REPLACEMENT CARVE-OUT GUARANTY
(Sycamore Life Insurance Company Loans)
Execution Version
Dated as of June 6, 2024
TABLE OF CONTENTS
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REPLACEMENT CARVE-OUT GUARANTY
(Sycamore Life Insurance Company Loans)
This REPLACEMENT CARVE-OUT GUARANTY (this "Guaranty") is made and entered into as of June 6, 2024, by FAIRWATER REAL ESTATE INVESTMENT TRUST, a Maryland real estate investment trust, having its principal office at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044 (EIN: 52-2198437; NYSE: FREIT) (the "Guarantor"), in favor of SYCAMORE LIFE INSURANCE COMPANY, a Connecticut stock life insurance company, having its principal office at 100 Constitution Plaza, Hartford, Connecticut 06103 (the "Lender").
This Guaranty is the execution version delivered at the closing of the acquisition by Fairwater Real Estate Investment Trust of 100% of the membership interests in fourteen (14) property-owning limited liability companies from Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership, including the two Borrowers identified herein.
RECITALS
A. GMP Peachtree LLC, a Delaware limited liability company (EIN: 84-2741063) ("GMP Peachtree"), is the owner of that certain real property and improvements commonly known as Peachtree Corners Logistics Center, located at 5900 Peachtree Industrial Blvd, Peachtree Corners, Georgia 30071 (the "Peachtree Property"). GMP Mount Juliet LLC, a Delaware limited liability company (EIN: 84-2741070) ("GMP Mount Juliet"), is the owner of that certain real property and improvements commonly known as Mount Juliet Commerce Park, located at 400 South Mount Juliet Road, Mount Juliet, Tennessee 37122 (the "Mount Juliet Property"). GMP Peachtree and GMP Mount Juliet are sometimes referred to herein individually as a "Borrower" and collectively as the "Borrowers."
B. The Borrowers and Lender are parties to that certain Note Purchase Agreement dated November 22, 2019, as amended (the "Loan Agreement"), pursuant to which Lender made two loans to the Borrowers: (i) Loan 3-A (the "Peachtree Loan"), secured by the Peachtree Property, and (ii) Loan 3-B (the "Mount Juliet Loan"), secured by the Mount Juliet Property (collectively, the "Loans"). The Loan Agreement, together with all promissory notes, mortgages, deeds of trust, deeds to secure debt, assignments of leases and rents, environmental indemnity agreements, guaranties, and all other instruments, agreements, certificates, and documents executed and delivered in connection with or relating to the Loans, as the same may have been or may hereafter be amended, restated, supplemented, or otherwise modified from time to time, are collectively referred to herein as the "Loan Documents." A description of certain of the Loan Documents is attached hereto as Exhibit A and incorporated herein by this reference.
C. As of February 28, 2024, the aggregate outstanding principal balance of the Loans is Forty-Eight Million One Hundred Thousand and 00/100 Dollars ($48,100,000.00). The Loans bear interest at a fixed rate of 3.95% per annum and mature on December 1, 2030.
D. In connection with the origination of the Loans, Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership (the "Original Guarantor" or "Prior Guarantor"), executed and delivered to Lender that certain Carve-Out Guaranty dated on or about November 22, 2019 (the "Original Guaranty"), pursuant to which the Original Guarantor guaranteed to Lender the payment and performance of certain non-recourse carve-out obligations of the Borrowers under the Loan Documents.
E. Fairwater Real Estate Investment Trust is acquiring 100% of the membership interests in each Borrower (and in twelve other property-owning limited liability companies) from Greystone Meridian Partners Fund III, L.P., pursuant to that certain Purchase and Sale Agreement dated February 28, 2024 (the "PSA"), by and between Greystone Meridian Partners Fund III, L.P., as seller, and Fairwater Real Estate Investment Trust (or its designees), as buyer. The consummation of the transactions contemplated by the PSA constitutes a change of control of the Borrowers within the meaning of the Loan Documents.
F. Sycamore Life Insurance Company has consented to the change of control described in Recital E above pursuant to that certain Consent Letter dated May 22, 2024 (the "Consent Letter"), issued by Lender to the Borrowers and the Original Guarantor, subject to, among other conditions, (i) the delivery of this Replacement Carve-Out Guaranty by the Guarantor, (ii) the satisfaction of certain financial covenants by the Guarantor as the replacement guarantor, (iii) the execution and delivery of the Assumption Agreement — Sycamore Loans dated June 6, 2024 (the "Assumption Agreement"), and (iv) the payment of a consent fee in the amount of Sixty Thousand One Hundred Twenty-Five and 00/100 Dollars ($60,125.00), representing 0.125% of the aggregate outstanding principal balance of $48,100,000.00, which consent fee has been paid to Lender by the parties in connection with the closing of the transactions contemplated by the PSA, with such consent fee being split equally (50/50) between buyer and seller pursuant to the terms of the PSA.
G. Lender's counsel in connection with the Consent Letter and this Guaranty is Partridge Wynn & Slater LLP, located at 100 Constitution Plaza, Suite 700, Hartford, Connecticut 06103 (Attention: Claire Wynn, Partner).
H. This Replacement Carve-Out Guaranty is being delivered to replace and supersede the Original Guaranty in its entirety. Upon the delivery, acceptance, and effectiveness of this Guaranty, the Original Guarantor shall be fully released from all obligations arising under the Original Guaranty, as more particularly set forth in Article VII hereof.
I. The Assumption Agreement, executed concurrently herewith, confirms the Borrowers' obligations under the Loan Documents and establishes Fairwater Real Estate Investment Trust's responsibility as the new indirect owner of the Borrowers.
J. Guarantor acknowledges that Lender would not have consented to the change of control of the Borrowers without the execution and delivery of this Guaranty, and that Guarantor has received and will continue to receive substantial direct and indirect benefit from the Loans and the ownership of the Borrowers and the Properties.
NOW, THEREFORE, in consideration of the foregoing premises, the consent of Lender to the change of control, the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:
ARTICLE I — DEFINITIONS
As used in this Guaranty, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.
"Borrowers" means GMP Peachtree LLC, a Delaware limited liability company (EIN: 84-2741063), and GMP Mount Juliet LLC, a Delaware limited liability company (EIN: 84-2741070), individually and collectively, as the context may require, together with their respective successors and permitted assigns.
"Carve-Out Obligations" means all obligations, liabilities, losses, damages, costs, expenses, claims, and causes of action arising from or relating to the Non-Recourse Carve-Out Events, as such term is defined and used in the Loan Documents, including without limitation the following events, acts, and omissions:
(a) fraud or intentional misrepresentation by or on behalf of any Borrower or Guarantor in connection with the Loans, the Loan Documents, or the Properties;
(b) misapplication or misappropriation of (i) rents, revenues, or other income from the Properties, (ii) insurance proceeds, or (iii) condemnation awards, in each case in violation of the terms and conditions of the Loan Documents;
(c) waste of any Property, whether by act or omission, including the removal, demolition, or material alteration of any improvements in violation of the Loan Documents;
(d) failure to pay real property taxes, assessments, or other governmental charges affecting any Property when due and payable, except to the extent such taxes are being contested in good faith in accordance with the procedures set forth in the Loan Documents;
(e) failure to maintain the insurance coverages required under the Loan Documents;
(f) commission of criminal acts by or on behalf of any Borrower or Guarantor in connection with the Properties or the Loans;
(g) the filing by or on behalf of any Borrower of a voluntary petition under Title 11 of the United States Code (the "Bankruptcy Code") or any similar state insolvency law, or the consent by any Borrower to an involuntary petition filed against such Borrower, or the failure of any Borrower to cause the dismissal of an involuntary petition filed against such Borrower within the applicable cure period specified in the Loan Documents;
(h) violation by any Borrower of the single-purpose entity covenants set forth in the Loan Documents or in the organizational documents of such Borrower;
(i) breach of any environmental covenant or environmental indemnity obligation set forth in the Loan Documents or in any Environmental Indemnity Agreement executed in connection therewith;
(j) any unauthorized transfer, conveyance, assignment, encumbrance, or pledge of all or any portion of any Property or any direct or indirect ownership interest in any Borrower, in violation of the restrictions on transfer set forth in the Loan Documents; and
(k) any other carve-out events, exceptions to non-recourse liability, or non-recourse carve-outs specifically enumerated in the Loan Agreement or the other Loan Documents.
"Environmental Indemnity Agreement" means that certain Environmental Indemnity Agreement dated November 22, 2019, executed by the Borrowers and the Original Guarantor in favor of Lender, as the same may be amended, supplemented, assumed, or replaced.
"Full Recourse Events" means those certain events and circumstances specified in the Loan Documents that, upon their occurrence, cause the Loans (or any of them) to become fully recourse obligations of the Borrowers and the Guarantor, including without limitation: (i) a voluntary bankruptcy filing by or on behalf of any Borrower; (ii) an unauthorized transfer of all or any portion of any Property or any direct or indirect ownership interest in any Borrower in violation of the Loan Documents; and (iii) a violation by any Borrower of the single-purpose entity covenants set forth in the Loan Documents. Upon the occurrence of a Full Recourse Event, the Guarantor's liability under this Guaranty shall be as set forth in Section 2.2 hereof.
"GAAP" means generally accepted accounting principles in the United States as in effect from time to time, consistently applied.
"Guaranteed Obligations" means, collectively, the Carve-Out Obligations, the Full Recourse Obligations (as and when triggered), the environmental indemnity obligations set forth in Section 2.4 hereof, and all other obligations expressly assumed by Guarantor pursuant to this Guaranty, including all costs and expenses of enforcement.
"Guarantor" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust (EIN: 52-2198437; NYSE: FREIT), together with its successors and permitted assigns.
"Guaranty" means this Replacement Carve-Out Guaranty, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Lender" means Sycamore Life Insurance Company, a Connecticut stock life insurance company, together with its successors, assigns, and participants.
"Liquid Assets" means, as of any date of determination, the aggregate amount of (i) unrestricted cash, (ii) unrestricted cash equivalents (including money market funds, certificates of deposit, and United States Treasury obligations with maturities of one year or less), and (iii) marketable securities that are freely tradeable on a recognized national securities exchange or over-the-counter market without restriction, lock-up, legend, or other impediment to immediate liquidation, in each case as reflected on the consolidated balance sheet of Guarantor prepared in accordance with GAAP.
"Loan Agreement" means that certain Note Purchase Agreement dated November 22, 2019, by and between the Borrowers and Lender, as the same may have been or may hereafter be amended, restated, supplemented, or otherwise modified from time to time.
"Loan Documents" has the meaning set forth in the Loan Agreement and includes, without limitation, the documents described on Exhibit A attached hereto.
"Loans" means Loan 3-A and Loan 3-B, as described in the Recitals hereto.
"Original Guarantor" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership.
"Original Guaranty" means that certain Carve-Out Guaranty dated on or about November 22, 2019, executed by the Original Guarantor in favor of Lender.
"Properties" means, collectively, (i) Peachtree Corners Logistics Center, located at 5900 Peachtree Industrial Blvd, Peachtree Corners, Georgia 30071 (approximately 345,000 rentable square feet of logistics/industrial space; built 2020), owned by GMP Peachtree LLC, and (ii) Mount Juliet Commerce Park, located at 400 South Mount Juliet Road, Mount Juliet, Tennessee 37122 (approximately 298,000 rentable square feet of logistics/industrial space; built 2021), owned by GMP Mount Juliet LLC. A description of the Properties is attached hereto as Exhibit B and incorporated herein by this reference.
"PSA" means that certain Purchase and Sale Agreement dated February 28, 2024, by and between Greystone Meridian Partners Fund III, L.P., as seller, and Fairwater Real Estate Investment Trust (or its designees), as buyer.
"Tangible Net Worth" means, as of any date of determination, the excess of (i) the total assets of Guarantor over (ii) the sum of (a) the total liabilities of Guarantor and (b) all intangible assets of Guarantor (including, without limitation, goodwill, trademarks, trade names, service marks, copyrights, patents, licenses, and any other assets classified as intangible under GAAP), in each case determined on a consolidated basis in accordance with GAAP.
ARTICLE II — GUARANTY OF CARVE-OUT OBLIGATIONS
Section 2.1 — Guaranty
Guarantor hereby unconditionally and irrevocably guarantees to Lender the full and punctual payment and performance of all Guaranteed Obligations when and as the same shall become due and payable or required to be performed, whether at maturity, by acceleration, or otherwise, and whether now existing or hereafter arising. This Guaranty is an absolute, unconditional, and irrevocable guaranty of payment and performance, and not merely a guaranty of collection. Guarantor's obligations under this Guaranty are primary, direct, immediate, and independent of the obligations of the Borrowers, and Lender shall not be required, as a condition to enforcing this Guaranty, to (a) pursue any right or remedy against any Borrower or any other person or entity, (b) proceed against or exhaust any collateral held by Lender, (c) pursue any other remedy in Lender's power, or (d) make any demand upon or give any notice to any Borrower or any other person or entity. The liability of Guarantor under this Guaranty shall not be contingent upon the exercise or enforcement by Lender of whatever remedies Lender may have against any Borrower or any other person or entity or against any collateral or security.
Guarantor acknowledges that this Guaranty is being delivered as a material inducement to Lender's consent to the change of control of the Borrowers and that Lender is relying upon this Guaranty in consenting to such change of control. Guarantor further acknowledges that Guarantor has received and will continue to receive substantial direct and indirect economic benefits from the Loans and the ownership and operation of the Properties through the Borrowers.
Section 2.2 — Full Recourse Liability
Upon the occurrence of a Full Recourse Event, the Guarantor's liability under this Guaranty shall automatically and without further notice or action extend to and include the full outstanding balance of the indebtedness evidenced by and arising under the Loan Documents, including without limitation:
(a) all outstanding principal (which was $48,100,000.00 as of February 28, 2024, subject to scheduled amortization and any prepayments made thereafter);
(b) all accrued and unpaid interest, including default interest at the rate specified in the Loan Documents;
(c) any prepayment premium, yield maintenance amount, or make-whole amount due under the Loan Documents;
(d) all late charges;
(e) all costs and expenses of enforcement, including reasonable attorneys' fees and disbursements, court costs, and expenses of collection; and
(f) all other amounts due and owing under the Loan Documents.
Upon the occurrence of a Full Recourse Event, Guarantor shall be liable for the entirety of the foregoing amounts as if the Loans were fully recourse obligations of Guarantor, and all limitations on Guarantor's liability set forth in this Guaranty or the Loan Documents with respect to the non-recourse nature of the Loans shall be deemed void and of no further force or effect.
Section 2.3 — Loss Guaranty
With respect to Carve-Out Obligations that are loss-based in nature (as distinguished from Full Recourse Events that trigger full recourse liability under Section 2.2), Guarantor hereby guarantees payment to Lender of all actual losses, damages, costs, liabilities, and expenses (including reasonable attorneys' fees and disbursements) sustained or incurred by Lender as a direct or indirect result of the occurrence of the applicable Carve-Out Obligation. The determination of whether a particular Carve-Out Obligation is loss-based or triggers full recourse liability shall be made in accordance with the applicable provisions of the Loan Documents. In no event shall Guarantor's aggregate liability for loss-based Carve-Out Obligations be less than zero, and Guarantor shall have no right of offset or deduction with respect to such liability.
Section 2.4 — Environmental Indemnity
Guarantor hereby guarantees and unconditionally agrees to indemnify, defend, and hold harmless Lender and its officers, directors, employees, agents, successors, and assigns from and against any and all losses, liabilities, damages, costs, claims, demands, penalties, fines, settlements, and expenses (including reasonable attorneys' fees, expert fees, consultant fees, laboratory costs, and remediation costs) arising out of or in connection with:
(a) the actual or alleged presence, release, generation, storage, transport, treatment, or disposal of any hazardous materials or hazardous substances on, under, at, from, or affecting any Property;
(b) any violation of applicable environmental laws, rules, regulations, or orders by any Borrower, any prior owner or operator of any Property, or any tenant, subtenant, licensee, or other occupant of any Property;
(c) any remediation, cleanup, monitoring, assessment, or removal obligations imposed on Lender by reason of its interest in the Loan Documents, any Property, or any foreclosure or deed-in-lieu of foreclosure; and
(d) all obligations, liabilities, and indemnities of the Borrowers and the guarantor under any Environmental Indemnity Agreement executed in connection with the Loan Documents,
in each case, as more particularly set forth in the Environmental Indemnity Agreement dated November 22, 2019, and any replacement, assumption, or supplement thereof executed in connection with the change of control. Guarantor's obligations under this Section 2.4 shall survive the repayment of the Loans, the release of the liens securing the Loans, and the termination of this Guaranty, to the extent provided in the Environmental Indemnity Agreement.
ARTICLE III — FINANCIAL COVENANTS OF GUARANTOR
Section 3.1 — Minimum Tangible Net Worth
Guarantor shall maintain at all times during the term of this Guaranty a Tangible Net Worth of not less than Five Hundred Million and 00/100 Dollars ($500,000,000.00). For the avoidance of doubt, Tangible Net Worth shall be calculated on a consolidated basis in accordance with GAAP and shall equal total assets minus total liabilities minus all intangible assets (including goodwill, intellectual property, and any other assets classified as intangible under GAAP). Compliance with this covenant shall be measured as of the last day of each fiscal quarter and each fiscal year of Guarantor.
Section 3.2 — Minimum Liquid Assets
Guarantor shall maintain at all times during the term of this Guaranty Liquid Assets of not less than Fifty Million and 00/100 Dollars ($50,000,000.00). For the avoidance of doubt, Liquid Assets shall consist solely of unrestricted cash, unrestricted cash equivalents, and marketable securities that are freely tradeable on a recognized national securities exchange or over-the-counter market without restriction, lock-up, or other impediment to immediate liquidation. Assets that are pledged, encumbered, restricted, or otherwise subject to any lien or hold shall not be included in the calculation of Liquid Assets. Compliance with this covenant shall be measured as of the last day of each fiscal quarter and each fiscal year of Guarantor.
Section 3.3 — Financial Reporting
Guarantor shall deliver to Lender, or cause to be delivered to Lender, the following financial information within the time periods specified:
(a) Annual Audited Financial Statements. Within one hundred twenty (120) days after the end of each fiscal year of Guarantor, annual audited consolidated financial statements of Guarantor, prepared in accordance with GAAP and audited by a nationally recognized independent certified public accounting firm, including a consolidated balance sheet, consolidated statement of operations, consolidated statement of equity, and consolidated statement of cash flows, together with all notes thereto and the auditor's report.
(b) Quarterly Unaudited Financial Statements. Within sixty (60) days after the end of each of the first three fiscal quarters of each fiscal year of Guarantor, quarterly unaudited consolidated financial statements of Guarantor, including a consolidated balance sheet, consolidated statement of operations, and consolidated statement of cash flows, prepared in accordance with GAAP (subject to normal year-end adjustments and the absence of footnotes), and certified by the chief financial officer of Guarantor as fairly presenting, in all material respects, the consolidated financial condition of Guarantor as of the dates thereof and for the periods covered thereby.
(c) Annual Compliance Certificate. Concurrently with the delivery of the annual audited financial statements described in clause (a) above, an annual compliance certificate in substantially the form attached hereto as Exhibit C (the "Compliance Certificate"), executed by the chief financial officer of Guarantor (currently Patricia Sung-Calloway) or another duly authorized officer of Guarantor, certifying (i) compliance with the minimum Tangible Net Worth covenant set forth in Section 3.1 and the minimum Liquid Assets covenant set forth in Section 3.2, (ii) the calculations supporting such certifications, and (iii) whether any event of default exists under this Guaranty and, if so, the nature thereof and the actions being taken or proposed to be taken with respect thereto.
(d) Additional Information. Such additional financial information, reports, certificates, or documents regarding the financial condition of Guarantor as Lender may reasonably request from time to time.
All financial statements delivered pursuant to this Section 3.3 shall be prepared in accordance with GAAP, applied on a consistent basis. Guarantor acknowledges that it is a public company whose common shares of beneficial interest are listed on the New York Stock Exchange (NYSE: FREIT), and Lender agrees that, to the extent Guarantor's periodic reports filed with the United States Securities and Exchange Commission (including Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q) contain the financial statements and information required by clauses (a) and (b) above, Lender may rely upon such SEC filings to satisfy the reporting requirements of clauses (a) and (b); provided, however, that Guarantor shall in all events be required to deliver the Compliance Certificate described in clause (c) above separately and independently of any SEC filings.
Section 3.4 — Failure to Comply
A breach by Guarantor of the financial covenant set forth in Section 3.1 or Section 3.2 that remains uncured for a period of thirty (30) days after written notice thereof from Lender to Guarantor (specifying in reasonable detail the nature of such breach) shall constitute a default under this Guaranty and shall, at Lender's election, constitute an event of default under the Loan Documents, entitling Lender to exercise any and all rights and remedies available to Lender under this Guaranty, the Loan Documents, and applicable law. Notwithstanding the foregoing, Guarantor's failure to deliver any financial statements, Compliance Certificate, or other financial information within the time periods specified in Section 3.3 shall constitute a default under this Guaranty if such failure continues for a period of fifteen (15) days after written notice thereof from Lender to Guarantor.
ARTICLE IV — GUARANTOR'S REPRESENTATIONS AND WARRANTIES
Guarantor hereby represents and warrants to Lender as of the date hereof as follows:
Section 4.1 — Organization and Authority
Guarantor is a Maryland real estate investment trust, duly organized, validly existing, and in good standing under the laws of the State of Maryland. Guarantor has full power, authority, and legal right to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. Guarantor has full power and authority to execute, deliver, and perform this Guaranty and each other document executed by Guarantor in connection herewith. The execution, delivery, and performance of this Guaranty by Guarantor have been duly authorized by all necessary action on the part of Guarantor, including all requisite approvals of the board of trustees of Guarantor, and no further action, consent, or authorization is required on the part of Guarantor for the execution, delivery, and performance of this Guaranty.
Section 4.2 — Enforceability
This Guaranty has been duly executed and delivered by Guarantor and constitutes the legal, valid, and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law).
Section 4.3 — No Conflicts
The execution, delivery, and performance of this Guaranty by Guarantor do not and will not (a) violate or conflict with Guarantor's declaration of trust, bylaws, or any other organizational or governing document of Guarantor, (b) violate or conflict with any law, regulation, order, writ, judgment, injunction, decree, or award applicable to Guarantor, (c) result in a breach of, or constitute a default under, or result in the acceleration of any obligation under, any material agreement, indenture, mortgage, deed of trust, loan agreement, lease, or other instrument to which Guarantor is a party or by which Guarantor or any of its properties or assets is bound, or (d) result in the creation or imposition of any lien, charge, or encumbrance upon any property or asset of Guarantor (other than as contemplated by this Guaranty). No consent, approval, authorization, or order of, or filing, registration, or qualification with, any court, governmental authority, or regulatory body is required for the execution, delivery, or performance by Guarantor of this Guaranty, other than such consents, approvals, authorizations, orders, filings, registrations, or qualifications as have already been obtained or made.
Section 4.4 — Litigation
There is no action, suit, proceeding, inquiry, or investigation pending or, to the knowledge of Guarantor, threatened against or affecting Guarantor or any of its subsidiaries before or by any court, arbitrator, administrative agency, or other governmental authority that (a) questions the validity or enforceability of this Guaranty or any action taken or to be taken by Guarantor pursuant to this Guaranty, or (b) would, if adversely determined, reasonably be expected to have a material adverse effect on the financial condition, business, operations, or prospects of Guarantor or on Guarantor's ability to perform its obligations under this Guaranty.
Section 4.5 — Financial Condition
The most recent financial statements of Guarantor filed with the United States Securities and Exchange Commission (including the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and the most recent Quarterly Report on Form 10-Q filed prior to the date hereof) are true, correct, and complete in all material respects and fairly present the consolidated financial condition of Guarantor and the consolidated results of its operations as of the dates thereof and for the periods covered thereby, in each case in accordance with GAAP (subject, in the case of quarterly statements, to normal year-end adjustments and the absence of footnotes). As of the date hereof:
(a) Guarantor's Tangible Net Worth exceeds Five Hundred Million and 00/100 Dollars ($500,000,000.00);
(b) Guarantor's Liquid Assets exceed Fifty Million and 00/100 Dollars ($50,000,000.00);
(c) Guarantor's market capitalization is approximately Four Billion Eight Hundred Million and 00/100 Dollars ($4,800,000,000.00) based on the closing price of Guarantor's common shares of beneficial interest on the New York Stock Exchange as reported for the quarter ended December 31, 2023; and
(d) there has been no material adverse change in the financial condition, business, operations, or prospects of Guarantor since the date of the most recent financial statements filed with the Securities and Exchange Commission.
Section 4.6 — REIT Status
Guarantor has elected to be treated as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), and is in compliance with the requirements for qualification as a real estate investment trust under the Code. Guarantor intends to continue to qualify as a real estate investment trust under the Code for each taxable year during the term of this Guaranty. Guarantor has not received any notice from the Internal Revenue Service questioning or challenging Guarantor's status as a real estate investment trust.
Section 4.7 — Solvency
Guarantor is solvent and will not be rendered insolvent by the execution, delivery, and performance of its obligations under this Guaranty. As of the date hereof and after giving effect to the obligations assumed under this Guaranty: (a) the fair value of Guarantor's assets exceeds the sum of Guarantor's debts (including contingent liabilities); (b) the present fair saleable value of Guarantor's assets exceeds the amount that will be required to pay the probable liability on Guarantor's existing debts (including contingent liabilities) as they become absolute and matured; (c) Guarantor is able to pay its debts and other liabilities (including contingent liabilities) as they mature in the normal course of business; and (d) Guarantor does not have unreasonably small capital for the businesses in which it is engaged.
ARTICLE V — COVENANTS OF GUARANTOR
Section 5.1 — Maintenance of Existence
Guarantor shall at all times during the term of this Guaranty maintain its existence and good standing as a Maryland real estate investment trust under the laws of the State of Maryland and shall maintain its qualification to do business 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 so qualify would not reasonably be expected to have a material adverse effect on Guarantor's ability to perform its obligations under this Guaranty.
Guarantor shall not dissolve, liquidate, wind up, or otherwise terminate its existence, and shall not merge, consolidate, or enter into any similar combination with any other person or entity, without the prior written consent of Lender; provided, however, that Guarantor may merge or consolidate with or into another entity without Lender's prior written consent if (i) the surviving or resulting entity expressly assumes in writing, in form and substance reasonably satisfactory to Lender, all of the obligations of Guarantor under this Guaranty and the other Loan Documents, (ii) the surviving or resulting entity satisfies the financial covenants set forth in Sections 3.1 and 3.2 of this Guaranty both immediately before and immediately after giving effect to such merger or consolidation, and (iii) no event of default exists under this Guaranty or any of the Loan Documents either before or after giving effect to such merger or consolidation.
Section 5.2 — Notice of Default
Guarantor shall promptly (and in any event within five (5) business days) notify Lender in writing of the occurrence of any event that constitutes, or that with the giving of notice or the passage of time or both would constitute, a default or event of default under this Guaranty. Such notice shall describe the nature of such default or event of default in reasonable detail and shall specify the actions Guarantor has taken or proposes to take to cure such default or event of default.
Section 5.3 — Further Assurances
Guarantor shall, from time to time, execute, deliver, and file (or cause to be executed, delivered, and filed) such further documents, instruments, certificates, agreements, and financing statements and take (or cause to be taken) such further actions as Lender may reasonably request in order to carry out the intent and purposes of this Guaranty and to establish, protect, perfect, and preserve the rights and remedies created or intended to be created in favor of Lender under this Guaranty.
ARTICLE VI — WAIVERS BY GUARANTOR
Section 6.1 — General Waivers
Guarantor hereby unconditionally and irrevocably waives, to the fullest extent permitted by applicable law:
(a) notice of acceptance of this Guaranty by Lender;
(b) notice of the creation, existence, or incurrence of any of the Guaranteed Obligations or of any new or additional indebtedness or obligation of any Borrower to Lender;
(c) notice of any default or event of default under the Loan Documents;
(d) demand, presentment for payment, notice of nonpayment, protest, notice of protest, and notice of dishonor;
(e) any right to require Lender to proceed first against any Borrower, any collateral, or any other guarantor, surety, or co-obligor before enforcing this Guaranty (Guarantor hereby waiving all rights and defenses arising out of suretyship, including without limitation all rights and defenses available to Guarantor under any applicable suretyship laws);
(f) any defense arising by reason of any disability, lack of authority, or other defense of any Borrower, or by reason of the cessation of the liability of any Borrower from any cause other than full and final payment and performance of all Guaranteed Obligations;
(g) any defense based on the adequacy or impairment of collateral or any failure by Lender to perfect any security interest in or lien upon any collateral;
(h) all defenses based on the statute of limitations, laches, delay, or waiver, to the extent that such defenses might otherwise be available to Guarantor;
(i) any right of marshaling of assets or any similar right or defense; and
(j) any and all other suretyship defenses, rights, and protections that might otherwise be available to Guarantor under applicable law.
Section 6.2 — Modifications to Loan Documents
Without notice to or the consent of Guarantor and without in any way releasing, discharging, diminishing, or otherwise affecting the liability of Guarantor under this Guaranty, Lender may, from time to time, in its sole and absolute discretion:
(a) modify, amend, extend, renew, accelerate, supplement, restate, or otherwise change any of the terms, conditions, covenants, or provisions of any of the Loan Documents, including without limitation any change in the interest rate, maturity date, payment schedule, or principal amount;
(b) grant any extension of time for payment or performance by any Borrower or any other person or entity;
(c) release, compromise, settle, or otherwise deal with any obligation of any Borrower or any other person or entity;
(d) release, substitute, exchange, add, or otherwise deal with any collateral securing the Loans or any portion thereof;
(e) release, add, or substitute any other guarantor, surety, or co-obligor;
(f) apply any payments received from any source to any obligations of any Borrower in such order and manner as Lender may determine in its sole discretion; and
(g) exercise or refrain from exercising any rights, remedies, powers, or privileges available to Lender under the Loan Documents or applicable law, including the right to enforce or to forbear from enforcing any provision of the Loan Documents.
No such action or inaction by Lender shall in any manner or to any extent release, discharge, diminish, impair, or otherwise affect the liability of Guarantor under this Guaranty, all of which shall remain in full force and effect until all Guaranteed Obligations have been fully paid, satisfied, and performed in accordance with their terms.
Section 6.3 — Waiver of Subrogation
Until such time as all Guaranteed Obligations have been fully and indefeasibly paid, satisfied, and performed and all commitments of Lender to extend credit to the Borrowers under the Loan Documents have been terminated, Guarantor hereby unconditionally and irrevocably waives:
(a) any right of subrogation that Guarantor may have against any Borrower or any other person or entity with respect to the Guaranteed Obligations;
(b) any right to enforce any remedy that Lender now has or may hereafter have against any Borrower or any other person or entity;
(c) any right of contribution, reimbursement, or indemnity from any Borrower; and
(d) any benefit of, and any right to participate in, any collateral or security now or hereafter held by Lender.
If, notwithstanding the foregoing waivers, any amount shall be paid to Guarantor on account of any such subrogation, contribution, reimbursement, or indemnity rights at any time when all Guaranteed Obligations shall not have been fully and indefeasibly paid, satisfied, and performed, such amount shall be held by Guarantor in trust for the benefit of Lender, segregated from other funds of Guarantor, and shall be forthwith paid over to Lender to be applied to the Guaranteed Obligations, whether matured or unmatured, in such order as Lender may determine in its sole discretion.
Section 6.4 — Reinstatement
If at any time any payment of any of the Guaranteed Obligations, or any part thereof, is rescinded, avoided, set aside, or must be returned, refunded, or repaid by Lender for any reason whatsoever, including without limitation as a result of any bankruptcy, insolvency, reorganization, or similar proceeding, or as a result of any preference, fraudulent transfer, or fraudulent conveyance claim or cause of action, or as a result of any settlement or compromise with any person or entity (including any Borrower or trustee in bankruptcy), then this Guaranty shall, to the extent of such rescission, avoidance, return, refund, or repayment, be reinstated and deemed to have continued in existence as if such payment had not been made, and all of Guarantor's obligations hereunder shall be revived and continue in full force and effect as if such payment had not been made, and Guarantor shall be liable for, and shall indemnify, defend, and hold harmless Lender from and against, the full amount so rescinded, avoided, set aside, returned, refunded, or repaid, together with all costs and expenses (including reasonable attorneys' fees) incurred by Lender in connection therewith. The provisions of this Section 6.4 shall survive the termination of this Guaranty and shall remain in full force and effect notwithstanding the discharge of Guarantor's obligations hereunder or the release of Guarantor.
ARTICLE VII — RELEASE OF ORIGINAL GUARANTOR
Section 7.1 — Release
Upon the delivery, acceptance, and effectiveness of this Replacement Carve-Out Guaranty by Lender, the Original Guaranty executed by Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership, dated on or about November 22, 2019, is hereby terminated in its entirety, and the Original Guarantor (Greystone Meridian Partners Fund III, L.P.) is hereby fully and unconditionally released and discharged from all obligations, liabilities, claims, causes of action, and demands of Lender arising under or relating to the Original Guaranty. From and after the date hereof, Lender shall have no further recourse against the Original Guarantor under or in connection with the Original Guaranty, and the Original Guaranty shall be of no further force or effect.
Lender hereby acknowledges and agrees to the release of the Original Guarantor as set forth in this Section 7.1 and confirms that, upon the execution and delivery of this Guaranty, the Original Guarantor shall have no further obligations or liabilities to Lender under the Original Guaranty.
Notwithstanding the foregoing, the release of the Original Guarantor set forth in this Section 7.1 is effective only with respect to obligations arising from and after the date of this Replacement Carve-Out Guaranty. Any liability of the Original Guarantor for Carve-Out Obligations or other obligations arising from events, acts, or omissions occurring prior to the date hereof shall be governed solely by the terms and conditions of the PSA as between the Original Guarantor and Fairwater Real Estate Investment Trust, and Lender shall have no further recourse against the Original Guarantor with respect to any such pre-closing obligations. The parties acknowledge that the allocation of liability for pre-closing events as between the Original Guarantor and Guarantor is a matter solely between the Original Guarantor and Guarantor under the PSA and does not create any rights or obligations in favor of or against Lender.
ARTICLE VIII — EVENTS OF DEFAULT; REMEDIES
Section 8.1 — Events of Default
Each of the following shall constitute an event of default under this Guaranty (each, a "Guaranty Event of Default"):
(a) the failure by Guarantor to perform or comply with any obligation, covenant, or agreement of Guarantor under this Guaranty, and such failure continues for a period of thirty (30) days after written notice thereof from Lender to Guarantor (or such shorter cure period as may be expressly specified herein for particular obligations); provided, however, that no cure period shall apply to Guarantor's obligation to make any payment of the Guaranteed Obligations when due;
(b) any representation or warranty made by Guarantor in this Guaranty or in any certificate, document, or instrument delivered pursuant to this Guaranty proves to have been false or misleading in any material respect when made;
(c) the failure by Guarantor to comply with the financial covenant set forth in Section 3.1 (Minimum Tangible Net Worth) or Section 3.2 (Minimum Liquid Assets), and such failure is not cured within thirty (30) days after written notice thereof from Lender to Guarantor;
(d) the filing by Guarantor of a voluntary petition under the Bankruptcy Code or any similar state or federal law, or the consent by Guarantor to the entry of an order for relief in an involuntary proceeding under the Bankruptcy Code, or the failure of Guarantor to cause the dismissal of any involuntary petition filed against Guarantor under the Bankruptcy Code within ninety (90) days after the filing thereof;
(e) Guarantor shall become insolvent, or shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts as they become due, or a receiver, custodian, liquidator, or trustee shall be appointed for Guarantor or for any substantial part of the property or assets of Guarantor, and such appointment is not dismissed or stayed within sixty (60) days;
(f) the dissolution, termination, or liquidation of Guarantor, or the failure of Guarantor to maintain its existence and good standing as required by Section 5.1;
(g) the entry of one or more final, non-appealable judgments or orders against Guarantor in an aggregate amount in excess of Ten Million and 00/100 Dollars ($10,000,000.00) (exclusive of any amounts covered by insurance), and such judgment or judgments shall not have been vacated, discharged, stayed, or bonded pending appeal within sixty (60) days after the entry thereof; or
(h) a material adverse change in the financial condition, business, operations, or prospects of Guarantor that, in the reasonable judgment of Lender, materially impairs Guarantor's ability to perform its obligations under this Guaranty.
Section 8.2 — Remedies
Upon the occurrence and during the continuance of a Guaranty Event of Default, Lender may, in its sole and absolute discretion, exercise any or all of the following rights and remedies (in addition to any other rights and remedies available to Lender under the Loan Documents or applicable law):
(a) declare all Guaranteed Obligations immediately due and payable, without demand, presentment, protest, or notice of any kind (all of which are hereby waived by Guarantor);
(b) proceed directly against Guarantor for the full amount of the Guaranteed Obligations without first proceeding against any Borrower, any collateral, or any other guarantor, surety, or co-obligor;
(c) exercise all rights and remedies available under the Loan Documents and applicable law, including the right to seek specific performance, injunctive relief, or damages;
(d) set off and apply any and all deposits, balances, or other sums at any time held by Lender for the account of Guarantor against any and all amounts owed by Guarantor under this Guaranty; and
(e) pursue any other remedy available at law or in equity.
All rights and remedies of Lender under this Guaranty are cumulative and may be exercised singularly or concurrently, and no exercise of any right or remedy shall be deemed an election of remedies or a waiver of any other right or remedy. The enforcement of this Guaranty by Lender shall be independent of, and shall not be contingent upon, the enforcement of any rights or remedies of Lender against any Borrower, any collateral, or any other guarantor.
ARTICLE IX — MISCELLANEOUS PROVISIONS
Section 9.1 — Governing Law
This Guaranty and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of Connecticut, without regard to the conflict of laws principles thereof that would result in the application of the laws of any other jurisdiction. The parties acknowledge that the State of Connecticut is the domicile of Sycamore Life Insurance Company and that the Loan Documents are governed by the laws of the State of Connecticut.
Section 9.2 — Jurisdiction and Venue
Guarantor hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of the State of Connecticut and the United States District Court for the District of Connecticut, in each case sitting in Hartford County, Connecticut, for the purposes of any suit, action, or proceeding arising out of or relating to this Guaranty, and Guarantor hereby irrevocably and unconditionally waives any objection that it may now or hereafter have to the laying of venue of any such suit, action, or proceeding in any such court, and hereby irrevocably and unconditionally waives any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum.
WAIVER OF JURY TRIAL. GUARANTOR AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY, THE LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.3 — Notices
All notices, demands, requests, consents, approvals, and other communications required or permitted under this Guaranty shall be in writing and shall be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by certified or registered mail, return receipt requested, postage prepaid, (c) sent by nationally recognized overnight courier (with written confirmation of receipt), or (d) sent by electronic mail (with confirmation of receipt), addressed as follows:
If to Guarantor:
Fairwater Real Estate Investment Trust 7200 Chesapeake Parkway, Suite 1100 Columbia, Maryland 21044
Attention: David Elgin Park, General Counsel
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, New York 10022
Attention: Douglas Fairchild
If to Lender:
Sycamore Life Insurance Company 100 Constitution Plaza Hartford, Connecticut 06103
Attention: Graham Hilliard, Vice President, Mortgage Investments
With a copy (which shall not constitute notice) to:
Partridge Wynn & Slater LLP 100 Constitution Plaza, Suite 700 Hartford, Connecticut 06103
Attention: Claire Wynn
Any party may change its address for purposes of this Section 9.3 by giving written notice of such change to the other party in accordance with the provisions of this Section 9.3. Notices shall be effective upon receipt (or refusal of receipt).
Section 9.4 — Entire Agreement; Amendments
This Guaranty, together with the other Loan Documents, constitutes the entire agreement between Guarantor and Lender with respect to the subject matter hereof and supersedes and replaces the Original Guaranty in its entirety. This Guaranty may not be amended, modified, restated, supplemented, or waived except by an instrument in writing signed by both Guarantor and Lender. No oral agreement, understanding, representation, or course of dealing between the parties shall be effective to amend or modify any provision of this Guaranty.
Section 9.5 — Successors and Assigns
This Guaranty shall be binding upon Guarantor and its successors and assigns and shall inure to the benefit of Lender and its successors, assigns, and participants. Guarantor may not assign, delegate, or transfer this Guaranty or any of its obligations hereunder without the prior written consent of Lender, and any attempted assignment, delegation, or transfer without such consent shall be null and void. Lender may assign, participate, or otherwise transfer its rights and interests under this Guaranty and the Loan Documents without the consent of Guarantor, and upon any such assignment, the assignee shall be entitled to all rights and benefits of Lender under this Guaranty.
Section 9.6 — Severability
If any provision of this Guaranty is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions of this Guaranty shall not be affected or impaired thereby. Any such invalid, illegal, or unenforceable provision shall be modified by such court to the minimum extent necessary to make it valid, legal, and enforceable, consistent with the original intent of the parties.