EXECUTION VERSION
FAIRWATER REAL ESTATE INVESTMENT TRUST 7200 Chesapeake Parkway, Suite 1100 Columbia, Maryland 21044
October 18, 2023
Greystone Meridian Partners Fund III, L.P. c/o Greystone Meridian Capital LLC 3300 Peachtree Road NE, Suite 2200 Atlanta, Georgia 30326
Attention: Victor Lansdell, Co-Founder & Managing Partner
Elise Rathborne, Co-Founder & Managing Partner
Re: Letter of Intent — Acquisition of 14-Property Sun Belt Logistics and Office Portfolio
Dear Mr. Lansdell and Ms. Rathborne:
LETTER OF INTENT
1. Introduction
Fairwater Real Estate Investment Trust, a Maryland real estate investment trust (NYSE: FREIT) ("Buyer," "Fairwater," or "FREIT"), is pleased to submit this letter of intent (this "LOI") to Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership ("Seller" or "GMP Fund III"), whose general partner is Greystone Meridian Capital LLC, a Delaware limited liability company ("GMP Capital"), setting forth the principal terms and conditions upon which Buyer proposes to acquire a fourteen (14) property Sun Belt logistics and office portfolio (the "Portfolio") from Seller, as more particularly described herein.
This LOI is submitted on behalf of Buyer by Jonathan R. Whitmore, Chief Executive Officer of Fairwater. Buyer's primary point of contact for all matters related to this proposed transaction shall be Marcus Devereaux, Executive Vice President, Acquisitions. Legal inquiries should be directed to David Elgin Park, General Counsel of Fairwater.
This LOI supersedes all prior discussions, correspondence, term sheets, indications of interest, and other communications between the parties and their respective representatives regarding the proposed transaction described herein. The parties acknowledge that they have engaged in preliminary discussions and due diligence regarding the Portfolio over the preceding several months, and this LOI is intended to memorialize the agreed-upon framework for the proposed transaction.
It is the intention of the parties to negotiate in good faith and to execute a definitive Purchase and Sale Agreement (the "PSA") based on the terms and conditions set forth in this LOI, together with such additional terms and conditions as are customary for transactions of this nature and as the parties may mutually agree upon during the negotiation of the PSA.
2. The Transaction
2.1 Portfolio Description
The Portfolio consists of fourteen (14) properties located across five (5) Sun Belt states: Georgia (four properties), Texas (three properties), Florida (three properties), Tennessee (three properties), and North Carolina (one property). The Portfolio is comprised of ten (10) logistics/industrial properties and four (4) suburban office properties.
The following is a summary of the key portfolio-level statistics:
• Total Portfolio Rentable square Feet: Approximately 5,224,000 RSF
• Logistics/Industrial Properties: Approximately 4,373,000 RSF (representing approximately 83.7% of the total Portfolio)
• Office Properties: Approximately 851,000 RSF (representing approximately 16.3% of the total Portfolio)
• Total Leases in Place: 87
• Weighted-Average Occupancy: Approximately 93.2% (as of December 31, 2023, or the latest available date for which data has been provided to Buyer)
• Annual In-Place Base Rent: Approximately $74,800,000
• In-Place Capitalization Rate: Approximately 6.80%
• Weighted-Average Remaining Lease Term: Approximately 5.8 years
The Portfolio is geographically diversified across major Sun Belt metropolitan statistical areas and submarkets that have demonstrated strong demographic and employment growth trends, with a meaningful concentration in the logistics and industrial sector, which Buyer views as highly complementary to Fairwater's existing portfolio and strategic investment thesis.
2.2 Portfolio Property List
The following table sets forth a summary of each of the fourteen (14) properties included in the Portfolio:
A more detailed portfolio summary, including year built, corresponding Target Entity names, and tenant information, is set forth on Exhibit A attached hereto and incorporated herein by reference.
2.3 Transaction Structure
The proposed transaction shall be structured as an entity-level acquisition in which Buyer shall acquire one hundred percent (100%) of the membership interests (the "Membership Interests") in each of fourteen (14) single-purpose Delaware limited liability companies (each, a "Target Entity" and collectively, the "Target Entities") that directly own the respective properties comprising the Portfolio. Each Target Entity is currently wholly owned by GMP Fund III.
The fourteen (14) Target Entities are as follows:
1. GMP Fairfield I LLC — owner of Fairfield Logistics Center I
2. GMP Fairfield II LLC — owner of Fairfield Logistics Center II
3. GMP Westlake LLC — owner of Westlake Distribution Hub
4. GMP Katy LLC — owner of Katy Freeway Logistics Park
5. GMP Alliance LLC — owner of Alliance Commerce Center
6. GMP Lakeland LLC — owner of Lakeland Crossings Industrial
7. GMP Southport LLC — owner of Southport Logistics Park
8. GMP Murfreesboro LLC — owner of Murfreesboro Distribution Center
9. GMP Buckhead LLC — owner of Buckhead Place Office Tower
10. GMP SouthPark LLC — owner of SouthPark Corporate Center
11. GMP Cool Springs LLC — owner of Cool Springs Office Park
12. GMP Brickell LLC — owner of Brickell Bay Office Building
13. GMP Peachtree LLC — owner of Peachtree Corners Logistics Center
14. GMP Mount Juliet LLC — owner of Mount Juliet Commerce Park
Each of the Target Entities is a Delaware limited liability company. The entity-level acquisition structure has been selected to facilitate the assumption of existing mortgage indebtedness encumbering the properties and to minimize transfer tax exposure in applicable jurisdictions where the transfer of membership interests may be treated differently from a direct conveyance of real property. The parties acknowledge that controlling-interest transfer taxes may nonetheless apply in certain jurisdictions and have addressed the allocation of such costs in Section 13 below.
3. Purchase Price
The aggregate purchase price for the Membership Interests in all fourteen (14) Target Entities shall be One Billion One Hundred Million Dollars ($1,100,000,000) (the "Purchase Price").
The Purchase Price shall be paid as follows:
(a) Assumption of Existing Mortgage Indebtedness: Buyer shall assume existing mortgage indebtedness secured by the properties in an aggregate outstanding principal balance of approximately $612,000,000, as more particularly described in Section 4 below.
(b) Cash Equity at Closing: The balance of the Purchase Price, approximately $488,000,000 (i.e., $1,100,000,000 minus the assumed debt of approximately $612,000,000), shall be paid by Buyer to Seller in immediately available funds at closing (the "Cash Consideration"). The Cash Consideration is subject to adjustment based on the actual outstanding principal balance of the assumed indebtedness as of the closing date.
The Purchase Price shall be subject to customary prorations and adjustments at closing, including without limitation prorations for real property taxes, common area maintenance and operating expense reconciliations, utility charges, and other income and expense items, as more fully described in Section 11 below and as shall be set forth in detail in the PSA.
The Purchase Price shall be allocated among the fourteen (14) properties based on appraised values to be mutually agreed upon by the parties in the PSA. If the parties are unable to agree on a mutually acceptable allocation, the allocation shall be determined by a nationally recognized independent appraisal firm to be jointly retained by Buyer and Seller, the costs of which shall be split equally between the parties.
4. Assumed Debt
As a material component of the transaction, Buyer shall assume the existing mortgage indebtedness secured by the properties. The existing indebtedness consists of three (3) separate loan facilities, as summarized below:
The assumption of each of the three loan facilities shall be subject to the receipt of lender consent from each of the three respective lenders. The parties acknowledge and agree that the transfer of the Membership Interests in the Target Entities constitutes a change of control under each of the above-referenced loan agreements, triggering the requirement for lender consent prior to closing. Seller shall use commercially reasonable efforts to cooperate with Buyer in obtaining such lender consents.
Any consent fees, assumption fees, processing fees, or similar charges imposed by any lender in connection with the assumption of the indebtedness or the granting of change of control consent shall be split equally (50/50) between Buyer and Seller.
As a condition to each lender's consent, Buyer shall provide a replacement carve-out guarantor satisfactory to each lender. Fairwater Real Estate Investment Trust shall serve as the replacement carve-out guarantor under each loan facility, and Buyer shall deliver such guaranty instruments and financial information as the lenders may reasonably require in connection therewith. Upon the effectiveness of the replacement guaranties, Seller and its affiliates shall be released from their existing guaranty obligations under the respective loan documents.
5. Earnest Money Deposit
Upon execution of the PSA, Buyer shall deposit Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000), representing two and one-half percent (2.5%) of the Purchase Price, as an earnest money deposit (the "Initial Deposit") with a mutually agreed-upon escrow agent (the "Escrow Agent"), to be identified in the PSA.
Upon the expiration of the Due Diligence Period (as defined in Section 6 below), Buyer shall deposit an additional Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000) (the "Additional Deposit" and, together with the Initial Deposit, the "Deposit"). The Additional Deposit shall be non-refundable (hard) upon deposit, except in the event of (i) a default by Seller under the PSA, or (ii) the failure of a closing condition that is not caused by or attributable to Buyer.
The aggregate Deposit shall equal Fifty-Five Million Dollars ($55,000,000), representing five percent (5%) of the Purchase Price. The Deposit shall be credited against the Purchase Price at closing. Pending closing or earlier termination of the PSA, the Deposit shall be held by the Escrow Agent in an interest-bearing escrow account, with interest accruing for the benefit of the party ultimately entitled to receive the Deposit.
6. Due Diligence
6.1 Due Diligence Period
Buyer shall have a due diligence period commencing on the date of execution of the PSA and expiring forty-six (46) days thereafter (the "Due Diligence Period"). During the Due Diligence Period, Buyer and its authorized representatives shall have the right to conduct a comprehensive investigation and review of the Portfolio, the Target Entities, and all matters relating thereto.
6.2 Access and Information
During the Due Diligence Period, Buyer and its representatives — including, without limitation, Buyer's outside counsel Calderwood & Harkness LLP, environmental consultants, engineers, accountants, and other professional advisors — shall have access to all books, records, financial statements, leases, service contracts, loan documents, title commitments, surveys, environmental reports, property condition assessments, insurance policies, and all other materials relating to the properties and the Target Entities. Seller shall cooperate fully with Buyer's diligence efforts and shall make its principals, asset management personnel, and property managers available for meetings and calls as reasonably requested by Buyer.
Seller shall provide Buyer with access to a virtual data room containing all diligence materials within ten (10) business days following the date of PSA execution. The virtual data room shall be organized in a manner consistent with Buyer's reasonable diligence checklist, which Buyer shall deliver to Seller promptly following PSA execution.
6.3 Scope of Due Diligence
Buyer's due diligence shall include, without limitation, the following:
(a) Lease Review. Review of all eighty-seven (87) tenant leases and all related amendments, modifications, supplements, guarantees, subleases, assignment and assumption agreements, landlord consents, commencement date memoranda, estoppel certificates, and tenant correspondence.
(b) Title and Survey Review. Title review based on title commitments from a nationally recognized title insurance company for each of the fourteen (14) properties, together with review of ALTA/NSPS land title surveys (2021 form) for all fourteen (14) properties. Buyer shall receive ALTA Owner's Policies (2021 form) at closing, as more particularly described in Section 7 below.
(c) Environmental Review. Phase I environmental site assessments for all fourteen (14) properties, prepared in accordance with ASTM Standard Practice E 1527-21, and such Phase II assessments or additional environmental investigation as Buyer may deem necessary based on the results of the Phase I assessments.
(d) Property Condition Assessments. Property condition assessments and engineering reports for all fourteen (14) properties, including evaluation of structural systems, roofing, HVAC, plumbing, electrical, fire protection, life safety, paving, and site improvements.
(e) Zoning Compliance. Zoning compliance review across all five (5) states in which the properties are located, including confirmation of permitted uses, setback compliance, parking requirements, and any nonconforming use or structure issues.
(f) Loan Document Review. Review of all existing loan documents, including loan agreements, promissory notes, deeds of trust, security agreements, guaranty agreements, environmental indemnity agreements, and all related side letters, amendments, modifications, and borrower covenants.
(g) Entity-Level Review. Review of all organizational documents of each Target Entity, including certificates of formation, limited liability company agreements, certificates of good standing, UCC lien searches, litigation searches, judgment searches, and bankruptcy searches.
(h) Financial and Tax Diligence. Review of historical financial statements, tax returns, and tax assessments for each Target Entity and each property, including analysis of depreciation schedules, property tax appeal status, and any pending or threatened tax reassessments.
(i) Insurance Review. Review of all insurance policies currently in effect with respect to the properties, including property, casualty, general liability, environmental liability, and umbrella/excess policies, together with loss run history for the most recent five (5) years.
(j) Service Contract Review. Review of all service contracts, management agreements, brokerage agreements, commission agreements, and other material contracts relating to the operation and maintenance of the properties.
6.4 Termination During Due Diligence Period
During the Due Diligence Period, Buyer may terminate the PSA for any reason or no reason in Buyer's sole and absolute discretion, by delivering written notice to Seller on or before the expiration of the Due Diligence Period. In the event of such termination, the Initial Deposit shall be promptly returned to Buyer, and neither party shall have any further obligation or liability to the other party, except for those obligations that expressly survive termination of the PSA.
6.5 Post-Due Diligence Period
After the expiration of the Due Diligence Period, the Deposit (including the Additional Deposit) shall be non-refundable, except as expressly provided in the PSA, including without limitation in the event of (i) a default by Seller, (ii) the failure of a closing condition that is not caused by or attributable to Buyer, or (iii) such other circumstances as the parties may agree to include in the PSA.
7. Title and Survey
Seller shall deliver, or cause to be delivered, title commitments from a nationally recognized title insurance company (the "Title Company") for each of the fourteen (14) properties within such time period as shall be specified in the PSA. Buyer shall obtain ALTA/NSPS land title surveys (2021 form) for all fourteen (14) properties at Buyer's expense.
The PSA shall set forth a customary title objection process, including (i) a deadline for Buyer to deliver written notice of title objections and survey objections to Seller, (ii) a cure period during which Seller may elect to cure or decline to cure any title objections, and (iii) Buyer's remedies in the event that Seller is unable or unwilling to cure any such objections. The specific title objection deadline and cure period shall be negotiated and agreed upon by the parties in the PSA.
At closing, Buyer shall receive ALTA Owner's Policies of Title Insurance (2021 form) from the Title Company for each of the fourteen (14) properties, with an aggregate insured amount equal to the Purchase Price as allocated among the properties in accordance with the agreed-upon allocation methodology described in Section 3 above. The policies shall contain such endorsements as Buyer and Buyer's lenders (if any) may reasonably require, including without limitation zoning, survey, access, contiguity, and non-imputation endorsements as applicable and available in the respective jurisdictions.
8. Tenant Estoppels and SNDAs
8.1 Tenant Estoppel Certificates
As a condition to closing, Seller shall deliver to Buyer duly executed tenant estoppel certificates from tenants representing at least eighty percent (80%) of the annual in-place base rent of the Portfolio (80% of $74,800,000 = $59,840,000) and from every tenant occupying twenty-five thousand (25,000) or more rentable square feet (collectively, "Major Tenants"). Each estoppel certificate shall be in a form reasonably acceptable to Buyer, and shall confirm, at a minimum, the identity of the tenant, the lease term, current base rent, security deposit amount, absence of landlord defaults, and such other matters as are customary for transactions of this nature.
8.2 Subordination, Non-Disturbance, and Attornment Agreements
Buyer shall deliver, or cause to be delivered, subordination, non-disturbance, and attornment agreements ("SNDAs") to all Major Tenants (defined for purposes of this Section as tenants with annual base rent of at least $1,500,000). The form of SNDA shall be reasonably acceptable to Buyer, the applicable lender, and the applicable tenant.
8.3 Delivery Deadlines
The specific deadlines for the delivery of tenant estoppel certificates and SNDAs shall be set forth in the PSA. Delivery of the required estoppel certificates and SNDAs in accordance with the requirements of this Section 8 shall be a condition to Buyer's obligation to close.
9. Representations and Warranties
9.1 Seller Representations and Warranties
The PSA shall contain customary representations and warranties of Seller regarding the Portfolio, the Target Entities, and the Membership Interests, including, without limitation, representations and warranties with respect to the following:
(a) Organization, authority, and enforceability of the PSA and all ancillary documents;
(b) Title to the Membership Interests in each Target Entity, free and clear of all liens, encumbrances, pledges, security interests, and adverse claims (other than liens arising under the existing mortgage indebtedness to be assumed by Buyer);
(c) No conflicts with organizational documents, other agreements, or applicable law; receipt of all required consents;
(d) Leases, including accuracy of the rent roll, absence of defaults by landlord or tenant, absence of undisclosed concessions, and completeness of the leases provided to Buyer;
(e) Environmental matters, including compliance with Environmental Laws and absence of known environmental contamination, except as disclosed;
(f) Compliance with laws and zoning, including all applicable federal, state, and local laws, ordinances, codes, and regulations;
(g) Tax matters, including proper filing of all required tax returns and payment of all taxes;
(h) Litigation, including absence of pending or, to Seller's knowledge, threatened litigation or claims affecting the properties or the Target Entities;
(i) Service contracts and other material agreements, including completeness and accuracy of the list of service contracts provided to Buyer;
(j) Financial statements, including accuracy and completeness of historical financial statements provided to Buyer during due diligence;
(k) Insurance, including maintenance of customary insurance coverages for properties of similar type and quality;
(l) Condition of properties, including absence of material defects not otherwise disclosed to Buyer;
(m) ERISA, including confirmation that no Target Entity is a "plan asset" entity;
(n) FIRPTA status, including confirmation that Seller is a domestic partnership and not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code;
(o) No bankruptcy or insolvency, including confirmation that no Target Entity or Seller is the subject of any bankruptcy, insolvency, or similar proceeding, and that none has been filed or threatened.
9.2 Knowledge Qualifier
Seller's representations and warranties shall be qualified by Seller's knowledge, which shall be limited to the actual knowledge (after reasonable inquiry) of the following individuals:
(i) Victor Lansdell, Co-Founder & Managing Partner, Greystone Meridian Capital LLC;
(ii) Elise Rathborne, Co-Founder & Managing Partner, Greystone Meridian Capital LLC; and
(iii) Sean Kilpatrick, President, Argyle Property Services LLC (Seller's property management affiliate).
9.3 Survival. General representations and warranties of Seller shall survive the closing for a period of eighteen (18) months following the closing date. Tax representations and fundamental representations (including, without limitation, representations regarding organization, authority, title to Membership Interests, and FIRPTA status) shall survive the closing for a period of thirty-six (36) months following the closing date. The specific scope of "fundamental representations" shall be defined in the PSA.
9.4 Buyer Representations and Warranties
Buyer shall provide customary representations and warranties in the PSA regarding Buyer's organization, authority, enforceability, financial capacity to consummate the transaction, and absence of conflicts.
10. Indemnification
10.1 Mutual Indemnification
The PSA shall contain mutual indemnification obligations for breaches of representations, warranties, and covenants, subject to the limitations set forth in this Section 10.
10.2 Caps and Thresholds
The following caps and thresholds shall apply to Seller's indemnification obligations:
(a) General Representation Cap: Seller's aggregate liability for breaches of general representations and warranties shall not exceed five percent (5%) of the Purchase Price, or $55,000,000.
(b) Fundamental Representation Cap: Seller's aggregate liability for breaches of fundamental representations and warranties shall not exceed ten percent (10%) of the Purchase Price, or $110,000,000.
(c) Basket (Tipping): Seller shall not be obligated to indemnify Buyer for breaches of general representations and warranties until the aggregate amount of all such losses exceeds one-half of one percent (0.5%) of the Purchase Price, or $5,500,000 (the "Basket"); provided, that once the Basket is exceeded, Seller's indemnification obligation shall apply from the first dollar of losses (i.e., a tipping basket, not a deductible).
(d) De Minimis Threshold: No individual claim shall be counted toward the Basket unless such claim exceeds $275,000 (the "De Minimis Threshold").
10.3 Indemnity Escrow
At closing, an amount equal to one and one-half percent (1.5%) of the Purchase Price, or $16,500,000 (the "Indemnity Escrow Amount"), shall be deposited with the Escrow Agent and held in escrow for a period of eighteen (18) months following the closing date, to serve as a source of recovery for Buyer's indemnification claims for breaches of Seller's general representations and warranties. Any funds remaining in the indemnity escrow at the end of the eighteen (18) month period (net of any pending claims) shall be released to Seller. The terms and conditions of the indemnity escrow shall be set forth in an escrow agreement to be negotiated and executed by the parties and the Escrow Agent at closing.
10.4 Representations and Warranties Insurance
Buyer intends to procure a buyer-side representations and warranties insurance policy (the "R&W Policy") to supplement Seller's indemnification obligations under the PSA. The anticipated policy limit of the R&W Policy shall be $55,000,000, representing five percent (5%) of the Purchase Price. The premium and all costs associated with the R&W Policy shall be borne by Buyer. The specific terms of the R&W Policy, including retention levels and coverage exclusions, shall be subject to Buyer's negotiations with the insurer and shall not affect Seller's indemnification obligations under the PSA.
11. Closing
11.1 Target Closing Date
The closing of the transaction (the "Closing") is targeted to occur approximately ninety (90) days following the date of execution of the PSA, subject to the satisfaction or waiver of all closing conditions set forth herein and in the PSA. The exact closing date shall be mutually agreed upon by the parties and specified in the PSA.
11.2 Closing Conditions
The obligation of each party to consummate the Closing shall be subject to the satisfaction or waiver of customary closing conditions, including, without limitation, the following:
(a) Receipt of lender consent from each of the three (3) lenders described in Section 4 (change of control approvals), on terms and conditions reasonably acceptable to Buyer;
(b) Delivery of the required tenant estoppel certificates and SNDAs in accordance with Section 8;
(c) Accuracy of Seller's representations and warranties at closing in all material respects (bring-down condition), with any changes from the date of the PSA disclosed in a closing certificate;
(d) Absence of any material adverse effect with respect to the Portfolio, the properties, or the Target Entities between the date of PSA execution and the closing date;
(e) The Title Company's irrevocable commitment to issue the ALTA Owner's Policies described in Section 7;
(f) Delivery of all required closing documents, including without limitation assignments of Membership Interests in each Target Entity, closing certificates, officer's certificates, FIRPTA certificates (as applicable), replacement carve-out guaranties, escrow agreements, and all other instruments and documents required by the PSA and by the applicable lenders.
11.3 Prorations and Working-Capital Adjustments
At Closing, the parties shall make customary prorations and working-capital adjustments, including without limitation:
(a) Real property taxes (based on the most recent available tax bills, with post-closing true-up upon receipt of actual tax bills);
(b) Insurance premiums (if applicable policies are assumed by Buyer);
(c) Common area maintenance and operating expense recoveries;
(d) Utility charges;
(e) Percentage rent (if applicable);
(f) Security deposits — aggregate tenant security deposits in the amount of approximately $4,283,000 shall be transferred to Buyer at closing or credited against the Cash Consideration.
A post-closing true-up of all prorations and adjustments shall be completed within ninety (90) days after the closing date, with the party owing the net adjustment to deliver payment to the other party within ten (10) business days following the completion of the true-up.
12. Property Management Transition
The Portfolio is currently managed by Argyle Property Services LLC ("Argyle"), an affiliate of Seller. Following the Closing, Buyer intends to transition property management responsibilities to Fairwater Property Management LLC ("FPML"), a wholly owned subsidiary of Buyer.
The PSA shall include, as an exhibit thereto, a form of transition services agreement (the "Transition Services Agreement") providing for a ninety (90) day post-closing transition period during which Argyle shall continue to provide property management and transition support services to facilitate an orderly handover of operations, tenant relationships, vendor contracts, accounting records, and building systems to FPML.
The transition services fee payable to Argyle during the transition period shall be $375,000 per month for a period of three (3) months, for an aggregate transition services fee of $1,125,000. Such fee shall be payable monthly in arrears. The specific scope of transition services, performance standards, and termination provisions shall be set forth in the Transition Services Agreement.
13. Transfer Taxes and Closing Costs
The entity-level transfer of the Membership Interests may give rise to controlling-interest transfer taxes in certain jurisdictions in which the properties are located. The parties estimate that such transfer taxes will be approximately $3,850,000 in the aggregate across all applicable jurisdictions. Controlling-interest transfer taxes and any similar transfer taxes arising from the transaction shall be split equally (50/50) between Buyer and Seller.
The allocation of other closing costs shall be as follows:
(a) Title Insurance Premiums: Buyer's responsibility.
(b) Survey Costs: Buyer's responsibility.
(c) Legal Fees and Advisory Costs: Each party shall bear its own legal fees, advisory costs, and other professional fees incurred in connection with the transaction.
(d) Lender Consent Fees: Split equally (50/50) between Buyer and Seller, as described in Section 4 above.
(e) Recording and Filing Fees: To be allocated in the PSA in accordance with customary practice in the applicable jurisdictions.
14. Exclusivity
This Section 14 is binding on the parties.
Commencing on November 15, 2023 (the "Exclusivity Commencement Date"), Seller hereby grants to Buyer an exclusive period of sixty (60) days (the "Exclusivity Period") during which Seller shall not, and shall cause its affiliates, partners, members, officers, directors, employees, agents, and representatives (including GMP Capital, Argyle, and their respective personnel) not to, directly or indirectly:
(a) solicit, initiate, encourage, or facilitate any inquiry, proposal, indication of interest, or offer from any third party relating to the sale, disposition, transfer, recapitalization, joint venture, merger, or other similar transaction involving the Portfolio or any property or Target Entity included therein;
(b) negotiate, discuss, or enter into any agreement, letter of intent, term sheet, or other arrangement with any third party regarding any competing transaction or potential competing transaction; or
(c) provide any confidential information, data room access, or other non-public information to any third party in connection with any potential competing transaction.
The Exclusivity Period shall expire on December 15, 2023 (sixty (60) days from the Exclusivity Commencement Date), unless extended by mutual written agreement of the parties.
Note: The parties subsequently extended the Exclusivity Period to January 31, 2024, by written amendment dated December 15, 2023, executed by both parties.
In the event that Seller breaches this Section 14, Buyer shall be entitled to seek injunctive relief, specific performance, and such other remedies as may be available at law or in equity, in addition to any other remedies Buyer may have under this LOI.
15. Confidentiality
This Section 15 is binding on the parties.
The terms and conditions of this LOI, the proposed transaction, and all information exchanged between the parties in connection herewith are confidential and are subject to the terms and conditions of the Mutual Non-Disclosure Agreement between Buyer and Seller dated October 10, 2023 (the "NDA"), which is incorporated herein by reference.
Neither party shall issue any press release, public announcement, or other public disclosure regarding this LOI or the proposed transaction without the prior written consent of the other party; provided, however, that Fairwater, as a publicly traded company listed on the New York Stock Exchange, may make such disclosures as may be required by applicable securities laws, rules, and regulations (including the Securities Act of 1933, the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder) or by the rules and listing standards of the New York Stock Exchange. In the event that Fairwater determines that any such disclosure is required, Fairwater shall provide Seller with reasonable advance notice thereof and shall consult with Seller regarding the content of any such disclosure to the extent practicable.
16. Buyer's Counsel
Buyer's outside counsel for the proposed transaction is:
Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, New York 10022
and
1700 K Street NW, Suite 900 Washington, DC 20006
Lead Partner: Douglas Fairchild (Real Estate) Lead Associate (PSA Drafting and Negotiation): Grace Nakamura
All correspondence, document drafts, and legal communications directed to Buyer's counsel should be addressed to Douglas Fairchild and Grace Nakamura at the addresses set forth above, or at such email addresses as may be provided separately.
17. Seller's Counsel
Seller's outside counsel for the proposed transaction is:
Blackridge Hayes LLP 1285 Avenue of the Americas, 34th Floor New York, New York 10019
Lead Partner: Nathaniel Pryce (Real Estate)
All correspondence, document drafts, and legal communications directed to Seller's counsel should be addressed to Nathaniel Pryce at the address set forth above, or at such email address as may be provided separately.
18. Non-Binding Nature
Except for Section 14 (Exclusivity), Section 15 (Confidentiality), Section 19 (Governing Law), and Section 20 (Miscellaneous), which are binding and enforceable obligations of the parties, this LOI is non-binding and does not create any obligation on the part of either party to consummate the proposed transaction or to negotiate or execute a definitive PSA.
The binding obligation to proceed with the transaction shall arise only upon the execution and delivery of a mutually acceptable, definitive Purchase and Sale Agreement by both parties. Until such time, each party reserves the right to withdraw from negotiations at any time prior to PSA execution, without liability to the other party, except for breach of the binding provisions of this LOI.
No party shall have any claim against the other for damages of any kind (including, without limitation, direct damages, consequential damages, reliance damages, or lost profits) arising out of or in connection with the failure to execute a definitive PSA, the termination of negotiations, or the failure to consummate the proposed transaction, except in the case of a breach of the binding provisions of this LOI.
Notwithstanding the foregoing, the parties acknowledge their mutual intent to negotiate the PSA in good faith and to use commercially reasonable efforts to finalize the PSA and consummate the transaction on the terms described herein.
19. Governing Law
This Section 19 is binding on the parties.