**EXHIBIT M**
to
PURCHASE AND SALE AGREEMENT
dated as of February 28, 2024
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 Buyer
INSURANCE REQUIREMENTS
INSURANCE REQUIREMENTS
This Exhibit M (these "Insurance Requirements") is attached to and forms a part of that certain Purchase and Sale Agreement (the "Agreement" or "PSA"), dated as of February 28, 2024, by and between Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership ("Seller"), and Fairwater Real Estate Investment Trust, a Maryland real estate investment trust ("Buyer"). This Exhibit M is incorporated in the Agreement by reference pursuant to Section 7.4 of the Agreement. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Agreement.
Buyer shall obtain and maintain, or cause each applicable Target Entity to obtain and maintain, at Buyer's sole cost and expense, the insurance coverages set forth in this Exhibit M, each to be effective no later than the Closing Date, which is anticipated to be June 6, 2024, and maintained continuously thereafter for so long as Buyer or any of its affiliates directly or indirectly own any interest in the applicable Properties. All policies of insurance required hereunder shall be issued by insurance carriers licensed or authorized to do business in each state in which a Property is located and holding an A.M. Best rating of "A-" (Excellent) or better and a financial size category of "VIII" or greater as of the date such policy is issued and as of each renewal date thereafter, unless otherwise approved in writing by the applicable lender(s).
The failure of Buyer to obtain or maintain any insurance coverage required by this Exhibit M shall not relieve Buyer of any obligation or liability under the Agreement, nor shall it limit or otherwise affect any of Buyer's indemnification obligations thereunder.
1. PROPERTY INSURANCE (ALL-RISK / SPECIAL FORM)
1.1 Coverage Type.
Buyer shall obtain and maintain, or cause each applicable Target Entity to obtain and maintain, "All Risk" or "Special Form" property insurance covering all fourteen (14) Properties comprising the Portfolio and all real and personal property located therein or forming a part thereof, including, without limitation, all buildings, structures, improvements, fixtures, machinery, equipment, building service equipment, tenant improvements and betterments (to the extent of Buyer's or the applicable Target Entity's insurable interest therein), and all other insurable personal property owned by Buyer or the applicable Target Entity and situated at or used in connection with any Property. Such insurance shall provide coverage on a replacement cost basis, without deduction for depreciation, and shall not be subject to any coinsurance penalty or provision.
1.2 Carrier. The property insurance policy shall be placed with Ironclad Indemnity Insurance Company, having its principal offices at 500 College Road East, Princeton, New Jersey 08540, or with such other insurance carrier as meets the carrier rating requirements specified in Section 9.1 hereof. The placement shall be arranged through Hartwick Gunderson & Associates, Inc. (Peter Langford, Account Executive), 100 North Charles Street, Suite 1200, Baltimore, Maryland 21201, or such other nationally recognized insurance broker as Buyer may designate from time to time, subject to Buyer's obligation to maintain coverage meeting all requirements of this Exhibit M and of the applicable loan documents.
1.3 Insured Amount.
The property insurance shall be maintained in an amount not less than the full replacement cost of all insurable improvements and personal property at each Property, as determined by qualified appraisals or insurance valuations. In no event shall the aggregate insured amount for the Portfolio be less than One Billion One Hundred Million Dollars ($1,100,000,000), which is equal to the Purchase Price as defined in the Agreement. The insured values shall be allocated among the fourteen (14) Properties in accordance with the Purchase Price Allocation Schedule attached to the Agreement as Exhibit K. Replacement cost valuations shall be updated annually, and Buyer shall, upon request of any lender, deliver to such lender a copy of the most recent replacement cost appraisal or insurance valuation for each Property secured by such lender's mortgage. In the event that any annual valuation reveals that the aggregate replacement cost of the Portfolio exceeds the then-current insured amount, Buyer shall promptly increase the insured amount to reflect the updated replacement cost.
1.4 Covered Perils (Minimum).
The property insurance policy shall cover, at a minimum, the following perils: fire; lightning; windstorm; hail; explosion; smoke; aircraft or vehicle impact; riot and civil commotion; vandalism and malicious mischief; water damage (including sprinkler leakage, burst pipes, and accidental discharge of water); collapse; sinkhole or mine subsidence (to the extent available in the applicable jurisdiction); and all other perils customarily covered under an "all risk" or "special form" property insurance policy for institutional-quality commercial real estate in the states of Georgia, Texas, Florida, Tennessee, and North Carolina. The policy shall not contain any exclusion or limitation that is not customary for properties of the type and in the jurisdictions of the Properties.
1.5 Required Sublimits and Extensions.
In addition to the base coverage described above, the property insurance shall include the following sublimits and coverage extensions:
(a) Flood Insurance. For each Property located in a Special Flood Hazard Area (SFHA) as designated by the Federal Emergency Management Agency (FEMA), Buyer shall obtain and maintain National Flood Insurance Program (NFIP) coverage or equivalent private flood insurance with per-occurrence limits not less than the lesser of (i) the full replacement cost of insurable improvements at such Property, or (ii) Twenty-Five Million Dollars ($25,000,000) per occurrence per Property. For Properties located outside of SFHA zones, Buyer shall obtain and maintain flood insurance coverage with per-occurrence limits of not less than Ten Million Dollars ($10,000,000) per occurrence. Flood insurance shall comply with the requirements of the National Flood Insurance Act of 1968, as amended, and the Flood Disaster Protection Act of 1973, as amended, and with any applicable lender requirements.
(b) Earthquake Insurance. If any Property is located in a high seismic zone or if earthquake insurance is required by any lender whose mortgage encumbers a Property, Buyer shall obtain and maintain earthquake insurance with per-occurrence limits of not less than Ten Million Dollars ($10,000,000). As of the date hereof, no Properties in the Portfolio are located in high seismic zones, and earthquake coverage shall be required only to the extent mandated by the applicable loan documents or by changes in USGS seismic zone designations affecting any Property.
(c) Windstorm / Named Storm. For each Property located in a jurisdiction where windstorm or named storm perils are excluded from the base property insurance policy, or where separate windstorm coverage is required by applicable state law or by any applicable lender, Buyer shall obtain and maintain separate windstorm or named storm coverage with limits not less than the full replacement cost of insurable improvements at each such Property. As of the date hereof, the following Florida Properties require separate windstorm or named storm coverage: (i) Lakeland Crossings Industrial, located at 7100 Drane Field Road, Lakeland, FL 33811 (GMP Lakeland LLC); (ii) Southport Logistics Park, located at 3200 Southport Connector Road, Jacksonville, FL 32218 (GMP Southport LLC); and (iii) Brickell Bay Office Building, located at 1450 Brickell Avenue, Miami, FL 33131 (GMP Brickell LLC). Coverage shall include sub-limits for named storms as required by each applicable lender and shall comply with the requirements of the applicable Corvinael Property Insurance Corporation or Florida Hurricane Catastrophe Fund programs, to the extent applicable.
(d) Ordinance or Law Coverage. Buyer shall obtain and maintain ordinance or law coverage with limits of not less than Five Million Dollars ($5,000,000) per occurrence, covering (i) the cost of demolition of any undamaged portion of a building or structure required by enforcement of any building, zoning, or land use law or ordinance, (ii) the increased cost of construction resulting from enforcement of any such law or ordinance during repair or reconstruction of a damaged building or structure, and (iii) loss to the undamaged portion of a building or structure when the building or structure must be demolished as a result of enforcement of any such law or ordinance.
(e) Equipment Breakdown / Boiler and Machinery. Buyer shall obtain and maintain equipment breakdown or boiler and machinery insurance covering all pressure vessels, HVAC systems, elevators, escalators, electrical panels, switchgear, generators, transformers, and building service equipment at all Properties, with limits of not less than the full replacement cost of such equipment. Coverage shall include mechanical breakdown, electrical arcing, and pressure explosion.
(f) Business Income / Rental Value Coverage. Buyer shall obtain and maintain business income and rental value coverage providing not less than twelve (12) months of actual loss sustained, calculated on the basis of annual in-place base rent for the Portfolio, which as of the date of the Agreement is approximately Seventy-Four Million Eight Hundred Thousand Dollars ($74,800,000) in the aggregate, allocated among the Properties in accordance with the rent rolls delivered pursuant to the Agreement. The policy shall include an extended period of indemnity of at least one hundred eighty (180) days beyond the date of completion of restoration or repair. Coverage shall also include loss of rents resulting from the cancellation of leases by tenants exercising casualty termination rights under their respective leases, to the extent such coverage is commercially available.
(g) Terrorism Insurance (TRIA). Buyer shall obtain and maintain terrorism insurance coverage under the Terrorism Risk Insurance Act of 2002 (as reauthorized by the Terrorism Risk Insurance Program Reauthorization Act of 2019 or any subsequent renewal or extension thereof), with limits equal to the full replacement cost of insurable improvements at each Property. Coverage shall include both certified acts of terrorism (as defined by the Secretary of the Treasury) and non-certified acts of terrorism, including coverage for nuclear, biological, chemical, and radiological events to the extent commercially available and required by any applicable lender.
1.6 Deductibles. The following maximum deductibles shall apply to the property insurance coverage:
All deductibles shall be the sole responsibility of Buyer or the applicable Target Entity. No deductible shall be applied in a manner that creates a coinsurance penalty or otherwise reduces the amount payable under the policy below the full replacement cost of the covered loss (net of the applicable deductible). If any lender requires a lower deductible than those set forth above, the more restrictive lender requirement shall control.
1.7 Additional Insureds and Loss Payees.
The property insurance policy shall name the following parties in the capacities indicated:
(a) Each applicable Target Entity as a named insured under the policy.
(b) Fairwater Real Estate Investment Trust as an additional named insured under the policy.
(c) Pinnacle Federal Bank, N.A. (with respect to Loans 1-A through 1-H, having an aggregate outstanding principal balance of $421,600,000.00 and secured by the eight (8) logistics properties identified in Section 10.1 below) as mortgagee and loss payee under a standard mortgagee clause (New York or equivalent form, non-contributory).
(d) Veltrano Capital Lending Corp. (with respect to Loans 2-A through 2-D, having an aggregate outstanding principal balance of $142,300,000.00 and secured by the four (4) office properties identified in Section 10.2 below) as mortgagee and loss payee under a standard mortgagee clause (New York or equivalent form, non-contributory).
(e) Sycamore Life Insurance Company (with respect to Loans 3-A and 3-B, having an aggregate outstanding principal balance of $48,100,000.00 and secured by the two (2) logistics properties identified in Section 10.3 below) as mortgagee and loss payee under a standard mortgagee clause (New York or equivalent form, non-contributory).
(f) Commonwealth National Title Insurance Company, as may be required in connection with the issuance of any title insurance policy or endorsement.
1.8 Property Schedule.
The property insurance policy shall specifically list and schedule all fourteen (14) Properties comprising the Portfolio, together with the applicable Target Entity and property address, as follows:
The Portfolio includes Properties located in five (5) states: Georgia (4 properties), Texas (3 properties), Florida (3 properties), Tennessee (3 properties), and North Carolina (1 property). The total Portfolio comprises approximately 5,224,000 rentable square feet, consisting of ten (10) logistics properties aggregating approximately 4,373,000 rentable square feet and four (4) office properties aggregating approximately 851,000 rentable square feet. Each property insurance policy or policies shall specifically identify each Property by address, Target Entity, insured value, and applicable sublimits and deductibles.
2. COMMERCIAL GENERAL LIABILITY INSURANCE
2.1 Coverage Type.
Buyer shall obtain and maintain, or cause each applicable Target Entity to obtain and maintain, commercial general liability ("CGL") insurance written on an occurrence basis, using Quillon Group ("ISO") form CG 00 01 or a substantively equivalent form providing coverage no less broad than the ISO form. The policy shall cover all operations conducted by or on behalf of Buyer, each Target Entity, and their respective employees, agents, contractors, and subcontractors at or in connection with the Properties, including, without limitation, all premises and operations, products and completed operations, and contractual liability.
2.2 Limits. The CGL policy shall provide the following minimum limits of coverage:
The general aggregate limit shall apply on a per-location basis with respect to each Property, and the policy shall include a per-location aggregate endorsement (ISO form CG 25 04 or equivalent) to ensure that the full aggregate limit is available at each Property.
2.3 Coverage Extensions.
The CGL policy shall include, at a minimum, the following coverage extensions:
(a) Broad form contractual liability, covering Buyer's and each Target Entity's liability assumed under any contract or agreement relating to any Property, including, without limitation, indemnification obligations under leases, management agreements, construction contracts, and service agreements.
(b) Broad form property damage coverage, including coverage for damage to property of third parties in the care, custody, or control of Buyer or any Target Entity, to the extent commercially available.
(c) Premises and operations liability, covering bodily injury and property damage arising out of the ownership, maintenance, use, or operation of any Property.
(d) Products and completed operations liability, covering bodily injury and property damage arising out of any products sold, handled, distributed, or disposed of by Buyer or any Target Entity, or arising out of any operations that have been completed at any Property.
(e) Personal and advertising injury liability, covering offenses such as false arrest, detention, imprisonment, malicious prosecution, wrongful eviction, slander, libel, defamation, invasion of privacy, and infringement of copyright, trade dress, or slogan in advertising.
(f) Host liquor liability, to the extent applicable to any events or activities conducted at any Property at which alcoholic beverages are served.
(g) Fire legal liability coverage, providing coverage for the legal liability of Buyer or any Target Entity for damage by fire to premises rented to or occupied by Buyer or any Target Entity.
(h) Non-owned and hired automobile liability, covering bodily injury and property damage arising out of the use of any automobile not owned by Buyer or any Target Entity but used in connection with the Properties, to the extent such coverage is not provided under a separate automobile liability policy as described in Section 5 hereof.
2.4 Additional Insureds.
The CGL policy shall name the following parties as additional insureds on a primary and non-contributory basis, using ISO additional insured endorsement form CG 20 11 or CG 20 26 (or equivalent endorsement providing equally broad coverage):
(a) Fairwater Real Estate Investment Trust.
(b) Each Target Entity as a named insured.
(c) Pinnacle Federal Bank, N.A., its successors and assigns.
(d) Veltrano Capital Lending Corp., its successors and assigns.
(e) Sycamore Life Insurance Company, its successors and assigns.
Each additional insured's coverage under the CGL policy shall be primary to and non-contributory with any other insurance maintained by such additional insured, and the policy shall contain an endorsement so providing.
2.5 Deductible / Self-Insured Retention.
The CGL policy shall have a deductible or self-insured retention of not more than Twenty-Five Thousand Dollars ($25,000) per occurrence. Buyer shall be solely responsible for the payment of all deductibles and self-insured retentions. The existence of any deductible or self-insured retention shall not reduce or otherwise affect the coverage afforded to any additional insured.
3. UMBRELLA / EXCESS LIABILITY INSURANCE
3.1 Coverage Type.
Buyer shall obtain and maintain, or cause to be obtained and maintained, umbrella or excess liability insurance on a follow-form basis, providing excess coverage over and above the primary CGL policy described in Section 2, the employer's liability coverage described in Section 4, and the automobile liability coverage described in Section 5. The umbrella or excess policy shall follow the terms, conditions, and exclusions of the underlying primary policies, except to the extent that broader coverage is provided by the umbrella or excess policy, and shall drop down to provide primary coverage in the event that any underlying primary policy's aggregate is exhausted.
3.2 Limits. The umbrella or excess liability policy shall provide the following minimum limits of coverage:
The foregoing limits may be provided through a combination of primary umbrella and excess layers, provided that the total available limits are not less than the amounts specified above and that each layer follows form to the underlying policies without material gaps in coverage.
3.3 Self-Insured Retention.
The umbrella or excess liability policy shall have a self-insured retention of not more than Ten Thousand Dollars ($10,000) per occurrence, applicable only to claims not covered by the underlying primary policies. Buyer shall be solely responsible for the payment of all self-insured retentions.
3.4 Additional Insureds.
The umbrella or excess liability policy shall name the same additional insureds as the CGL policy described in Section 2.4, including Fairwater Real Estate Investment Trust, each Target Entity, Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company, each as additional insured on a primary and non-contributory basis with respect to their insurable interest.
4. WORKERS' COMPENSATION AND EMPLOYER'S LIABILITY INSURANCE
4.1 Workers' Compensation.
Buyer shall obtain and maintain, or cause each applicable Target Entity to obtain and maintain, workers' compensation insurance providing statutory benefits as required by the laws of each state in which a Property is located, including the states of Georgia, Texas, Florida, Tennessee, and North Carolina. The workers' compensation policy shall include a United States Longshore and Harbor Workers' Compensation Act ("USL&H") endorsement if any Property is located in a jurisdiction or circumstances in which USL&H coverage is applicable or if any employees of Buyer, any Target Entity, or any property manager perform work covered by the USL&H Act. The policy shall also include an "other states" endorsement to provide coverage in any state to which an employee of Buyer or any Target Entity may be sent on a temporary basis in connection with the Properties.
4.2 Employer's Liability.
The workers' compensation policy shall include employer's liability coverage with the following minimum limits:
4.3 Waiver of Subrogation.
The workers' compensation and employer's liability policy shall include a waiver of subrogation endorsement in favor of Fairwater Real Estate Investment Trust and each lender (Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company), to the extent permitted by applicable law and the applicable workers' compensation statutes.
5. AUTOMOBILE LIABILITY INSURANCE
5.1 Coverage. Buyer shall obtain and maintain, or cause each applicable Target Entity to obtain and maintain, comprehensive automobile liability insurance covering all owned, non-owned, leased, and hired vehicles used in connection with the ownership, operation, management, or maintenance of the Properties. If Buyer or any Target Entity does not own any vehicles, the automobile liability policy shall cover non-owned and hired vehicles only.
5.2 Limits. The automobile liability policy shall provide a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury and property damage. Such limits shall apply to any single accident or occurrence, regardless of the number of persons injured or the amount of property damaged. The automobile liability coverage may also serve as an underlying policy for the umbrella or excess liability coverage described in Section 3.
6. ENVIRONMENTAL / POLLUTION LIABILITY INSURANCE
6.1 Applicability. Environmental or pollution liability insurance is required for those Properties at which recognized environmental conditions ("RECs") have been identified in the Phase I Environmental Site Assessments ("Phase I ESAs") prepared in connection with the transactions contemplated by the Agreement. Specifically, as of the date hereof, the following Properties have been identified as having de minimis RECs requiring environmental liability insurance coverage:
(a) Westlake Distribution Hub, located at 11500 Westlake Parkway, Houston, Texas 77082, owned by GMP Westlake LLC. The Phase I ESA dated October 12, 2023, prepared by Trident Environmental Group LLC (Rachel Kwan, Senior Environmental Scientist), identified a de minimis REC associated with historical petroleum storage operations on an adjacent parcel and localized soil staining near a former loading dock area.
(b) Lakeland Crossings Industrial, located at 7100 Drane Field Road, Lakeland, Florida 33811, owned by GMP Lakeland LLC. The Phase I ESA dated October 18, 2023, prepared by Trident Environmental Group LLC (Rachel Kwan, Senior Environmental Scientist), identified a de minimis REC associated with the presence of a closed leaking underground storage tank case on a neighboring property within a 500-foot radius, with no evidence of on-site contamination.
Environmental liability insurance is recommended, but not required under this Exhibit M, for the remaining twelve (12) Properties for which Phase I ESAs have been completed with no RECs identified. Notwithstanding the foregoing, if any lender whose mortgage encumbers a Property requires environmental liability insurance for such Property, Buyer shall obtain and maintain such coverage in compliance with the applicable lender's requirements.
6.2 Limits (for Required Properties).
For each Property for which environmental liability insurance is required pursuant to Section 6.1 above, the environmental liability policy shall provide the following minimum limits:
Coverage shall include, without limitation: (i) third-party claims for bodily injury and property damage arising out of pollution conditions at, on, under, or migrating from the insured Property; (ii) first-party cleanup costs and remediation expenses incurred by Buyer or the applicable Target Entity; (iii) transportation and disposal liability for the movement and disposal of pollutants or contaminants from the insured Property; and (iv) legal defense costs, which shall be in addition to the policy limits (or, if defense costs are included within the policy limits, the policy limits shall be increased accordingly to provide the minimum coverage amounts set forth above net of defense costs).
6.3 Policy Term.
The environmental liability policy shall have a minimum policy term of three (3) years from the Closing Date. A claims-made form of policy is acceptable, provided that the policy includes an extended reporting period (also known as a "tail") of not less than three (3) years following the expiration of the policy term, during which claims arising from pollution conditions first discovered during the policy period may be reported. Buyer shall maintain the environmental liability coverage (or tail coverage, as applicable) continuously for a period of not less than six (6) years following the Closing Date.
7. CRIME / OMNIVREL INSURANCE
7.1 Coverage. Buyer shall obtain and maintain, or cause to be obtained and maintained, commercial crime insurance or a fidelity bond providing coverage for losses arising from employee dishonesty, including theft of money, securities, and other property; forgery or alteration; computer fraud and funds transfer fraud; and inside and outside theft. The policy shall cover acts committed by employees of Buyer, each Target Entity, and Buyer's property manager.
7.2 Limits. The commercial crime or fidelity policy shall provide limits of not less than Five Million Dollars ($5,000,000) per occurrence and in the aggregate. Coverage shall extend to and include the acts of employees of Fairwater Property Management LLC, having its principal offices at 7200 Chesapeake Parkway, Suite 1150, Columbia, Maryland 21044 (Leah Torrance, Senior Vice President, Operations), which entity will serve as Buyer's property manager for the Portfolio following Closing. In addition, during the ninety (90)-day transition services period described in Section 11 hereof and in the Transition Services Agreement attached to the Agreement as Exhibit L, coverage shall also extend to the acts of employees of Argyle Property Services LLC (Sean Kilpatrick, Portfolio Manager), which entity currently provides property management services to the Portfolio on behalf of Seller. If the commercial crime policy does not extend coverage to the employees of the property manager(s) referenced above, Buyer shall require each such property manager to obtain and maintain its own commercial crime or fidelity coverage with limits of not less than Five Million Dollars ($5,000,000), and Buyer shall obtain and maintain evidence of such coverage.
8. REPRESENTATIONS AND WARRANTIES INSURANCE
8.1 Separate Procurement.
Buyer-side representations and warranties ("R&W") insurance is being procured by Buyer in connection with the transactions contemplated by the Agreement and is addressed separately from this Exhibit M. The R&W insurance policy is not a requirement of this Exhibit M, but the following information is provided for reference and coordination purposes:
Carrier: Sentinel Specialty Insurance Company
Policy Limit: Fifty-Five Million Dollars ($55,000,000), representing five percent (5%) of the Purchase Price
Retention: Eleven Million Dollars ($11,000,000), representing one percent (1%) of the Purchase Price, which retention shall drop to Five Million Five Hundred Thousand Dollars ($5,500,000) at twelve (12) months following the Closing Date
Premium: One Million Four Hundred Two Thousand Five Hundred Dollars ($1,402,500), representing 2.55% of the policy limit, payable in full at binding
Broker: Hartwick Gunderson & Associates, Inc. (Peter Langford, Account Executive), 100 North Charles Street, Suite 1200, Baltimore, Maryland 21201
8.2 Coordination. The R&W insurance policy shall be bound concurrently with the Closing. At Closing, Buyer shall deliver to Seller a no-claims declaration confirming that, as of the Closing Date, Buyer has not made and is not aware of any basis for making any claim under the R&W insurance policy. The R&W insurance policy shall not limit, modify, or otherwise affect Buyer's obligations to maintain the insurance coverages described in Sections 1 through 7 and Sections 9 through 12 of this Exhibit M. To the extent any claim arises that may be covered under both the R&W insurance policy and any other policy maintained pursuant to this Exhibit M, the parties acknowledge that the R&W insurance policy is intended to serve as a separate and independent source of recovery and that coordination of coverage between the R&W policy and other policies shall be governed by the terms of the respective policies.
9. GENERAL REQUIREMENTS APPLICABLE TO ALL POLICIES
9.1 Carrier Ratings.
All policies of insurance required by this Exhibit M shall be issued by insurance carriers holding a current A.M. Best rating of "A-" (Excellent) or better and a financial size category of "VIII" or greater, as published in the most recent edition of Best's Key Rating Guide (or any successor publication). If any carrier's rating falls below the minimum requirements specified herein during the policy period, Buyer shall use commercially reasonable efforts to replace such carrier with a carrier meeting the minimum rating requirements within sixty (60) days of the downgrade, unless otherwise approved in writing by the applicable lender(s). No insurance carrier shall be used without the prior written approval of the applicable lender(s) if such carrier does not meet the minimum rating requirements set forth in this Section 9.1.
9.2 Policy Forms.
All policies of insurance required by this Exhibit M shall be written on forms customarily used for institutional-quality commercial real estate of the type (logistics/industrial and office) and in the jurisdictions (Georgia, Texas, Florida, Tennessee, and North Carolina) of the Properties. Policy forms shall be standard ISO forms or manuscript forms providing coverage no less broad than the applicable standard ISO forms. All endorsements required by this Exhibit M or by any applicable lender shall be attached to the respective policies and shall be in forms reasonably satisfactory to the applicable lender(s).
9.3 Notice of Cancellation / Material Change.
Each policy of insurance required by this Exhibit M shall contain a provision, or shall be endorsed to provide, that the insurance carrier will give not less than thirty (30) days' prior written notice of cancellation, non-renewal, or any material change in coverage, terms, conditions, or limits to each of the following parties: (i) Buyer; (ii) each applicable Target Entity; (iii) Pinnacle Federal Bank, N.A.; (iv) Veltrano Capital Lending Corp.; and (v) Sycamore Life Insurance Company. In the event of cancellation for non-payment of premium, not less than ten (10) days' prior written notice shall be provided to each of the foregoing parties. Buyer shall use commercially reasonable efforts to ensure that all notices required by this Section 9.3 are delivered to the applicable parties at the addresses specified in the Agreement or in the applicable loan documents.
9.4 Waiver of Subrogation.
All property and liability policies of insurance required by this Exhibit M shall include a waiver of subrogation endorsement waiving the insurance carrier's rights of subrogation against Fairwater Real Estate Investment Trust, each Target Entity, and each lender (Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company), their respective officers, directors, members, partners, employees, and agents, to the extent permitted by applicable law and to the extent such waiver does not invalidate or impair the coverage provided by such policy. The costs of any additional premium associated with such waiver of subrogation endorsements shall be borne solely by Buyer.
9.5 Primary and Non-Contributory.
All liability policies of insurance required by this Exhibit M that name lenders or other additional insureds shall be primary to and non-contributory with any other insurance maintained by such additional insureds. Each such policy shall contain an endorsement confirming the primary and non-contributory status of the coverage afforded to additional insureds, and in no event shall any additional insured be required to exhaust or contribute under its own insurance before the coverage afforded under Buyer's or the applicable Target Entity's policy responds to a covered claim.
9.6 Severability of Interests / Cross-Liability.
All liability policies of insurance required by this Exhibit M shall include a severability of interests clause or cross-liability provision, providing that the insurance shall apply separately to each insured against whom a claim is made or suit is brought, as though a separate policy had been issued to each insured, except with respect to the limits of insurance and any rights or duties specifically assigned to the first named insured. The inclusion of more than one insured under the policy shall not affect the rights of any insured as respects any claim, suit, or judgment made or brought by or in favor of any other insured.
9.7 No Limitation on Indemnity.
The insurance coverage requirements set forth in this Exhibit M shall in no way be construed to limit the nature, extent, or scope of Buyer's indemnification obligations under the Agreement, including, without limitation, any indemnification obligations set forth in Article IX of the Agreement. The procurement and maintenance of insurance in accordance with this Exhibit M shall not relieve Buyer of liability under any indemnity provisions of the Agreement for losses, claims, damages, or liabilities in excess of the limits or outside the coverage of such insurance. The failure of any insurer to pay any claim under any policy required by this Exhibit M shall not relieve Buyer of any obligation under the Agreement.
9.8 Evidence of Insurance.
At or prior to the Closing Date, Buyer shall deliver to Seller, to each lender (Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company), and to Commonwealth National Title Insurance Company the following evidence of insurance:
(a) Certificates of insurance on ACORD Form 28 (Evidence of Commercial Property Insurance) for all property insurance coverages required by Section 1 of this Exhibit M, together with copies of all endorsements naming additional named insureds and loss payees.
(b) Certificates of insurance on ACORD Form 25 (Certificate of Liability Insurance) for all liability insurance coverages required by Sections 2, 3, 4, 5, and 6 of this Exhibit M, together with copies of all endorsements naming additional insureds.
(c) Copies of all additional insured endorsements, loss payee endorsements, waiver of subrogation endorsements, primary and non-contributory endorsements, and any other endorsements required by this Exhibit M or by any applicable loan documents.
(d) If requested by any lender, complete copies of all insurance policies required by this Exhibit M, including all declarations pages, coverage forms, and endorsements.
All certificates of insurance shall be certified by the insurance carrier or an authorized representative thereof and shall accurately reflect the coverage, limits, deductibles, additional insureds, loss payees, and endorsements required by this Exhibit M. Buyer acknowledges that the delivery of certificates of insurance does not constitute a waiver of any requirement to maintain coverage in accordance with this Exhibit M.
9.9 Renewal. Buyer shall maintain all insurance coverages required by this Exhibit M continuously and without gap or lapse for so long as Buyer or any of its affiliates directly or indirectly own any interest in any Property. Not less than fifteen (15) days prior to the expiration of any policy of insurance required by this Exhibit M, Buyer shall deliver to each lender (Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company) and, if requested, to Seller, renewal certificates of insurance and copies of any new or amended endorsements, evidencing the renewal of such policy with coverage, limits, and terms at least as favorable as those required by this Exhibit M. If Buyer is unable to renew any policy on terms at least as favorable as those required hereby, Buyer shall promptly notify each affected lender and shall use commercially reasonable efforts to obtain the broadest coverage and highest limits commercially available on reasonable terms.
10. LENDER-SPECIFIC INSURANCE REQUIREMENTS
10.1 Pinnacle Federal Bank, N.A.
The following requirements apply to the eight (8) logistics properties securing the loan obligations owed to Pinnacle Federal Bank, N.A.:
Loan Reference: Master Loan Agreement, dated as of September 15, 2020, by and among GMP Fairfield I LLC, GMP Fairfield II LLC, GMP Westlake LLC, GMP Katy LLC, GMP Alliance LLC, GMP Lakeland LLC, GMP Southport LLC, and GMP Murfreesboro LLC, as borrowers, and Pinnacle Federal Bank, N.A., as lender, as amended by that certain First Amendment to Master Loan Agreement, dated as of March 1, 2022, and that certain Second Amendment to Master Loan Agreement, dated as of August 15, 2023 (as so amended, the "Pinnacle Loan Agreement"). Loans 1-A through 1-H.
Lender's Counsel: Whitfield & Archer LLP (Sandra Whitfield, Partner), 717 Texas Avenue, Suite 2500, Houston, Texas 77002.
Properties Secured:
• Fairfield Logistics Center I — 4200 Fairfield Industrial Blvd, Fairburn, GA 30213 (GMP Fairfield I LLC)
• Fairfield Logistics Center II — 4300 Fairfield Industrial Blvd, Fairburn, GA 30213 (GMP Fairfield II LLC)
• Westlake Distribution Hub — 11500 Westlake Parkway, Houston, TX 77082 (GMP Westlake LLC)
• Katy Freeway Logistics Park — 22600 Katy Freeway, Katy, TX 77449 (GMP Katy LLC)
• Alliance Commerce Center — 2800 Alliance Gateway Blvd, Fort Worth, TX 76177 (GMP Alliance LLC)
• Lakeland Crossings Industrial — 7100 Drane Field Road, Lakeland, FL 33811 (GMP Lakeland LLC)
• Southport Logistics Park — 3200 Southport Connector Road, Jacksonville, FL 32218 (GMP Southport LLC)
• Murfreesboro Distribution Center — 1600 Joe B. Jackson Parkway, Murfreesboro, TN 37127 (GMP Murfreesboro LLC)
Outstanding Principal Balance: $421,600,000.00
Interest Rate: 4.22% per annum, fixed
Maturity Date: July 1, 2028
Insurance Compliance: Buyer shall comply with all insurance requirements set forth in Article VII of the Pinnacle Loan Agreement, including, without limitation, specific requirements for: (i) flood insurance coverage on the Florida Properties (Lakeland Crossings Industrial and Southport Logistics Park) and the Texas Properties (Westlake Distribution Hub, Katy Freeway Logistics Park, and Alliance Commerce Center); (ii) separate windstorm or named storm endorsements for the Florida Properties; (iii) replacement cost endorsements on all property insurance policies; and (iv) business income/rental value coverage based on actual rents for each secured Property. Pinnacle Federal Bank, N.A. shall be named as mortgagee and loss payee under a standard mortgagee clause (non-contributory) on all property insurance policies covering the secured Properties, and as additional insured on all liability policies, in each case on a primary and non-contributory basis.
10.2 Veltrano Capital Lending Corp.
The following requirements apply to the four (4) office properties securing the loan obligations owed to Veltrano Capital Lending Corp.:
Loan Reference: Loan Agreement, dated as of February 1, 2021, by and among GMP Buckhead LLC, GMP SouthPark LLC, GMP Cool Springs LLC, and GMP Brickell LLC, as borrowers, and Veltrano Capital Lending Corp., as lender, as amended by that certain First Amendment to Loan Agreement, dated as of June 15, 2022 (as so amended, the "Veltrano Loan Agreement"). Loans 2-A through 2-D.
Lender's Counsel: Cranford McCabe LLP (Leo Cranford, Partner), 100 Southeast Second Street, Suite 3000, Miami, Florida 33131.
Properties Secured:
• Buckhead Place Office Tower — 3380 Peachtree Road NE, Atlanta, GA 30326 (GMP Buckhead LLC)
• SouthPark Corporate Center — 6200 Fairview Road, Charlotte, NC 28210 (GMP SouthPark LLC)
• Cool Springs Office Park — 5000 Virginia Way, Brentwood, TN 37027 (GMP Cool Springs LLC)
• Brickell Bay Office Building — 1450 Brickell Avenue, Miami, FL 33131 (GMP Brickell LLC)
Outstanding Principal Balance: $142,300,000.00
Interest Rate: 4.68% per annum, fixed
Maturity Date: March 1, 2029
Insurance Compliance: Buyer shall comply with all insurance requirements set forth in Section 5.4 of the Veltrano Loan Agreement, including, without limitation, specific requirements for: (i) windstorm or named storm coverage for the Brickell Bay Office Building located in Miami, Florida; (ii) replacement cost endorsements on all property insurance policies; and (iii) terrorism insurance covering each secured Property. Veltrano Capital Lending Corp. shall be named as mortgagee and loss payee under a standard mortgagee clause on all property insurance policies covering the secured Properties, and as additional insured on all liability policies, in each case on a primary and non-contributory basis.
10.3 Sycamore Life Insurance Company.
The following requirements apply to the two (2) logistics properties securing the loan obligations owed to Sycamore Life Insurance Company:
Loan Reference: Note Purchase Agreement, dated as of November 22, 2019, by and among GMP Peachtree LLC and GMP Mount Juliet LLC, as issuers, and Sycamore Life Insurance Company, as purchaser, as amended by that certain First Amendment to Note Purchase Agreement, dated as of April 1, 2021 (as so amended, the "Sycamore NPA"). Loans 3-A and 3-B.
Lender's Counsel: Partridge Wynn & Slater LLP (Claire Wynn, Partner), 100 Constitution Plaza, Suite 700, Hartford, Connecticut 06103.
Properties Secured:
• Peachtree Corners Logistics Center — 5900 Peachtree Industrial Blvd, Peachtree Corners, GA 30071 (GMP Peachtree LLC)
• Mount Juliet Commerce Park — 400 South Mount Juliet Road, Mount Juliet, TN 37122 (GMP Mount Juliet LLC)
Outstanding Principal Balance: $48,100,000.00
Interest Rate: 3.95% per annum, fixed
Maturity Date: December 1, 2030
Insurance Compliance: Buyer shall comply with all insurance requirements set forth in Section 6.3 of the Sycamore NPA, including all property, liability, and business income coverage requirements applicable to the secured Properties. Sycamore Life Insurance Company shall be named as mortgagee and loss payee under a standard mortgagee clause on all property insurance policies covering the secured Properties, and as additional insured on all liability policies, in each case on a primary and non-contributory basis.
10.4 Conflict Between Exhibit M and Loan Documents.
To the extent that any lender's loan documents (including, without limitation, the Pinnacle Loan Agreement, the Veltrano Loan Agreement, and the Sycamore NPA, each as defined above, together with any amendments, supplements, or modifications thereto) require higher limits of coverage, broader coverage terms, lower deductibles, additional endorsements, or any other insurance requirements beyond those specified in this Exhibit M, the more stringent requirement shall control, and Buyer shall comply with such lender requirements in all respects. Buyer shall promptly notify Seller of any insurance requirement imposed by a lender that is materially more restrictive than the requirements set forth in this Exhibit M. In the event of any conflict between the requirements of two or more lenders, Buyer shall comply with the most stringent requirement of any applicable lender, unless the lenders agree otherwise in writing.
11. TRANSITION PERIOD INSURANCE
11.1 Existing Coverage.
During the ninety (90)-day post-closing transition services period (from the Closing Date of June 6, 2024, through approximately September 4, 2024), Buyer shall ensure that all fourteen (14) Properties comprising the Portfolio are continuously covered under the insurance policies described in this Exhibit M, without any gap, lapse, or interruption in coverage from the expiration or termination of Seller's existing insurance policies. Buyer acknowledges that Seller's existing insurance policies will be cancelled or will cease to provide coverage for the Properties effective as of the Closing Date, and Buyer shall be solely responsible for ensuring that replacement coverage is in effect at all times from and after the Closing Date.
11.2 Coordination with Argyle Property Services LLC.
During the transition services period provided for under the Transition Services Agreement attached to the Agreement as Exhibit L, Argyle Property Services LLC (Sean Kilpatrick, Portfolio Manager) shall cooperate with Buyer and Fairwater Property Management LLC (Leah Torrance, Senior Vice President, Operations) to ensure the orderly transition of insurance coverage, including, without limitation: (i) the transfer of claims files and loss run information from Seller's existing carriers to Buyer's carriers; (ii) the collection and delivery of vendor certificates of insurance and contractor endorsements; (iii) the verification of tenant insurance compliance with respect to each of the eighty-seven (87) leases across the Portfolio; (iv) the transfer of any prepaid insurance premiums or return premiums due from Seller's existing carriers; and (v) the coordination of any pending or open insurance claims at any Property as of the Closing Date, including the assignment or transfer of such claims to Buyer's policies as applicable.
11.3 Binding of Policies.
All policies of insurance required under this Exhibit M shall be bound effective as of 12:01 a.m. Eastern Time on the Closing Date (June 6, 2024). Evidence of binding, including binders of insurance or certificates of insurance confirming that all required coverages have been bound and are effective, shall be delivered to Seller, to each lender (Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company), and to Commonwealth National Title Insurance Company not later than one (1) business day prior to the Closing Date. If any policy cannot be bound as of the Closing Date due to circumstances beyond Buyer's reasonable control, Buyer shall notify Seller and each affected lender immediately and shall use commercially reasonable efforts to bind such policy as promptly as practicable; provided, however, that Closing shall not occur until all required policies have been bound and evidence of binding has been delivered to Seller and each lender.
12. TENANT INSURANCE REQUIREMENTS
12.1 Lease Compliance.
Buyer shall enforce, and shall cause each applicable Target Entity and property manager to enforce, all insurance requirements contained in each of the eighty-seven (87) leases across the Portfolio, including, without limitation, requirements that each tenant obtain and maintain: (i) commercial general liability insurance; (ii) property insurance covering tenant improvements, betterments, and personal property; (iii) workers' compensation insurance as required by applicable law; and (iv) umbrella or excess liability insurance, in each case with limits, deductibles, and coverage terms as specified in the applicable lease. Buyer shall require each tenant to name the applicable Target Entity and the applicable lender(s) as additional insured(s) under such tenant's commercial general liability and umbrella or excess liability policies, as required by the applicable lease and loan documents. Buyer shall not amend, waive, or modify any tenant insurance requirement in any material respect without the prior written consent of the applicable lender(s), to the extent such consent is required under the applicable loan documents.
12.2 Certificates of Insurance.
Buyer or its property manager (Fairwater Property Management LLC, 7200 Chesapeake Parkway, Suite 1150, Columbia, Maryland 21044, Leah Torrance, Senior Vice President, Operations) shall collect and maintain current certificates of insurance from all tenants evidencing compliance with the insurance requirements of their respective leases. Buyer shall implement and maintain an ongoing insurance compliance monitoring program, including tracking of policy expiration dates, verification of coverage limits and additional insured endorsements, and follow-up with non-compliant tenants. Certificates of insurance from tenants shall be made available to any lender upon request within ten (10) business days of such request.
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ACKNOWLEDGMENT AND AGREEMENT
This Exhibit M is attached to and incorporated by reference in the Purchase and Sale Agreement, dated as of February 28, 2024, 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 Buyer. The undersigned parties hereby acknowledge that they have reviewed this Exhibit M and agree to be bound by its terms and conditions as set forth herein.
BUYER:
FAIRWATER REAL ESTATE INVESTMENT TRUST, a Maryland real estate investment trust
By: ________
Name: ________
Title: ________
Date: ________
SELLER:
GREYSTONE MERIDIAN PARTNERS FUND III, L.P., a Delaware limited partnership
By: Greystone Meridian Capital LLC,