including, without limitation, the obligation to ensure that each Borrower (i) maintains its own separate books, records, and financial statements, (ii) does not commingle its funds or assets with those of any other person or entity, (iii) maintains adequate capitalization, (iv) conducts its business in its own name, and (v) complies with all other SPE covenants set forth in the Loan Documents and the organizational documents of each Borrower;
(c) all reporting and notice obligations required of the indirect owner under the Loan Documents, including the obligation to deliver (or cause the Borrowers to deliver) financial statements, operating reports, rent rolls, tenant information, compliance certificates, and such other information as the Lender may reasonably request;
(d) all transfer restrictions and change of control provisions set forth in the Loan Documents, including, without limitation, the prohibition on transfers of direct or indirect interests in the Borrowers without the Lender's prior written consent;
(e) all obligations to cause the Borrowers to comply with the terms and conditions of the Loan Documents, including, without limitation, the obligation to make all payments of principal, interest, and other amounts due and owing under the Loans when due, to maintain required insurance coverage, to pay taxes and assessments, to maintain the Properties in good condition and repair, and to comply with all applicable laws, rules, and regulations; and
(f) all other obligations, covenants, and conditions applicable to the direct or indirect owner of the Borrowers under the Loan Documents, whether or not specifically enumerated herein.
The assumption of obligations set forth in this Section 2.1 is absolute and unconditional and shall not be subject to any defense, counterclaim, setoff, or recoupment.
Section 2.2 Borrowers' Obligations Unaffected. The obligations of GMP Peachtree LLC, as Borrower A, and GMP Mount Juliet LLC, as Borrower B, under the Note Purchase Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed in all respects. Nothing in this Agreement shall be deemed to constitute a novation, discharge, or release of any Borrower's obligations under the Loan Documents. The aggregate outstanding principal balance of the Loans ($48,100,000 as of February 28, 2024), the fixed interest rate of 3.95% per annum, the maturity date of December 1, 2030, and all other economic and non-economic terms and conditions of the Loans shall remain unchanged by this Agreement. Each Borrower, by executing this Agreement, hereby acknowledges and consents to the transfer of membership interests to the Assuming Party and confirms that its obligations under the Loan Documents remain in full force and effect.
Section 2.3 Confirmation of Loan Terms. The Parties hereby confirm the following terms and balances with respect to the Loans:
(a) Loan 3-A (GMP Peachtree LLC):
(i) Outstanding principal balance as of the Effective Date: as set forth on the most recent loan statement delivered by the Lender;
(ii) Accrued and unpaid interest through the Effective Date: current and paid through the most recent payment date;
(iii) Escrow balances (taxes and insurance): maintained at the Lender in accordance with the Loan Documents;
(iv) Reserve balances (capital expenditure reserves, tenant improvement/leasing commission reserves): maintained at the Lender in accordance with the Loan Documents.
(b) Loan 3-B (GMP Mount Juliet LLC):
(i) Outstanding principal balance as of the Effective Date: as set forth on the most recent loan statement delivered by the Lender;
(ii) Accrued and unpaid interest through the Effective Date: current and paid through the most recent payment date;
(iii) Escrow balances (taxes and insurance): maintained at the Lender in accordance with the Loan Documents;
(iv) Reserve balances (capital expenditure reserves, tenant improvement/leasing commission reserves): maintained at the Lender in accordance with the Loan Documents.
(c) Aggregate Loan Terms:
(i) Aggregate outstanding principal balance as of February 28, 2024: $48,100,000;
(ii) Fixed interest rate: 3.95% per annum;
(iii) Maturity date: December 1, 2030;
(iv) Payment dates and amortization schedule: as set forth in the Note Purchase Agreement and the respective promissory notes; all payment dates and the amortization schedule remain unchanged by this Agreement.
Section 2.4 No Release of Borrowers. Nothing in this Agreement shall be deemed to release, discharge, or modify the obligations of GMP Peachtree LLC or GMP Mount Juliet LLC as Borrowers under the Note Purchase Agreement or any other Loan Document. Each Borrower shall remain primarily liable for all obligations arising under the Loan Documents, and the assumption of obligations by the Assuming Party pursuant to this Article 2 is in addition to, and not in substitution for, the Borrowers' direct obligations under the Loan Documents.
ARTICLE 3 — REPLACEMENT GUARANTY AND RELEASE OF ORIGINAL GUARANTOR
Section 3.1 Delivery of Replacement Guaranty. The Assuming Party has, simultaneously with the execution and delivery of this Agreement, executed and delivered to the Lender the Replacement Guaranty, a true and correct copy of which is attached hereto as Exhibit B and incorporated herein by reference. The Replacement Guaranty replaces and supersedes the Original Guaranty in all respects with respect to obligations arising from and after the Effective Date. The Replacement Guaranty covers the same non-recourse carve-out obligations covered by the Original Guaranty, including, without limitation, obligations arising from fraud, intentional misrepresentation, voluntary bankruptcy filings, prohibited transfers, waste, environmental liabilities, and violations of single-purpose entity covenants.
Section 3.2 Financial Covenants of Assuming Party (as Replacement Guarantor). The Assuming Party, in its capacity as Replacement Guarantor under the Replacement Guaranty, hereby covenants and agrees that, for so long as any obligations remain outstanding under the Loan Documents, the Assuming Party shall:
(a) maintain a minimum tangible net worth of not less than Five Hundred Million Dollars ($500,000,000) at all times, calculated in accordance with generally accepted accounting principles ("GAAP") consistently applied;
(b) maintain minimum liquid assets of not less than Fifty Million Dollars ($50,000,000) at all times. For purposes of this Section 3.2(b), "liquid assets" means unrestricted cash, cash equivalents, and marketable securities that are freely tradable on a nationally recognized securities exchange;
(c) deliver to the Lender audited financial statements of the Assuming Party, prepared in accordance with GAAP and audited by an independent nationally recognized accounting firm, within one hundred twenty (120) days following the end of each fiscal year of the Assuming Party; and
(d) deliver to the Lender a quarterly compliance certificate, executed by a duly authorized officer of the Assuming Party, certifying compliance with the financial covenants set forth in clauses (a) and (b) above, within forty-five (45) days following the end of each fiscal quarter.
Section 3.3 Release of Original Guarantor. Effective as of the Effective Date and conditioned upon the satisfaction of each of the following conditions: (a) the execution, delivery, and effectiveness of the Replacement Guaranty, (b) the payment of the consent fee of $60,125 to the Lender, and (c) the satisfaction of all conditions set forth in the Consent, the Lender hereby releases and forever discharges Greystone Meridian Partners Fund III, L.P. from all obligations, liabilities, claims, damages, demands, causes of action, costs, and expenses under the Original Guaranty arising from and after the Effective Date; provided, however, that the Original Guarantor shall remain fully liable for any and all obligations, liabilities, claims, damages, demands, causes of action, costs, and expenses arising under the Original Guaranty that are attributable to acts, omissions, events, conditions, or circumstances occurring or existing prior to the Effective Date, regardless of when such obligations, liabilities, or claims are asserted or discovered.
Section 3.4 Confirmation of Release. The Lender hereby confirms that, subject to the terms and conditions of Section 3.3, the Original Guaranty is terminated and of no further force or effect as of the Effective Date with respect to obligations arising from and after such date. Notwithstanding the foregoing, the termination of the Original Guaranty shall not affect any rights, remedies, or claims of the Lender arising under the Original Guaranty with respect to obligations, liabilities, or claims attributable to the period prior to the Effective Date.
ARTICLE 4 — REPRESENTATIONS AND WARRANTIES OF ASSUMING PARTY
The Assuming Party hereby represents and warrants to the Lender, as of the Effective Date, as follows:
Section 4.1 Organization and Authority. The Assuming Party is a real estate investment trust duly organized, validly existing, and in good standing under the laws of the State of Maryland. The Assuming Party has full power and authority to execute, deliver, and perform this Agreement and the Replacement Guaranty and to consummate the transactions contemplated hereby and thereby. The Assuming Party is duly qualified to do business and is in good standing in each jurisdiction where the nature of its business or the ownership or leasing of its properties requires such qualification, except where the failure to be so qualified would not reasonably be expected to have a material adverse effect on the Assuming Party's ability to perform its obligations hereunder or under the Replacement Guaranty.
Section 4.2 Due Authorization. The execution, delivery, and performance of this Agreement and the Replacement Guaranty by the Assuming Party have been duly authorized by all necessary action on the part of the Assuming Party, including by resolution of the Board of Trustees of Fairwater Real Estate Investment Trust. No further approval, consent, authorization, or other action by, or filing with, any person, entity, or governmental authority is required in connection with the execution, delivery, or performance by the Assuming Party of this Agreement or the Replacement Guaranty, other than such approvals, consents, authorizations, actions, or filings as have been obtained or made on or prior to the date hereof.
Section 4.3 Enforceability. This Agreement and the Replacement Guaranty constitute the legal, valid, and binding obligations of the Assuming Party, enforceable against the Assuming Party in accordance with their respective terms, except as the enforceability thereof may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or similar laws now or hereafter in effect relating to or affecting the rights of creditors generally, and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
Section 4.4 No Conflicts. The execution, delivery, and performance of this Agreement and the Replacement Guaranty by the Assuming Party do not and will not (a) violate, conflict with, or result in a breach of any provision of the declaration of trust, bylaws, or other organizational documents of the Assuming Party, (b) violate any applicable law, statute, rule, regulation, order, judgment, decree, or injunction of any court or governmental authority to which the Assuming Party or any of its properties is subject, or (c) constitute a breach of, or default under, or result in the creation or imposition of any lien upon any property of the Assuming Party pursuant to, any material agreement, indenture, mortgage, deed of trust, loan agreement, note, or other instrument to which the Assuming Party is a party or by which the Assuming Party or any of its properties is bound.
Section 4.5 Compliance with Financial Covenants. As of the Effective Date, the Assuming Party represents and warrants that (a) its tangible net worth, calculated in accordance with GAAP, is not less than Five Hundred Million Dollars ($500,000,000), and (b) its liquid assets (as defined in Section 3.2(b)) are not less than Fifty Million Dollars ($50,000,000). An officer's certificate evidencing compliance with such financial covenants is attached hereto as Exhibit D.
Section 4.6 No Litigation. There is no pending or, to the actual knowledge of the Assuming Party, threatened litigation, action, suit, arbitration, investigation, or proceeding before any court, governmental authority, or arbitral tribunal that would reasonably be expected to materially and adversely affect the Assuming Party's ability to execute, deliver, or perform its obligations under this Agreement or the Replacement Guaranty, or that would reasonably be expected to result in a material adverse change in the financial condition of the Assuming Party.
Section 4.7 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 does not hold assets that constitute "plan assets" within the meaning of 29 C.F.R. § 2510.3-101 (as modified by Section 3(42) of ERISA). The assets of the Borrowers do not constitute "plan assets" within the meaning of ERISA. No portion of the funds used by the Assuming Party to acquire the membership interests in the Borrowers constitutes assets of any employee benefit plan subject to Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code").
Section 4.8 REIT Status. The Assuming Party is organized and has been operated in a manner intended to qualify, and the Assuming Party has elected to qualify, as a real estate investment trust (a "REIT") under Sections 856 through 860 of the Code. The Assuming Party has not received any written notification from the Internal Revenue Service challenging or proposing to revoke such REIT qualification.
Section 4.9 Knowledge Individuals. For purposes of this Agreement, the Loan Documents, the Replacement Guaranty, and any other document or agreement executed in connection herewith or therewith, the "knowledge" of the Assuming Party (as new indirect owner of the Borrowers) shall mean the actual knowledge, without independent investigation or inquiry (other than reasonable inquiry of direct reports), of the following individuals:
(a) Marcus Devereaux, Executive Vice President, Acquisitions;
(b) Leah Torrance, Senior Vice President, Asset Management; and
(c) David Elgin Park, General Counsel.
ARTICLE 5 — REPRESENTATIONS AND WARRANTIES OF TRANSFEROR
The Transferor hereby represents and warrants to the Lender and the Assuming Party, as of the Effective Date, as follows:
Section 5.1 Organization and Authority. Greystone Meridian Partners Fund III, L.P. is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware. Its general partner is Greystone Meridian Capital LLC, a Delaware limited liability company. The Transferor has full power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby.
Section 5.2 Due Authorization. The execution and delivery of this Agreement by the Transferor have been duly authorized by all necessary action on the part of the Transferor, acting through its general partner, Greystone Meridian Capital LLC. No further approval, consent, authorization, or other action by, or filing with, any person, entity, or governmental authority is required in connection with the execution and delivery by the Transferor of this Agreement, other than such approvals, consents, authorizations, actions, or filings as have been obtained or made on or prior to the date hereof.
Section 5.3 No Default. To the actual knowledge of the Transferor (as defined in Section 5.5), as of the Effective Date, no default or event of default exists under the Note Purchase Agreement or any other Loan Document. The Transferor has not received any written notice from the Lender alleging the existence of any default or event of default under the Note Purchase Agreement or any other Loan Document that has not been cured or waived.
Section 5.4 Loan Status Confirmation. The Transferor hereby confirms the loan terms and balances set forth in Section 2.3 of this Agreement and represents and warrants that no prepayments, modifications, amendments, waivers, supplements, or side letters have been made to or entered into with respect to the Loan Documents other than as previously disclosed to the Lender in writing and set forth on Exhibit A hereto. All payments of principal, interest, escrow deposits, and other amounts due under the Loan Documents through the Effective Date have been made when due, and no payment is past due.
Section 5.5 Knowledge Individuals (Transferor). For purposes of this Agreement, the "knowledge" of the Transferor shall mean the actual knowledge, without independent investigation or inquiry (other than reasonable inquiry of direct reports), of the following individuals:
(a) Victor Lansdell, Co-Founder & Managing Partner;
(b) Elise Rathborne, Chief Financial Officer; and
(c) Sean Kilpatrick, Vice President, Asset Management.
ARTICLE 6 — LENDER ACKNOWLEDGMENTS AND AGREEMENTS
Section 6.1 Recognition of Assuming Party. The Lender hereby recognizes and acknowledges the Assuming Party as the new sole indirect owner of one hundred percent (100%) of the membership interests in each Borrower, effective as of the Effective Date. From and after the Effective Date, the Lender shall treat the Assuming Party as the "Owner," "Sponsor," and indirect owner of the Borrowers for all purposes under the Loan Documents, and all references in the Loan Documents to the "Owner," "Sponsor," or indirect owner of the Borrowers shall be deemed to refer to the Assuming Party.
Section 6.2 Consent Confirmation. The Lender hereby confirms that the Consent dated May 22, 2024 remains in full force and effect and that, subject to the terms and conditions thereof and of this Agreement, the transfer of one hundred percent (100%) of the membership interests in each Borrower from the Transferor to the Assuming Party does not constitute a default or event of default under the Note Purchase Agreement, any other Loan Document, or any other agreement between the Lender and the Borrowers. The Lender hereby waives, solely with respect to the transfer contemplated by the Purchase Agreement and this Agreement, any prohibition on such transfer set forth in Section 7.02 of the Note Purchase Agreement or any other provision of the Loan Documents.
Section 6.3 Consent Fee Acknowledgment. The Lender acknowledges receipt of the consent fee in the amount of Sixty Thousand One Hundred Twenty-Five Dollars ($60,125), representing 0.125% of the aggregate outstanding principal balance of the Loans ($48,100,000), in full and complete satisfaction of any consent fee, assumption fee, transfer fee, or similar fee required under the Loan Documents in connection with the change of control contemplated by the Purchase Agreement and this Agreement. No additional fee, charge, or payment is due or owing to the Lender in connection with such change of control.
Section 6.4 No Modification of Loan Terms. Except as expressly set forth in this Agreement, the Note Purchase Agreement and all other Loan Documents remain unmodified, in full force and effect, and binding upon the Borrowers, the Assuming Party (as indirect owner), and the Lender. Without limiting the generality of the foregoing, the fixed interest rate of 3.95% per annum, the maturity date of December 1, 2030, the amortization schedule, the payment dates, the reserve and escrow requirements, and all other terms and conditions of the Loan Documents are hereby confirmed and remain unchanged by this Agreement.
Section 6.5 Notices. From and after the Effective Date, all notices, demands, requests, consents, and other communications to the Assuming Party (as new indirect owner of the Borrowers) under the Loan Documents shall be directed to:
Fairwater Real Estate Investment Trust 7200 Chesapeake Parkway, Suite 1100 Columbia, Maryland 21044
Attention: David Elgin Park, General Counsel
Telephone: (410) 555-8200
Email: dpark@fairwaterreit.com
With a copy to (which shall not constitute notice):
Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, New York 10022
Attention: Douglas Fairchild
Telephone: (212) 555-3600
Email: dfairchild@calderwoodharkness.com
Section 6.6 Counsel for Lender. The Lender's outside legal counsel in connection with this Agreement, the Consent, and the related transactions is:
Partridge Wynn & Slater LLP 100 Constitution Plaza, Suite 700 Hartford, Connecticut 06103
Attention: Claire Wynn, Partner
Telephone: (860) 555-4100
Email: cwynn@partridgewynn.com
ARTICLE 7 — PROPERTY MANAGEMENT
Section 7.1 Current Property Manager. The Lender acknowledges that each of the Properties is currently managed by Argyle Property Services LLC, an affiliate of the Transferor, pursuant to property management agreements entered into in connection with the Loan Documents. The Assuming Party has advised the Lender that it intends to transition property management responsibilities for each Property to Fairwater Property Management LLC, a wholly-owned subsidiary of the Assuming Party, having its principal office at 7200 Chesapeake Parkway, Suite 1150, Columbia, Maryland 21044, in accordance with a ninety (90)-day transition services agreement between the Transferor (or its affiliates) and the Assuming Party (or its affiliates) to be entered into on or about the Effective Date.
Section 7.2 Lender Approval of New Manager. The Lender hereby approves Fairwater Property Management LLC as the replacement property manager for each of the Properties, subject to the following conditions:
(a) Within ninety (90) days of the Effective Date, the Assuming Party shall cause each Borrower to execute and deliver to the Lender a new property management agreement with Fairwater Property Management LLC, in form and substance reasonably satisfactory to the Lender, which management agreement shall be subordinate to the Loan Documents in accordance with the requirements set forth therein;
(b) The management fee payable under each such property management agreement shall not exceed the management fee currently payable under the existing management agreements with Argyle Property Services LLC, unless otherwise approved in writing by the Lender; and
(c) Fairwater Property Management LLC shall execute and deliver to the Lender a subordination, non-disturbance, and attornment agreement in form reasonably satisfactory to the Lender, if required under the Loan Documents.
ARTICLE 8 — INSURANCE
Section 8.1 Replacement Insurance. The Assuming Party hereby confirms that replacement property and casualty insurance policies covering each of the Properties have been bound with Ironclad Indemnity Insurance Company, effective as of the Effective Date, and that such replacement policies satisfy all insurance requirements set forth in the Loan Documents, including, without limitation, requirements as to coverage types, coverage amounts, deductibles, policy terms, and insurer financial ratings. Evidence of such insurance coverage, including certificates of insurance and copies of declarations pages, has been delivered to the Lender prior to the Effective Date.
Section 8.2 Lender Named as Additional Insured / Mortgagee. All replacement insurance policies obtained pursuant to Section 8.1 name Sycamore Life Insurance Company as mortgagee and loss payee (or additional insured, as applicable) in accordance with the requirements of the Loan Documents. Standard mortgage clauses and loss payable endorsements, as applicable, have been included in each replacement policy and copies thereof have been delivered to the Lender.
ARTICLE 9 — COVENANTS
Section 9.1 SPE Covenants. The Assuming Party hereby covenants and agrees that, for so long as any obligations remain outstanding under the Loan Documents, the Assuming Party shall cause each Borrower to continue to comply in all respects with all single-purpose entity covenants and separateness requirements set forth in the Loan Documents and each Borrower's respective operating agreement, as the same may be amended from time to time with the prior written consent of the Lender. Without limiting the generality of the foregoing, the Assuming Party shall not permit or cause any Borrower to take any action, or fail to take any action, that would jeopardize or impair the single-purpose entity status of such Borrower.
Section 9.2 Reporting Obligations. The Assuming Party hereby covenants and agrees that it shall cause each Borrower to deliver to the Lender all financial statements, operating reports, rent rolls, tenant information, budget reports, capital expenditure reports, and such other reports and information as are required to be delivered under the Loan Documents, within the time periods specified therein. The Assuming Party shall cooperate with the Lender in connection with any review, audit, or inspection of the books and records of the Borrowers or the Properties as permitted under the Loan Documents.
Section 9.3 Transfer Restrictions. The Assuming Party hereby acknowledges and agrees to be bound by all transfer restrictions applicable to the direct or indirect owner of the Borrowers under the Loan Documents, including, without limitation, the transfer restrictions and change of control provisions set forth in Section 7.02 of the Note Purchase Agreement. The Assuming Party agrees that no further transfer, sale, assignment, conveyance, pledge, encumbrance, or other disposition of any direct or indirect ownership interest in the Borrowers shall be made without the prior written consent of the Lender, to the extent required under the Loan Documents, and the satisfaction of any applicable conditions set forth therein.
Section 9.4 Operating Accounts. The Borrowers' operating accounts and other deposit accounts shall continue to be maintained at Magnolia Commerce Bank, N.A. (225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303; contact: Linda Prescott, Vice President, Commercial Banking), unless the Assuming Party obtains the prior written consent of the Lender to transfer such accounts to another financial institution in accordance with the requirements of the Loan Documents. Any account control agreements or similar agreements currently in effect with respect to the Borrowers' accounts shall remain in full force and effect, and the Assuming Party shall execute, or cause to be executed, such additional or replacement account control agreements as the Lender may reasonably require.
ARTICLE 10 — INDEMNIFICATION
Section 10.1 Assuming Party Indemnity. The Assuming Party hereby agrees to indemnify, defend, and hold harmless the Lender and its officers, directors, employees, agents, representatives, successors, and assigns (collectively, the "Lender Indemnitees") from and against any and all losses, claims, damages, liabilities, obligations, penalties, actions, judgments, suits, costs, and expenses (including, without limitation, reasonable attorneys' fees and disbursements) (collectively, "Losses") arising out of or in connection with:
(a) any breach by the Assuming Party of any of its representations, warranties, obligations, covenants, or agreements set forth in this Agreement;
(b) any breach by the Assuming Party of the Replacement Guaranty; or
(c) the ownership, management, or operation of the Properties from and after the Effective Date, to the extent such Losses are attributable to the acts, omissions, negligence, or willful misconduct of the Assuming Party or its affiliates, directors, officers, employees, or agents.
The indemnification obligations set forth in this Section 10.1 shall survive the termination or expiration of this Agreement and shall not be limited by any limitation on the amount or type of damages, compensation, or benefits payable by or for the Assuming Party under applicable workers' compensation, disability benefit, or other employee benefit acts.
Section 10.2 Transferor Indemnity. The Transferor hereby agrees to indemnify, defend, and hold harmless the Lender Indemnitees from and against any and all Losses arising out of or in connection with acts, omissions, events, conditions, or circumstances attributable to the period prior to the Effective Date, to the extent such Losses are not released by the Lender pursuant to Section 3.3 of this Agreement. The indemnification obligations of the Transferor under this Section 10.2 shall survive the closing of the transactions contemplated by this Agreement and the Purchase Agreement.
ARTICLE 11 — CONDITIONS PRECEDENT
Section 11.1 Conditions to Effectiveness. This Agreement shall not become effective until each of the following conditions precedent has been satisfied (or waived by the Lender in its sole discretion):
(a) Execution and Delivery of this Agreement. This Agreement shall have been duly executed and delivered by each of the Parties.
(b) Execution and Delivery of Replacement Guaranty. The Replacement Guaranty shall have been duly executed and delivered by the Assuming Party in favor of the Lender, in form and substance satisfactory to the Lender.
(c) Payment of Consent Fee. The consent fee in the amount of Sixty Thousand One Hundred Twenty-Five Dollars ($60,125) shall have been paid to the Lender in immediately available funds. The Lender confirms that such fee has been received.
(d) Replacement Insurance. Evidence of replacement property and casualty insurance policies naming the Lender as mortgagee and loss payee (or additional insured, as applicable), meeting all insurance requirements under the Loan Documents, shall have been delivered to the Lender.
(e) Board Resolutions and Secretary's Certificate. Board resolutions and a secretary's (or authorized officer's) certificate of the Assuming Party authorizing the execution, delivery, and performance of this Agreement and the Replacement Guaranty, in form reasonably satisfactory to the Lender, shall have been delivered to the Lender.
(f) Certificates of Good Standing. Certificates of good standing for each Borrower issued by the Secretary of State of the State of Delaware, dated not more than thirty (30) days prior to the Effective Date, shall have been delivered to the Lender.
(g) Officer's Certificate — Financial Covenants. An officer's certificate from the Assuming Party, substantially in the form attached hereto as Exhibit D, confirming compliance with the financial covenants set forth in Section 3.2 (including minimum tangible net worth of not less than $500,000,000 and minimum liquid assets of not less than $50,000,000), shall have been delivered to the Lender.
(h) Opinions of Counsel. Legal opinions satisfactory to the Lender shall have been delivered to the Lender, including:
(i) an opinion of Calderwood & Harkness LLP, counsel to the Assuming Party, covering customary corporate and enforceability matters;
(ii) a local counsel opinion from Talmadge Beaumont LLP, Atlanta, Georgia, covering matters relating to the Peachtree Corners Logistics Center property (Loan 3-A) and the laws of the State of Georgia; and
(iii) a local counsel opinion from Ellsworth Ridley LLP, Nashville, Tennessee, covering matters relating to the Mount Juliet Commerce Park property (Loan 3-B) and the laws of the State of Tennessee.
(i) Lender's Legal Fees and Expenses. All reasonable out-of-pocket legal fees and expenses of the Lender incurred in connection with this Agreement, the Consent, and the related transactions, including, without limitation, the fees and expenses of Partridge Wynn & Slater LLP, shall have been paid by the Assuming Party and/or the Transferor.
Each of the foregoing conditions precedent has been satisfied as of the Effective Date, and this Agreement is in full force and effect.
ARTICLE 12 — MISCELLANEOUS
Section 12.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut, without giving effect to any choice of law or conflict of law provisions that would require the application of the laws of any other jurisdiction, consistent with the governing law provisions of the Note Purchase Agreement.
Section 12.2 Entire Agreement. This Agreement, together with the Consent, the Replacement Guaranty, the Note Purchase Agreement, and the other Loan Documents, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements, representations, warranties, statements, promises, and understandings, whether written or oral, with respect to the subject matter hereof. No Party shall have any right, remedy, or claim with respect to the subject matter hereof except as expressly set forth in this Agreement, the Consent, the Replacement Guaranty, the Note Purchase Agreement, and the other Loan Documents.
Section 12.3 Amendments and Waivers. No amendment, modification, supplement, or waiver of any provision of this Agreement shall be effective unless in writing and signed by all Parties hereto. No waiver of any breach or default under this Agreement shall constitute a waiver of any subsequent breach or default, whether of the same or a different provision of this Agreement.
Section 12.4 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors, heirs, administrators, personal representatives, and permitted assigns. No Party may assign its rights or obligations under this Agreement without the prior written consent of all other Parties hereto, except that the Lender may assign its rights and obligations hereunder in connection with any assignment, participation, or transfer of the Loans in accordance with the Loan Documents.
Section 12.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile, portable document format (.pdf), or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement. Electronic signatures complying with the federal Electronic Signatures in Global and National Commerce Act (E-SIGN) or the Uniform Electronic Transactions Act (UETA), as applicable, shall be deemed original signatures for all purposes.
Section 12.6 Severability. If any provision of this Agreement shall be held to be invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been included herein, provided that the remaining provisions of this Agreement, taken as a whole, continue to reflect the original intent of the Parties in all material respects.
Section 12.7 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed duly given when (a) delivered by hand, (b) sent by overnight courier (with confirmation of receipt), (c) sent by certified or registered mail, return receipt requested, postage prepaid, or (d) delivered by electronic mail (with confirmation of receipt and a copy sent by one of the methods described in clauses (a), (b), or (c)), addressed as follows:
If to Lender:
Sycamore Life Insurance Company 100 Constitution Plaza Hartford, Connecticut 06103
Attention: Graham Hilliard, Vice President, Mortgage Investments
Telephone: (860) 555-7700
Email: ghilliard@sycamorelife.com
With a copy to Lender's Counsel:
Partridge Wynn & Slater LLP 100 Constitution Plaza, Suite 700 Hartford, Connecticut 06103
Attention: Claire Wynn, Partner
Telephone: (860) 555-4100
Email: cwynn@partridgewynn.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
Telephone: (410) 555-8200
Email: dpark@fairwaterreit.com
With a copy to Assuming Party's Counsel:
Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, New York 10022
Attention: Douglas Fairchild
Telephone: (212) 555-3600
Email: dfairchild@calderwoodharkness.com
If to the Transferor / Original Guarantor:
Greystone Meridian Partners Fund III, L.P. 3300 Peachtree Road NE, Suite 2200 Atlanta, Georgia 30326
Attention: Victor Lansdell
Telephone: (404) 555-9100
Email: vlansdell@greystonemeridian.com
With a copy to Transferor's Counsel:
Blackridge Hayes LLP 1285 Avenue of the Americas, 34th Floor New York, New York 10019
Attention: Nathaniel Pryce
Telephone: (212) 555-4400
Email: npryce@blackridgehayes.com