EXHIBIT S
FORM OF REPLACEMENT GUARANTY
Exhibit S to that certain Purchase and Sale Agreement, dated as of February 28, 2024 (the "Purchase Agreement"), by and between Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership ("Seller"), and Fairwater Real Estate Investment Trust, a Maryland real estate investment trust ("Buyer" or "Guarantor").
This form is to be executed at Closing for each of the three existing mortgage lender facilities, with appropriate loan-specific information inserted in the bracketed fields. Three separate originals of this Replacement Guaranty shall be executed and delivered, one to each of Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company, respectively.
REPLACEMENT CARVE-OUT GUARANTY
(this "Guaranty")
Dated as of [__], 2024
This REPLACEMENT CARVE-OUT GUARANTY (this "Guaranty") is made as of the date first written above 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) ("Guarantor"), in favor of:
[Pinnacle Federal Bank, N.A., a national banking association, with an address at 600 Travis Street, Suite 4400, Houston, Texas 77002]
or
[Veltrano Capital Lending Corp., a Delaware corporation, with an address at 200 South Biscayne Boulevard, Suite 3100, Miami, Florida 33131]
or
[Sycamore Life Insurance Company, a Connecticut stock life insurance company, with an address at 100 Constitution Plaza, Hartford, Connecticut 06103]
(as applicable, "Lender").
The Guarantor executes and delivers this Guaranty for the benefit of Lender with respect to the obligations of:
[For Pinnacle Federal Bank, N.A.: GMP Fairfield I LLC, GMP Fairfield II LLC, GMP Westlake LLC, GMP Katy LLC, GMP Alliance LLC, GMP Lakeland LLC, GMP Southport LLC, and GMP Murfreesboro LLC, each a Delaware limited liability company (collectively, "Borrower")]
[For Veltrano Capital Lending Corp.: GMP Buckhead LLC, GMP SouthPark LLC, GMP Cool Springs LLC, and GMP Brickell LLC, each a Delaware limited liability company (collectively, "Borrower")]
[For Sycamore Life Insurance Company: GMP Peachtree LLC and GMP Mount Juliet LLC, each a Delaware limited liability company (collectively, "Borrower")]
as borrower under:
[For Pinnacle Federal Bank, N.A.: that certain Master Loan Agreement dated as of September 15, 2020, by and between Borrower and Lender, evidencing Loans 1-A through 1-H (aggregate outstanding principal balance of $421,600,000; fixed interest rate of 4.22% per annum; maturity date of July 1, 2028), as amended, restated, supplemented, or otherwise modified from time to time]
[For Veltrano Capital Lending Corp.: that certain Loan Agreement dated as of February 1, 2021, by and between Borrower and Lender, evidencing Loans 2-A through 2-D (aggregate outstanding principal balance of $142,300,000; fixed interest rate of 4.68% per annum; maturity date of March 1, 2029), as amended, restated, supplemented, or otherwise modified from time to time]
[For Sycamore Life Insurance Company: that certain Note Purchase Agreement dated as of November 22, 2019, by and between Borrower and Lender, evidencing Loans 3-A and 3-B (aggregate outstanding principal balance of $48,100,000; fixed interest rate of 3.95% per annum; maturity date of December 1, 2030), as amended, restated, supplemented, or otherwise modified from time to time]
(together with all promissory notes, mortgages, deeds of trust, assignments of leases and rents, security agreements, UCC financing statements, and all other documents, instruments, and agreements executed in connection therewith, collectively, the "Loan Documents").
This Guaranty is delivered in connection with the change of control of Borrower resulting from the transfer of one hundred percent (100%) of the membership interests in Borrower from Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership (the "Original Guarantor"), to Guarantor pursuant to that certain Purchase and Sale Agreement, dated as of February 28, 2024 (the "Purchase Agreement"), by and between the Original Guarantor, as seller, and Guarantor, as buyer.
This Guaranty replaces and supersedes in its entirety that certain Carve-Out Guaranty dated [original date] executed by the Original Guarantor in favor of Lender (the "Original Guaranty"). Lender has consented to the change of control contemplated by the Purchase Agreement and to the substitution of Guarantor for the Original Guarantor as guarantor under the Loan Documents, subject to, among other things, the execution and delivery of this Guaranty by Guarantor on or prior to the closing of the transactions contemplated by the Purchase Agreement.
RECITALS
WHEREAS, Borrower is indebted to Lender pursuant to the Loan Documents in the aggregate outstanding principal amount of $[___] (the "Loan"), together with all accrued and unpaid interest thereon and all other amounts payable by Borrower under the Loan Documents;
WHEREAS, the membership interests of Borrower were previously owned, directly or indirectly, by Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership, and the Original Guarantor executed the Original Guaranty in favor of Lender in connection with the origination and funding of the Loan;
WHEREAS, pursuant to the Purchase Agreement, Guarantor has acquired one hundred percent (100%) of the direct or indirect membership interests in Borrower from the Original Guarantor, constituting a change of control under the Loan Documents requiring, among other things, the prior written consent of Lender;
WHEREAS, Lender has consented to such change of control conditioned upon, among other things, the execution and delivery of this Guaranty by Guarantor in favor of Lender to replace and supersede the Original Guaranty in its entirety, and the simultaneous release of the Original Guarantor from its obligations under the Original Guaranty;
WHEREAS, Guarantor has a direct and material economic interest in Borrower and in the Properties securing the Loan, and Guarantor will derive substantial economic benefit from the continued existence and performance of the Loan and from Lender's consent to the change of control, and accordingly Guarantor's execution and delivery of this Guaranty is a condition precedent to Lender's consent to the change of control and constitutes reasonably equivalent value to Guarantor; and
NOW, THEREFORE, in consideration of Lender's consent to the change of control contemplated by the Purchase Agreement, Lender's agreement to release the Original Guarantor from its obligations under the Original Guaranty, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Guarantor, Guarantor hereby covenants and agrees with Lender as follows:
SECTION 1: DEFINED TERMS
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 assigned to such terms in the Loan Documents.
"Borrower" shall have the meaning set forth in the preamble to this Guaranty.
"Guaranteed Obligations" means all Losses arising from or relating to the occurrence of any Non-Recourse Carve-Out or any Springing Recourse Event, as more fully set forth in Section 2 hereof.
"Guarantor" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust, and its successors and permitted assigns.
"Guaranty" means this Replacement Carve-Out Guaranty, as it may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Lender" shall have the meaning set forth in the preamble to this Guaranty, and shall include Lender's successors, participants, and assigns.
"Liquid Assets" shall have the meaning set forth in Section 5(b) hereof.
"Loan" means the loan evidenced and secured by the Loan Documents, including all principal, interest, fees, costs, charges, expenses, and other amounts payable by Borrower under or in connection with the Loan Documents.
"Loan Documents" shall have the meaning set forth in the preamble to this Guaranty, and shall include all amendments, restatements, supplements, modifications, renewals, replacements, consolidations, and extensions thereof.
"Losses" means any and all losses, damages, costs, expenses (including reasonable attorneys' fees and disbursements, expert witness fees, and costs of investigation), liabilities, claims, actions, suits, proceedings, penalties, and judgments of every kind and nature.
"Non-Recourse Carve-Outs" shall have the meaning set forth in Section 2(a) hereof.
"Original Guarantor" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership.
"Original Guaranty" means the Carve-Out Guaranty previously executed by the Original Guarantor in favor of Lender in connection with the origination of the Loan.
"Permitted Transfers" shall have the meaning assigned to such term in the Loan Documents, as modified by Lender's written consent to the change of control contemplated by the Purchase Agreement.
"Property" or "Properties" means the real property or properties secured by the Loan, together with all improvements, fixtures, and appurtenances thereto, as more particularly described in the Loan Documents and in Exhibit B attached hereto.
"Purchase Agreement" means that certain Purchase and Sale Agreement, dated as of February 28, 2024, by and between the Original Guarantor, as seller, and Guarantor, as buyer.
"Springing Recourse Events" shall have the meaning set forth in Section 2(b) hereof.
"Tangible Net Worth" shall have the meaning set forth in Section 5(a) hereof.
All other capitalized terms used in this Guaranty and not otherwise defined herein shall have the respective meanings assigned to such terms in the Loan Documents. In the event of any conflict between the definitions set forth in this Guaranty and the definitions set forth in the Loan Documents, the definitions set forth in this Guaranty shall control solely with respect to the interpretation of this Guaranty.
SECTION 2: GUARANTEED OBLIGATIONS
Section 2(a): Non-Recourse Carve-Out Obligations (Loss Guaranty)
Guarantor hereby absolutely and unconditionally guarantees to Lender the payment and performance of all Losses actually suffered or incurred by Lender by reason of, arising out of, or relating to any of the following acts, omissions, or events by or with respect to Borrower or Guarantor (each, a "Non-Recourse Carve-Out"):
(i) Fraud or Intentional Misrepresentation. Any fraud or intentional misrepresentation by Borrower, Guarantor, or any officer, director, trustee, partner, member, manager, or authorized agent of Borrower or Guarantor in connection with the Loan, including any fraudulent or intentionally misleading statement, certification, or representation made in any application, financial statement, rent roll, certificate, report, or other document delivered to Lender in connection with the Loan;
(ii) Misapplication of Rents and Revenues. Any misapplication or misappropriation of any rents, revenues, income, issues, profits, insurance proceeds, or condemnation awards received by Borrower (or by any person or entity on Borrower's behalf) after the occurrence and during the continuance of an Event of Default under the Loan Documents, to the extent such amounts were required under the Loan Documents to be applied to the Loan, deposited in a lockbox or cash management account maintained for Lender's benefit, or otherwise held for Lender's benefit;
(iii) Misapplication of Security Deposits. Any misapplication or misappropriation of tenant security deposits or other refundable deposits held by or on behalf of Borrower with respect to the Properties (the aggregate amount of such security deposits across the portfolio being approximately $4,283,000 as of the date hereof), including any failure to maintain such deposits in accordance with applicable law and the terms of the applicable tenant leases and the Loan Documents;
(iv) Removal or Disposal of Property. Any removal, transfer, conveyance, or disposal of any portion of any Property or any personal property, fixtures, equipment, or other assets in which Lender has a security interest after the occurrence and during the continuance of an Event of Default under the Loan Documents, other than dispositions occurring in the ordinary course of Borrower's business operations at the Properties (including, without limitation, the replacement of worn or obsolete personal property with items of comparable quality and utility);
(v) Waste. Physical waste committed by Borrower, or permitted by Borrower, on or with respect to any Property, including any material deterioration of any Property caused by the intentional acts or gross negligence of Borrower or Guarantor;
(vi) Failure to Pay Real Property Taxes. Any failure by Borrower to pay, prior to delinquency, real property taxes, assessments, water and sewer charges, or other governmental charges or impositions that could create a lien on any Property senior to, or on parity with, Lender's mortgage lien or deed of trust lien (the annual estimated aggregate real property taxes for the portfolio being approximately $14,760,000), provided that Borrower shall not be deemed to have failed to pay such taxes if (A) Borrower is contesting such taxes in good faith by appropriate legal proceedings in accordance with the terms of the Loan Documents and has established adequate reserves therefor, or (B) such taxes are being paid from escrow or impound accounts maintained by Lender;
(vii) Failure to Maintain Insurance. Any failure by Borrower to maintain insurance coverages in the amounts, types, and with the carriers required by the Loan Documents, or any failure by Borrower to apply or make available insurance proceeds as required by the Loan Documents;
(viii) Breach of SPE Covenants. Any breach of, or failure to comply with, the single-purpose entity covenants, separateness covenants, or organizational requirements set forth in the Loan Documents or in the organizational documents of Borrower, including any failure to maintain Borrower's existence as a separate and distinct legal entity from Guarantor and any other affiliate of Guarantor;
(ix) Affiliate Fees and Compensation. Any fee, commission, management fee, or other compensation paid by Borrower to Guarantor or to any affiliate of Guarantor that is not in the ordinary course of Borrower's business operations or that is not on commercially reasonable terms and conditions consistent with arm's-length transactions, or any such payment that is not expressly permitted under the terms of the Loan Documents; and
(x) Environmental Liabilities. Any environmental liability, cost, or expense arising from Borrower's violation of, or failure to comply with, any environmental laws, rules, or regulations applicable to any Property, to the extent such violation or failure first occurs after the date of this Guaranty, including any costs of investigation, remediation, removal, or monitoring of any hazardous substances or hazardous materials at, on, under, or emanating from any Property.
The obligations of Guarantor under this Section 2(a) shall be limited to the actual Losses suffered or incurred by Lender as a result of the occurrence of one or more of the foregoing Non-Recourse Carve-Outs, as determined by a court of competent jurisdiction or as agreed upon by the parties.
Section 2(b): Springing Full Recourse Events (Full Recourse Guaranty)
Notwithstanding anything to the contrary contained in the Loan Documents or in Section 2(a) above, the entire outstanding indebtedness, obligations, and liabilities of Borrower under the Loan Documents (including, without limitation, the entire outstanding principal balance of the Loan, all accrued and unpaid interest thereon, and all other amounts payable by Borrower under the Loan Documents) shall become fully recourse to Guarantor, and Guarantor shall be personally liable for the payment and performance thereof, upon the occurrence of any of the following events (each, a "Springing Recourse Event"):
(i) Voluntary Bankruptcy. Any voluntary filing by Borrower of a petition for relief under Title 11 of the United States Code (the Bankruptcy Code), or any voluntary filing by Borrower under any other federal or state bankruptcy, insolvency, receivership, or similar debtor relief statute, or any voluntary dissolution, liquidation, or winding up of Borrower, or any voluntary assignment by Borrower for the benefit of its creditors. For the avoidance of doubt, any such voluntary filing by Guarantor, in its capacity as the direct or indirect owner and controller of Borrower, that results in, or is intended to result in, the filing of a petition by or on behalf of Borrower shall constitute a Springing Recourse Event hereunder;
(ii) Collusive Involuntary Bankruptcy. The filing of an involuntary petition for relief against Borrower under the Bankruptcy Code or any other federal or state bankruptcy, insolvency, receivership, or similar debtor relief statute, unless such involuntary petition is dismissed within ninety (90) days of the date of filing, but only to the extent that such involuntary filing was caused by, solicited by, or the result of collusion with Borrower, Guarantor, or any affiliate of Borrower or Guarantor;
(iii) Prohibited Transfers. Any sale, conveyance, transfer, assignment, pledge, encumbrance, or other disposition (whether voluntary, involuntary, or by operation of law) of all or any portion of any Property or of any direct or indirect ownership interest in Borrower in violation of the transfer restrictions and prohibitions set forth in the Loan Documents, other than Permitted Transfers expressly authorized under the Loan Documents (as modified by Lender's consent to the change of control);
(iv) Unauthorized Subordinate Financing. The incurrence, creation, assumption, or guaranty of any subordinate or mezzanine debt, or the granting of any subordinate lien, security interest, or encumbrance, secured by or relating to any Property or any direct or indirect ownership interest in Borrower, without the prior written consent of Lender, except to the extent expressly permitted under the Loan Documents; and
(v) Substantive Consolidation. Any violation of the single-purpose entity requirements or separateness covenants set forth in the Loan Documents that results in, or is a material contributing factor to, the substantive consolidation of the assets and liabilities of Borrower with those of Guarantor or any other person or entity in any bankruptcy, insolvency, or similar proceeding.
Upon the occurrence of a Springing Recourse Event, Guarantor's liability hereunder shall not be limited to Losses actually suffered by Lender but shall extend to the full amount of the outstanding indebtedness and obligations of Borrower under the Loan Documents, as if Borrower's obligations under the Loan Documents were fully recourse obligations.
SECTION 3: NATURE OF GUARANTY
This Guaranty is an absolute, unconditional, irrevocable, and continuing guaranty of payment and performance and not merely a guaranty of collection. Guarantor's obligations hereunder are primary and independent of Borrower's obligations under the Loan Documents and are not conditioned upon Lender's pursuit of any remedy against Borrower, any other guarantor, or any collateral securing the Loan.
Lender may, at its election, proceed directly and immediately against Guarantor to collect and enforce the Guaranteed Obligations without first pursuing or exhausting any right, remedy, or claim against Borrower, any other guarantor, any collateral, or any other person or entity. Lender shall not be required to make any demand upon, or pursue or exhaust any of its rights or remedies against, Borrower, any other guarantor, or any other person or entity, or with respect to any collateral, prior to or as a condition to enforcing this Guaranty.
Guarantor's obligations under this Guaranty shall not be released, diminished, impaired, reduced, or otherwise affected by any of the following, and Guarantor hereby consents to each of the following without notice to or further assent from Guarantor:
(a) Any extension, renewal, modification, amendment, supplement, restatement, increase, decrease, or restructuring of the Loan Documents, including any increase in the principal amount of the Loan, any change in the interest rate or maturity date, or any change in the terms of repayment;
(b) Any release, substitution, exchange, impairment, or addition of any collateral for the Loan, including any release of any Property from the lien of any mortgage or deed of trust securing the Loan;
(c) Any release, substitution, or discharge of any other guarantor, co-guarantor, or surety for the Loan;
(d) Any failure of Lender to perfect or maintain a perfected security interest or lien in any collateral securing the Loan, or any loss of priority of any such security interest or lien;
(e) Any impairment, deterioration, destruction, or loss (whether insured or uninsured) of any collateral securing the Loan;
(f) The bankruptcy, insolvency, dissolution, liquidation, reorganization, or receivership of Borrower, or the commencement of any case or proceeding relating thereto, including any discharge, stay, injunction, or other order obtained in connection therewith;
(g) The failure of Lender to exercise diligence or reasonable care in the preservation, protection, or enforcement of any collateral, right, or remedy;
(h) Any defense, setoff, counterclaim, or cross-claim that Borrower may have or assert against Lender (whether or not relating to the Loan);
(i) The invalidity, illegality, or unenforceability of any provision of the Loan Documents or of Borrower's obligations thereunder; and
(j) Any other circumstance, occurrence, or condition that might otherwise constitute a legal or equitable defense available to, or a discharge of, a guarantor, surety, or accommodation party, to the fullest extent permitted by applicable law.
This Guaranty shall continue to be effective, and Guarantor's obligations hereunder shall continue in full force and effect, irrespective of any of the foregoing circumstances, whether or not Guarantor shall have had notice or knowledge thereof. This Guaranty shall remain in full force and effect until all Guaranteed Obligations have been indefeasibly paid, performed, and discharged in full and the Loan has been fully repaid and the Loan Documents have been terminated.
SECTION 4: WAIVERS BY GUARANTOR
Guarantor hereby unconditionally and irrevocably waives, to the fullest extent permitted by applicable law:
(a) Notice of Acceptance. Any notice of acceptance of this Guaranty by Lender. Guarantor acknowledges that Lender's acceptance of this Guaranty is conclusively established by Lender's execution of the acknowledgment and acceptance set forth on the signature page hereof or, if Lender does not execute such acknowledgment, by Lender's retention of this Guaranty;
(b) Presentment, Demand, Protest, and Notice of Dishonor. Presentment for payment, demand of payment, protest, notice of protest, notice of dishonor, and notice of nonpayment with respect to the Loan or any instrument or agreement evidencing the Loan;
(c) Notice of Modification. Notice of any modification, amendment, extension, renewal, supplement, restatement, or other change in the terms or conditions of the Loan Documents or of any collateral securing the Loan;
(d) Notice of Default. Notice of any default or Event of Default under the Loan Documents, or of the occurrence of any event that, with the giving of notice or the passage of time, or both, would constitute an Event of Default under the Loan Documents;
(e) Suretyship Defenses. Any right to require Lender to (i) proceed first against Borrower or any other person or entity, (ii) proceed first against or exhaust any collateral securing the Loan, (iii) marshal any assets of Borrower or any other person or entity, or (iv) pursue any other right, remedy, or claim before proceeding against Guarantor under this Guaranty. Guarantor hereby waives all suretyship defenses and all defenses in the nature of suretyship;
(f) Statute of Limitations, Laches, and Estoppel. Any defense arising from the statute of limitations applicable to the enforcement of this Guaranty, or any defense based on laches, waiver, or estoppel, in each case to the fullest extent permitted by applicable law;
(g) Setoff, Counterclaim, and Cross-Claim. Any right to assert any setoff, counterclaim, recoupment, or cross-claim against Lender in any action or proceeding to enforce this Guaranty, except for compulsory counterclaims that would be waived if not asserted in such action or proceeding;
(h) Election of Remedies. Any defense based on Lender's election of remedies, including any election to proceed by non-judicial foreclosure, judicial foreclosure, power of sale, or any other remedy available to Lender under the Loan Documents or applicable law; and
(i) Anti-Deficiency and One-Action Statutes. The benefits of any anti-deficiency statutes, one-action rules, fair value limitations, or similar statutes or rules of law, to the extent applicable to Guarantor's obligations under this Guaranty, including any such statutes or rules arising under the laws of any state in which any Property is located.
Guarantor acknowledges that the waivers set forth in this Section 4 have been made knowingly, voluntarily, and with full understanding of their legal consequences, after consultation with Guarantor's legal counsel.
SECTION 5: FINANCIAL COVENANTS OF GUARANTOR
Section 5(a): Minimum Tangible Net Worth
Guarantor covenants and agrees that, at all times while any portion of the Loan remains outstanding, Guarantor shall maintain a Tangible Net Worth of not less than Five Hundred Million Dollars ($500,000,000).
For purposes of this Guaranty, "Tangible Net Worth" means, as of any date of determination, (i) the total assets of Guarantor minus (ii) the total liabilities of Guarantor minus (iii) the intangible assets of Guarantor, including, without limitation, goodwill, trademarks, trade names, service marks, copyrights, patents, licenses, franchises, permits, and similar intangible items, in each case as determined in accordance with generally accepted accounting principles in the United States ("GAAP") applied on a consistent basis. For the avoidance of doubt, Tangible Net Worth shall not include any minority or non-controlling interests in entities that are not wholly owned by Guarantor unless such interests are consolidated in Guarantor's financial statements in accordance with GAAP.
Compliance with this Section 5(a) shall be tested as of the last day of each fiscal quarter of Guarantor, commencing with the first full fiscal quarter ending after the date of this Guaranty.
Section 5(b): Minimum Liquid Assets
Guarantor covenants and agrees that, at all times while any portion of the Loan remains outstanding, Guarantor shall maintain Liquid Assets of not less than Fifty Million Dollars ($50,000,000).
For purposes of this Guaranty, "Liquid Assets" means, as of any date of determination, the sum of (i) unrestricted cash held by Guarantor and its consolidated subsidiaries, (ii) unrestricted cash equivalents held by Guarantor and its consolidated subsidiaries (including money market funds, certificates of deposit with maturities of ninety (90) days or less, and United States Treasury obligations with maturities of one year or less), (iii) marketable securities held by Guarantor and its consolidated subsidiaries that are readily convertible to cash within thirty (30) days without material penalty or loss, and (iv) amounts available to be drawn by Guarantor under any committed, unsecured revolving credit facility that is in effect and under which no default or event of default has occurred and is continuing (including, without limitation, Guarantor's $750,000,000 unsecured revolving credit facility with Aldgate National Bank, N.A., dated as of August 14, 2022, bearing interest at the Secured Overnight Financing Rate (SOFR) plus 130 basis points per annum, as such facility may be amended, restated, or replaced from time to time). "Liquid Assets" shall not include restricted cash, escrowed funds, tenant security deposits, or any other cash or investments that are subject to contractual, legal, or regulatory restrictions on withdrawal or use.
Compliance with this Section 5(b) shall be tested as of the last day of each fiscal quarter of Guarantor, commencing with the first full fiscal quarter ending after the date of this Guaranty.
Section 5(c): Financial Reporting
Guarantor shall deliver to Lender the following financial statements, certificates, and reports within the time periods specified below:
(i) Annual Audited Financial Statements. Within one hundred twenty (120) days after the end of each fiscal year of Guarantor, annual consolidated financial statements of Guarantor (including a consolidated balance sheet, consolidated statement of operations, consolidated statement of equity, and consolidated statement of cash flows), prepared in accordance with GAAP, and audited by a nationally or regionally recognized independent certified public accounting firm. Guarantor's current independent auditor is Ashford Prewitt LLP, located at 1 South Street, Suite 2700, Baltimore, Maryland 21202 (engagement partner: Martin Ashford, CPA). A change in Guarantor's independent auditor to a firm other than a nationally or regionally recognized accounting firm shall require prior written notice to Lender;
(ii) 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 and consolidated statement of operations), prepared in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnote disclosures), and certified by an authorized officer of Guarantor as fairly presenting in all material respects the financial condition and results of operations of Guarantor as of and for the periods covered thereby;
(iii) Annual Compliance Certificate. Concurrently with the delivery of the annual audited financial statements required by clause (i) above, an annual compliance certificate signed by Guarantor's chief financial officer (currently Patricia Sung-Calloway, CFO of Fairwater Real Estate Investment Trust) certifying that (A) Guarantor is in compliance with the Tangible Net Worth covenant set forth in Section 5(a), including a calculation of Tangible Net Worth as of the last day of the fiscal year, (B) Guarantor is in compliance with the Liquid Assets covenant set forth in Section 5(b), including a calculation of Liquid Assets as of the last day of the fiscal year, and (C) no event has occurred and is continuing that constitutes, or with the giving of notice or the passage of time, or both, would constitute, a breach of any of Guarantor's obligations under this Guaranty. A form of compliance certificate reasonably acceptable to Lender shall be agreed upon by Guarantor and Lender within thirty (30) days after the date of this Guaranty;
(iv) SEC Filings. To the extent Guarantor is, and for so long as Guarantor remains, a reporting company subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, Guarantor shall deliver to Lender copies of Guarantor's annual reports on Form 10-K and quarterly reports on Form 10-Q, within ten (10) business days of the filing thereof with the Securities and Exchange Commission. Guarantor represents that, as of the date hereof, Guarantor is listed on the New York Stock Exchange under ticker symbol "FREIT" and has an approximate market capitalization of $4,800,000,000 as of the fourth quarter of 2023. Delivery of SEC filings via the EDGAR system or by providing Lender with a link to such filings on the SEC's website shall satisfy this requirement.
Guarantor shall promptly notify Lender in writing of any actual or anticipated breach of the financial covenants set forth in Section 5(a) or Section 5(b), and of any material adverse change in Guarantor's financial condition, in each case within five (5) business days after Guarantor becomes aware of such breach or material adverse change.
SECTION 6: REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Guarantor hereby represents and warrants to Lender as of the date hereof as follows:
(a) Organization and Good Standing. Guarantor is a real estate investment trust duly formed, validly existing, and in good standing under the laws of the State of Maryland. Guarantor has the full power and authority to own its properties and assets and to conduct its business as currently conducted. Guarantor is duly qualified to do business and is in good standing in each jurisdiction where the nature of its business or the ownership 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.
(b) Authority. Guarantor has full power, authority, and legal right to execute, deliver, and perform this Guaranty and each other document, instrument, and agreement to be executed and delivered by Guarantor in connection herewith. The execution, delivery, and performance of this Guaranty have been duly authorized by all necessary action on the part of Guarantor, including all necessary approvals by Guarantor's board of trustees. No further consent, approval, authorization, or order of, or filing or registration with, any court, governmental authority, or third party is required in connection with the execution, delivery, and performance by Guarantor of this Guaranty.
(c) Enforceability. This Guaranty 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 creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery, and performance of this Guaranty by Guarantor do not and will not (i) violate or conflict with Guarantor's declaration of trust, bylaws, or any other organizational documents of Guarantor, (ii) violate or conflict with any law, rule, regulation, order, writ, judgment, injunction, or decree applicable to Guarantor, (iii) result in a breach of, constitute a default under, or give rise to a right of termination, acceleration, or cancellation under any material agreement, contract, indenture, mortgage, or instrument to which Guarantor is a party or by which Guarantor or any of its assets is bound, or (iv) result in the creation or imposition of any lien, charge, or encumbrance on any asset of Guarantor.
(e) Litigation. There is no pending or, to Guarantor's Knowledge (as defined below), threatened action, suit, proceeding, investigation, arbitration, or claim before any court, tribunal, governmental body, or arbitrator that would reasonably be expected to materially adversely affect Guarantor's ability to perform its obligations under this Guaranty, or that challenges or seeks to prevent, enjoin, or delay the transactions contemplated hereby.
(f) Financial Condition. The financial statements of Guarantor most recently delivered to Lender have been prepared in accordance with GAAP and fairly present, in all material respects, the financial condition, results of operations, and cash flows of Guarantor as of and for the periods covered thereby. Since the date of such financial statements, there has been no material adverse change in the financial condition, business, properties, or operations of Guarantor. As of the date hereof, Guarantor satisfies the Tangible Net Worth covenant set forth in Section 5(a) and the Liquid Assets covenant set forth in Section 5(b).
(g) REIT Status. Guarantor has duly and validly elected to be treated as a real estate investment trust under Section 856 of the Internal Revenue Code of 1986, as amended (the "Code"), and has been so treated for all taxable years since its formation. Guarantor is currently in compliance with all requirements for qualification as a real estate investment trust under the Code and intends to continue to maintain such qualification for the foreseeable future.
(h) No Bankruptcy. No petition in bankruptcy, petition for reorganization, or petition for relief under any bankruptcy, insolvency, or debtor relief statute has been filed by or, to Guarantor's Knowledge, against Guarantor. Guarantor has not made an assignment for the benefit of creditors, and no receiver, trustee, custodian, or liquidator has been appointed for Guarantor or any of its assets. Guarantor is solvent and is paying its debts as they become due.
(i) Knowledge Individuals. For purposes of all representations, warranties, and covenants in this Guaranty that are qualified by Guarantor's "knowledge" or words of similar import, "Guarantor's Knowledge" means the actual (and not constructive or imputed) knowledge of the following individuals, each of whom is an officer or senior employee of Guarantor with responsibility for the subject matter to which the applicable representation, warranty, or covenant relates: (A) Marcus Devereaux, Executive Vice President, Acquisitions; (B) Leah Torrance, Senior Vice President, Asset Management; and (C) David Elgin Park, General Counsel.
The representations and warranties set forth in this Section 6 shall survive the execution and delivery of this Guaranty and shall be deemed to be remade as of each date on which Guarantor delivers a compliance certificate or financial statements to Lender pursuant to Section 5(c).
SECTION 7: SUBROGATION
Guarantor shall have no right of subrogation against Borrower, and Guarantor hereby waives, until the Loan has been indefeasibly paid and performed in full and the Loan Documents have been fully discharged and terminated, any and all rights of subrogation, contribution, reimbursement, exoneration, or indemnity against Borrower, and any right of recourse to, or with respect to, any assets or property of Borrower, whether any such right arises by contract, by operation of law, in equity, or otherwise, in each case to the extent arising from or in connection with any payment made or obligation performed by Guarantor under this Guaranty. Until such time as the Loan has been indefeasibly paid and performed in full and the Loan Documents have been fully discharged and terminated, Guarantor waives all rights of subrogation, whether contractual, statutory, arising under common law, or otherwise, including any rights arising under Sections 509 or 553 of the Bankruptcy Code.
If any amount shall be paid to Guarantor on account of any such right of subrogation, contribution, reimbursement, exoneration, or indemnity prior to the indefeasible payment and performance in full of the Loan and the full discharge and termination of the Loan Documents, such amount shall be received and held by Guarantor in trust for the benefit of Lender and shall be promptly paid over to Lender for application to the Loan in such order and manner as Lender may elect in its sole discretion.
SECTION 8: SUBORDINATION
Any and all indebtedness, liabilities, and obligations of Borrower to Guarantor, whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, secured or unsecured, and howsoever evidenced or arising, are hereby subordinated and made subject in right of payment, collection, and enforcement to the prior indefeasible payment and performance in full of all obligations of Borrower to Lender under the Loan Documents. So long as any portion of the Loan remains outstanding, Guarantor shall not collect, enforce, receive, accept, or retain any payment, distribution, or proceeds with respect to any such indebtedness, liabilities, or obligations of Borrower to Guarantor, without the prior written consent of Lender.
If, notwithstanding the foregoing, Guarantor shall receive any payment, distribution, or proceeds from Borrower on account of any such subordinated indebtedness, liabilities, or obligations while the Loan remains outstanding and without Lender's prior written consent, Guarantor shall receive and hold such payment, distribution, or proceeds in trust for the benefit of Lender and shall promptly pay over and deliver such payment, distribution, or proceeds to Lender in the form received (with any necessary endorsements) for application to the Loan in such order and manner as Lender may elect in its sole discretion.
SECTION 9: AMENDMENTS, MODIFICATIONS, AND WAIVERS
No amendment, modification, supplement, restatement, or waiver of any provision of this Guaranty, and no consent to any departure by Guarantor from any provision of this Guaranty, shall be effective unless the same shall be in writing and signed by Lender and Guarantor (or, in the case of a waiver, signed by the party against whom enforcement of such waiver is sought). Any such amendment, modification, supplement, restatement, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which it was given.
No failure or delay by Lender in exercising any right, remedy, or power under this Guaranty shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power preclude any other or further exercise thereof or the exercise of any other right, remedy, or power. The rights, remedies, and powers of Lender under this Guaranty are cumulative and not exclusive of any other rights, remedies, or powers that Lender may have under the Loan Documents, at law, in equity, or otherwise.
SECTION 10: SUCCESSORS AND ASSIGNS
This Guaranty shall be binding upon Guarantor and Guarantor's successors and assigns, and shall inure to the benefit of Lender and Lender's successors, participants, and assigns. Guarantor may not assign, delegate, or transfer any of its rights or obligations under this Guaranty without the prior written consent of Lender, and any attempted assignment, delegation, or transfer without such consent shall be void and of no force or effect.
Lender may, without notice to or the consent of Guarantor, sell, assign, transfer, or participate in all or any portion of its rights and interests under this Guaranty and the Loan Documents in connection with any sale, transfer, assignment, or participation of the Loan. In the event of any such sale, assignment, transfer, or participation, the assignee, transferee, or participant shall have, to the extent of the interest so assigned, transferred, or participated, the same rights and benefits under this Guaranty as Lender, and Guarantor shall continue to be bound by this Guaranty with respect to any such assignee, transferee, or participant.
SECTION 11: NOTICES
All notices, demands, requests, consents, approvals, and other communications required or permitted to be given under this Guaranty shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) sent by a nationally recognized overnight courier service (with tracking capability), or (iii) sent by certified or registered mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as may be specified by notice given in accordance with this Section 11):
If to Guarantor:
Fairwater Real Estate Investment Trust 7200 Chesapeake Parkway, Suite 1100 Columbia, Maryland 21044
Attention: David Elgin Park, General Counsel
Telephone: (410) 555-1800
With a copy to (which shall not constitute notice):
Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, New York 10022
Attention: Douglas Fairchild, Esq.
Telephone: (212) 555-6300
If to Lender:
[Insert Lender's address as set forth in the preamble to this Guaranty]
Attention: [Bradley Carston, Senior Vice President (Pinnacle Federal Bank, N.A.) / Denise Alvarado, Managing Director (Veltrano Capital Lending Corp.) / Graham Hilliard, Vice President, Mortgage Investments (Sycamore Life Insurance Company)]
With a copy to (which shall not constitute notice):
[Whitfield & Archer LLP (for Pinnacle Federal Bank, N.A.) / Cranford McCabe LLP (for Veltrano Capital Lending Corp.) / Partridge Wynn & Slater LLP (for Sycamore Life Insurance Company)] [Insert applicable counsel address]
Attention: [Insert applicable contact name]
All such notices, demands, requests, consents, approvals, and other communications shall be effective (A) if delivered personally, upon delivery, (B) if sent by nationally recognized overnight courier service, on the next business day following deposit with such courier service, or (C) if sent by certified or registered mail, on the third business day following deposit in the United States mail. Any notice that is refused by the intended recipient shall be deemed to have been effectively given on the date of such refusal.
SECTION 12: RELEASE OF ORIGINAL GUARANTOR
Upon the execution and delivery of this Guaranty by Guarantor and the acceptance hereof by Lender (whether by execution of the acknowledgment and acceptance set forth on the signature page hereof or otherwise), the Original Guarantor (Greystone Meridian Partners Fund III, L.P.) shall be automatically and irrevocably released and discharged from any and all obligations, liabilities, and claims of Lender arising under or in connection with the Original Guaranty. Lender hereby confirms that, upon such execution and delivery, the Original Guaranty shall terminate and shall be of no further force or effect, and Lender shall have no further rights or claims against the Original Guarantor under or in connection with the Original Guaranty.
Notwithstanding the foregoing, the release and discharge of the Original Guarantor contemplated by this Section 12 shall not release or discharge the Original Guarantor from any claims, liabilities, or obligations arising from acts, omissions, or events occurring prior to the date hereof, but only to the extent that Lender has provided written notice to the Original Guarantor of such claims, liabilities, or obligations on or prior to the date hereof. For the avoidance of doubt, if Lender has not provided written notice of any such pre-closing claim to the Original Guarantor on or prior to the date hereof, the Original Guarantor shall be fully and irrevocably released from all obligations under the Original Guaranty as of the date hereof.
SECTION 13: GOVERNING LAW
This Guaranty shall be governed by, and construed and enforced in accordance with, the laws of the State of New York (consistent with the governing law provision of the Purchase Agreement), without regard to conflicts of laws principles that would require the application of the laws of any other jurisdiction. Guarantor acknowledges that the State of New York has a substantial relationship to the parties and the transactions contemplated hereby and that the choice of New York law is reasonable.
Notwithstanding the foregoing, to the extent the applicable Loan Documents specify a governing law other than New York law (e.g., the law of the state in which the applicable Property or Properties are located), the governing law provision of the Loan Documents shall control with respect to the interpretation and enforcement of this Guaranty, in which case the following bracketed instruction shall apply: [Bracketed: insert governing law per applicable Loan Documents].
SECTION 14: JURISDICTION AND VENUE
Guarantor hereby irrevocably and unconditionally submits to the exclusive jurisdiction of (i) the United States District Court for the Southern District of New York and (ii) the Supreme Court of the State of New York, County of New York, and any appellate courts thereof, for the purposes of any action, suit, or proceeding arising out of or relating to this Guaranty or the transactions contemplated hereby; provided, however, that if the applicable Loan Documents specify a different jurisdiction, such other jurisdiction shall also be available to Lender at its election.
Guarantor hereby irrevocably and unconditionally waives (a) any objection it may now or hereafter have to the laying of venue of any action, suit, or proceeding arising out of or relating to this Guaranty in any court referred to in this Section 14 and (b) any claim that any such action, suit, or proceeding has been brought in an inconvenient forum.
SECTION 15: WAIVER OF JURY TRIAL
GUARANTOR AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, CLAIM, COUNTERCLAIM, OR CROSS-CLAIM ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTY, THE LOAN DOCUMENTS, OR ANY MATTER RELATED HERETO OR THERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. GUARANTOR AND LENDER EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS GUARANTY AND THAT EACH HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THIS WAIVER. GUARANTOR AND LENDER EACH CERTIFY 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.
SECTION 16: ATTORNEYS' FEES
If Lender commences any action, suit, or proceeding to enforce this Guaranty, or if Lender is required to defend any action, suit, or proceeding relating to or arising from the enforcement of this Guaranty, and Lender prevails in such action, suit, or proceeding (whether by judgment, settlement, or otherwise), Guarantor shall pay to Lender all of Lender's reasonable and documented attorneys' fees, costs, expenses, and disbursements incurred in connection therewith, including fees, costs, and expenses incurred at trial and on appeal, and in connection with any bankruptcy or insolvency proceeding of Borrower or Guarantor. Any amounts payable by Guarantor under this Section 16 shall bear interest from the date of demand by Lender until paid at the default rate specified in the Loan Documents.
SECTION 17: SEVERABILITY
If any provision of this Guaranty is held to be invalid, illegal, or unenforceable by any court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Guaranty, and the remaining provisions of this Guaranty shall continue in full force and effect. In the event that any provision is held to be invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to replace such provision with a valid, legal, and enforceable provision that achieves, to the greatest extent possible, the economic, business, and legal purposes of the invalid, illegal, or unenforceable provision.
SECTION 18: ENTIRE AGREEMENT
This Guaranty, together with the Loan Documents, the consent letter or letters delivered by Lender in connection with Lender's consent to the change of control contemplated by the Purchase Agreement, and any side letters or agreements entered into between Guarantor and Lender in connection herewith, constitutes the entire agreement between Guarantor and Lender with respect to the subject matter hereof and supersedes the Original Guaranty in its entirety. There are no representations, warranties, covenants, or agreements between Guarantor and Lender relating to the subject matter hereof other than those expressly set forth or referred to herein.
SECTION 19: COUNTERPARTS; ELECTRONIC SIGNATURES
This Guaranty may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Guaranty by facsimile transmission, electronic mail in portable document format (PDF), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall be as effective as delivery of a manually executed original counterpart. The words "execution," "signed," "signature," and words of like import in or related to this Guaranty shall be deemed to include electronic signatures and the keeping of records in electronic form, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature, to the extent and as provided for in any applicable law, including the federal Electronic Signatures in Global and National Commerce Act, the New York Electronic Signatures and Records Act, or any similar state law based on the Uniform Electronic Transactions Act.
SECTION 20: REIT-SPECIFIC PROVISIONS
Notwithstanding anything contained in this Guaranty to the contrary, any obligation or liability of Guarantor under this Guaranty, and any claim by Lender against Guarantor arising under or in connection with this Guaranty, shall be satisfied solely from the assets of Fairwater Real Estate Investment Trust and shall not be a personal liability of, and shall not be enforceable against, any trustee, officer, director, employee, agent, or shareholder of Guarantor individually, in their personal capacities, by reason of their status as a trustee, officer, director, employee, agent, or shareholder of Guarantor. The foregoing limitation is consistent with, and is intended to give full effect to, the provisions of the Maryland REIT statute and the declaration of trust and bylaws of Guarantor providing for the exculpation of trustees, officers, and shareholders of a Maryland real estate investment trust from personal liability for the debts and obligations of such trust.
Nothing in this Guaranty shall be construed to require Guarantor to take any action, or to refrain from taking any action, that would cause Guarantor to fail to qualify as a real estate investment trust under Section 856 of the Internal Revenue Code of 1986, as amended, or that would subject Guarantor to any tax, penalty, or excise tax under Sections 857, 4981, or any other provision of the Code applicable to real estate investment trusts. In the event of any conflict between the provisions of this Guaranty and the requirements for Guarantor's continued qualification as a real estate investment trust under the Code, the requirements for such qualification shall control; provided, however, that this provision shall not relieve Guarantor of its obligations under Section 2 hereof with respect to the payment of Guaranteed Obligations.
[SIGNATURE PAGE FOLLOWS]
SIGNATURE PAGE TO REPLACEMENT CARVE-OUT GUARANTY
IN WITNESS WHEREOF, Guarantor has executed and delivered this Replacement Carve-Out Guaranty as of the date first written above.
GUARANTOR:
FAIRWATER REAL ESTATE INVESTMENT TRUST, a Maryland real estate investment trust
By: ________
Name: Jonathan R. Whitmore
Title: Chief Executive Officer
Date: ________
ACKNOWLEDGED AND ACCEPTED BY LENDER:
[PINNACLE FEDERAL BANK, N.A., a national banking association / VELTRANO CAPITAL LENDING CORP., a Delaware corporation / SYCAMORE LIFE INSURANCE COMPANY, a Connecticut stock life insurance company]
By: ________
Name: [Bradley Carston / Denise Alvarado / Graham Hilliard]
Title: [Senior Vice President / Managing Director / Vice President, Mortgage Investments]
Date: ________
EXHIBIT A TO REPLACEMENT GUARANTY
DESCRIPTION OF LOAN DOCUMENTS
The following is a complete list of the Loan Documents for the applicable Lender facility. This list cross-references Exhibit Q to the Purchase Agreement (Assumed Loan Documents List).
For Pinnacle Federal Bank, N.A.:
1. Master Loan Agreement, dated as of September 15, 2020, by and between Borrower (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) and Pinnacle Federal Bank, N.A., as Lender.