PURCHASE AND SALE AGREEMENT

PURCHASE AND SALE AGREEMENT
EXECUTION VERSION
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")
Dated as of February 28, 2024
Re: Acquisition of 100% of the Membership Interests in Fourteen (14) Property-Owning Delaware Limited Liability Companies
Governing Law: State of New York
TABLE OF CONTENTS
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RECITALS
A. Seller is a Delaware limited partnership whose general partner is Greystone Meridian Capital LLC, a Delaware limited liability company ("Seller GP"). Seller's principal office is located at 3300 Peachtree Road NE, Suite 2200, Atlanta, Georgia 30326. Seller's registered agent address in the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801. Seller GP is managed by Victor Lansdell and Elise Rathborne, each a Co-Founder & Managing Partner of Seller GP.
B. Seller is the sole member of each of the following fourteen (14) Delaware limited liability companies (each, a "Target Entity" and collectively, the "Target Entities"):
1.  GMP Fairfield I LLC
2.  GMP Fairfield II LLC
3.  GMP Westlake LLC
4.  GMP Katy LLC
5.  GMP Alliance LLC
6.  GMP Lakeland LLC
7.  GMP Southport LLC
8.  GMP Murfreesboro LLC
9.  GMP Buckhead LLC
10.  GMP SouthPark LLC
11.  GMP Cool Springs LLC
12.  GMP Brickell LLC
13.  GMP Peachtree LLC
14.  GMP Mount Juliet LLC
C. Each Target Entity is a single-purpose entity that owns one real property (each, a "Property" and collectively, the "Properties" or the "Portfolio"). The Properties are located in five (5) states — Georgia, Texas, Florida, Tennessee, and North Carolina — and comprise ten (10) logistics properties and four (4) office properties totaling approximately 5,224,000 rentable square feet.
D. Buyer is a publicly traded Maryland real estate investment trust, headquartered at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044, with shares of beneficial interest listed on the New York Stock Exchange under the ticker symbol "FREIT" and a market capitalization of approximately $4.8 billion as of the fourth quarter of 2023.
E. Buyer desires to acquire, and Seller desires to sell, assign, transfer, and deliver to Buyer, all of the membership interests (the "Interests") in each Target Entity, on the terms and subject to the conditions set forth in this Agreement.
F. The Properties are subject to existing mortgage indebtedness in the aggregate outstanding principal balance of Six Hundred Twelve Million Dollars ($612,000,000), which Buyer shall assume at Closing subject to receipt of the requisite lender consents as more particularly described in Article VI hereof.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"ABR" means annual base rent, calculated as the aggregate annualized fixed base rent payable under an applicable lease (exclusive of any additional rent, percentage rent, or escalation charges), determined as of the applicable measurement date.
"Additional Deposit" has the meaning set forth in Section 3.2(b), and refers to the amount of Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000) to be deposited with the Escrow Agent by Buyer upon expiration of the Due Diligence Period.
"Adjusted Purchase Price" means the Purchase Price as adjusted pursuant to Section 3.3 (PCA Credit) and Article XII (prorations), which as of the Effective Date is anticipated to be One Billion Ninety-Eight Million Nine Hundred Thirty Thousand Dollars ($1,098,930,000), subject to further adjustment as provided herein.
"Agreement" means this Purchase and Sale Agreement, including all exhibits and schedules attached hereto, as the same may be amended from time to time in accordance with Section 15.5.
"Assumed Debt" means the aggregate outstanding principal balance of the Assumed Loans as of the Closing Date.
"Assumed Loans" means, collectively, the Pinnacle Loans, the Veltrano Loans, and the Sycamore Loans, as more particularly described in Section 6.1.
"Basket" means Five Million Five Hundred Thousand Dollars ($5,500,000), representing 0.5% of the Purchase Price, which shall operate as a tipping basket (and not as a true deductible) as more particularly set forth in Section 13.3(c).
"Business Day" means any day other than a Saturday, Sunday, or any day on which commercial banks located in New York, New York are authorized or required by law to close.
"Buyer" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust.
"Buyer's Knowledge" or "to Buyer's Knowledge" means the actual knowledge, after reasonable inquiry of the Buyer's Knowledge Individuals (as defined below), of the matters in question.
"Buyer's Knowledge Individuals" means Marcus Devereaux (Executive Vice President, Acquisitions), Leah Torrance (Senior Vice President, Asset Management), and David Elgin Park (General Counsel) of Buyer.
"Cap" means the General Rep Cap or the Fundamental Rep Cap, as applicable.
"Cash Equity at Closing" means the amount payable by Buyer to Seller at Closing in immediately available funds, calculated as the Purchase Price minus the Assumed Debt, minus the PCA Credit, and as further adjusted for prorations in accordance with Article XII.
"Change of Control" means any direct or indirect transfer of ownership interests in a Target Entity, as such term (or any analogous term) is defined in each Assumed Loan Agreement.
"Closing" means the consummation of the transactions contemplated by this Agreement, including the delivery of all closing deliverables, the payment of the Cash Equity at Closing, and the assumption of the Assumed Loans.
"Closing Date" means the date on which the Closing occurs. The Scheduled Closing Date is May 31, 2024; the actual Closing Date shall be determined in accordance with Section 11.1, as the same may be extended pursuant to Section 6.6 or Article XIV.
"Confidentiality Agreement" means that certain Non-Disclosure and Confidentiality Agreement dated as of October 10, 2023, by and between Seller and Buyer.
"Consent Fees" means the fees payable to the Assumed Loan lenders in connection with their respective Lender Consents, as more particularly set forth in Section 6.3.
"De Minimis Threshold" means Two Hundred Seventy-Five Thousand Dollars ($275,000) per individual claim, as more particularly set forth in Section 13.3(d).
"Deposit" means, collectively, the Earnest Money Deposit and the Additional Deposit, in the aggregate amount of Fifty-Five Million Dollars ($55,000,000).
"Disclosure Schedules" means Schedule 1 (General Disclosure Schedules) and Schedules 2-1 through 2-14 (Property-Specific Disclosure Schedules) attached hereto.
"Due Diligence Period" means the period commencing on the Effective Date and expiring at 5:00 p.m. Eastern Time on April 15, 2024 (forty-six (46) days from the Effective Date).
"Earnest Money Deposit" has the meaning set forth in Section 3.2(a), and refers to the amount of Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000) to be deposited with the Escrow Agent within two (2) Business Days after the Effective Date.
"Effective Date" means February 28, 2024.
"Environmental Laws" means all applicable federal, state, and local laws, statutes, ordinances, rules, regulations, orders, judgments, and decrees relating to the protection of human health, safety, natural resources, or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), and all analogous state and local laws and regulations.
"Escrow Agent" means Commonwealth National Title Insurance Company, in its capacity as escrow agent under the Escrow Agreement.
"Escrow Agreement" means the escrow agreement in the form attached hereto as Exhibit G, by and among Buyer, Seller, and the Escrow Agent.
"Estoppel" means a tenant estoppel certificate substantially in the form attached hereto as Exhibit E.
"Estoppel Delivery Deadline" means May 15, 2024.
"Fundamental Representations" means, collectively, the representations and warranties of Seller set forth in Section 7.1 (Organization and Authority), Section 7.2 (Authorization; Enforceability), Section 7.3 (No Conflicts; Consents), Section 7.4 (Title to Interests), Section 7.6 (No Bankruptcy), Section 7.14 (FIRPTA), and Section 7.15 (Brokers).
"Fundamental Rep Cap" means One Hundred Ten Million Dollars ($110,000,000), representing ten percent (10%) of the Purchase Price.
"General Rep Cap" means Fifty-Five Million Dollars ($55,000,000), representing five percent (5%) of the Purchase Price.
"Indemnity Escrow" means the amount of Sixteen Million Five Hundred Thousand Dollars ($16,500,000), representing 1.5% of the Purchase Price, to be deposited with the Escrow Agent at Closing in accordance with Section 13.4.
"Interests" means one hundred percent (100%) of the membership interests in each Target Entity.
"Lender Consent" means the written consent of each Assumed Loan lender (or the applicable agent thereof) to the Change of Control contemplated by this Agreement, in form and substance reasonably satisfactory to the parties and the applicable lender.
"Lender Consent Deadline" means May 24, 2024, as may be extended pursuant to Section 6.6.
"Losses" means any and all losses, damages, liabilities, claims, demands, judgments, settlements, costs, and expenses (including reasonable attorneys' fees and expenses) actually incurred by an indemnified party.
"Major Tenant" means any tenant under a lease at any Property with ABR equal to or greater than One Million Five Hundred Thousand Dollars ($1,500,000) per annum.
"Mandatory Cure Items" means (i) monetary liens and encumbrances (including mortgages, deeds of trust, and judgment liens, other than the Assumed Loans), (ii) mechanic's liens, (iii) delinquent real property taxes and assessments, (iv) judgments against any Target Entity, and (v) any matters arising by, through, or under Seller or any Target Entity after the effective date of the applicable title commitment.
"Material Adverse Change" means any event, occurrence, condition, or change that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (i) the Properties, taken as a whole, (ii) the Target Entities, taken as a whole, or (iii) Seller's ability to consummate the transactions contemplated hereby; provided, however, that none of the following shall constitute a Material Adverse Change: (a) changes in general economic or market conditions, (b) changes affecting the commercial real estate industry generally, or (c) changes resulting from acts of God, pandemic, war, or terrorism.
"Outside Date" means June 14, 2024, as may be extended by mutual written agreement of the parties.
"PCA Credit" has the meaning set forth in Section 3.3(a).
"Permitted Exceptions" means those exceptions to title set forth on Exhibit P attached hereto.
"Pinnacle Loans" means, collectively, Loans 1-A through 1-H, having an aggregate outstanding principal balance of Four Hundred Twenty-One Million Six Hundred Thousand Dollars ($421,600,000), evidenced and governed by the Master Loan Agreement dated September 15, 2020, by and between each applicable Target Entity (as borrower) and Pinnacle Federal Bank, N.A. (as lender), as amended from time to time.
"Portfolio" means, collectively, the fourteen (14) Properties.
"Properties" means the fourteen (14) real properties owned by the Target Entities, as more particularly described on Exhibit A attached hereto.
"Property" means any one of the Properties.
"Purchase Price" means One Billion One Hundred Million Dollars ($1,100,000,000).
"R&W Insurance Policy" means the buyer-side representations and warranties insurance policy to be obtained by Buyer from Sentinel Specialty Insurance Company in accordance with Section 9.5.
"Rent Roll" means the rent roll attached hereto as Exhibit H, setting forth certain information with respect to the leases at the Properties as of December 31, 2023.
"Replacement Guaranty" means a guaranty in the form attached hereto as Exhibit S, to be executed and delivered by Buyer in favor of each Assumed Loan lender at Closing.
"Veltrano Loans" means, collectively, Loans 2-A through 2-D, having an aggregate outstanding principal balance of One Hundred Forty-Two Million Three Hundred Thousand Dollars ($142,300,000), evidenced and governed by the Loan Agreement dated February 1, 2021, by and between each applicable Target Entity (as borrower) and Veltrano Capital Lending Corp. (as lender), as amended from time to time.
"Scheduled Closing Date" means May 31, 2024.
"Security Deposits" means the aggregate tenant security deposits in the amount of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000), held in accounts maintained by the Target Entities at Magnolia Commerce Bank, N.A.
"Seller" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership.
"Seller GP" means Greystone Meridian Capital LLC, a Delaware limited liability company, in its capacity as the general partner of Seller.
"Seller's Knowledge" or "to Seller's Knowledge" means the actual knowledge, after reasonable inquiry of the Seller's Knowledge Individuals (as defined below), of the matters in question.
"Seller's Knowledge Individuals" means Victor Lansdell (Co-Founder & Managing Partner of Seller GP), Elise Rathborne (Co-Founder & Managing Partner of Seller GP), and Sean Kilpatrick (Portfolio Manager, Argyle Property Services LLC).
"SNDA" means a Subordination, Non-Disturbance and Attornment Agreement substantially in the form attached hereto as Exhibit F.
"SNDA Delivery Deadline" means May 15, 2024.
"Sycamore Loans" means, collectively, Loans 3-A and 3-B, having an aggregate outstanding principal balance of Forty-Eight Million One Hundred Thousand Dollars ($48,100,000), evidenced and governed by the Note Purchase Agreement dated November 22, 2019, by and between each applicable Target Entity (as borrower) and Sycamore Life Insurance Company (as lender), as amended from time to time.
"Target Entity" means each of the fourteen (14) Delaware limited liability companies listed in Recital B hereof, and "Target Entities" means all of them, collectively.
"Title Company" means Commonwealth National Title Insurance Company, 191 Peachtree Street NE, Suite 800, Atlanta, Georgia 30303.
"Title Policy" means an ALTA Owner's Policy of Title Insurance (2021 form) issued by the Title Company with respect to each Property.
"Transfer Taxes" means all documentary stamp taxes, transfer taxes, controlling-interest transfer taxes, deed recording taxes, and similar charges imposed by any governmental authority in connection with the transactions contemplated hereby.
"Transition Services Agreement" means the transition services agreement in the form attached hereto as Exhibit L, to be entered into at Closing by and between Argyle Property Services LLC and Fairwater Property Management LLC.
Section 1.2 — Rules of Construction
The following rules of construction shall apply to this Agreement:
(a) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation" and shall not be construed to limit any general statement to the specific or similar items or matters immediately following it.
(b) References to any exhibit, schedule, article, section, or subsection shall be deemed references to the applicable exhibit, schedule, article, section, or subsection of this Agreement, unless the context otherwise requires.
(c) All references to "days" shall mean calendar days unless the term "Business Days" is used. If the last day for the performance of any obligation or the exercise of any right hereunder falls on a day that is not a Business Day, the period shall be extended to the next succeeding Business Day.
(d) All references to "$" or "Dollars" shall mean United States dollars.
(e) The headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of any provision hereof.
(f) Whenever the context requires, the singular shall include the plural, the plural shall include the singular, and the masculine, feminine, and neuter genders shall each include the others.
(g) The term "knowledge" with respect to any party shall mean the actual knowledge, after reasonable inquiry of the applicable Knowledge Individuals named herein, of the matters in question. The standard of "reasonable inquiry" requires each Knowledge Individual to make inquiry of those persons under his or her supervision who would reasonably be expected to have knowledge of the relevant matter, and to review applicable files and records in the Knowledge Individual's possession or control.
(h) Unless the context otherwise requires, all references to statutes, regulations, or other laws shall include any amendments, modifications, supplements, or successor provisions thereto.
(i) The words "herein," "hereof," "hereby," "hereunder," and other words of similar import refer to this Agreement as a whole and not to any particular section or provision.
ARTICLE II — SALE AND PURCHASE OF INTERESTS
Section 2.1 — Agreement to Sell and Purchase
Subject to the terms and conditions of this Agreement, at the Closing, Seller agrees to sell, assign, transfer, convey, and deliver to Buyer, and Buyer agrees to purchase, acquire, and accept from Seller, all of the Interests, consisting of one hundred percent (100%) of the membership interests in each of the fourteen (14) Target Entities, free and clear of all liens, encumbrances, pledges, security interests, claims, and restrictions (other than those arising under the Assumed Loans and restrictions imposed by the organizational documents of the Target Entities, as disclosed to Buyer). The consideration for such sale and purchase shall be the Purchase Price, payable in the manner set forth in Article III.
Section 2.2 — Assets of the Target Entities
The parties acknowledge and agree that each Target Entity is a single-purpose entity that owns one Property and that the acquisition of the Interests constitutes the indirect acquisition of the Properties and all related assets held by the Target Entities, including all real property, improvements, fixtures, personal property, leases, contracts, permits, licenses, and intangible property associated therewith.
The Portfolio is comprised of fourteen (14) Properties totaling approximately 5,224,000 rentable square feet, consisting of ten (10) logistics properties (approximately 4,373,000 rentable square feet, representing approximately 83.7% of the Portfolio) and four (4) office properties (approximately 851,000 rentable square feet, representing approximately 16.3% of the Portfolio), located across five (5) states: Georgia (four properties), Texas (three properties), Florida (three properties), Tennessee (three properties), and North Carolina (one property).
The complete property list, with addresses, Target Entity owners, approximate rentable square footage, year of construction or last major renovation, and applicable loan designation, is as follows:
Section 2.3 — No Asset-Level Transfer
The parties confirm and agree that the transaction contemplated by this Agreement is structured as an entity-level purchase (i.e., the transfer of one hundred percent (100%) of the membership interests in each Target Entity), and not as an asset-level transfer. No deeds, bills of sale, or other conveyance instruments shall be recorded in connection with the transfer of ownership of the Properties. The Properties shall continue to be owned by the same Target Entities following the Closing, with Buyer succeeding Seller as the sole member of each Target Entity. To the extent that any assignment of leases, contracts, or other agreements is required or appropriate to document the change of membership, such assignments shall be in supplement to the Assignments and Assumptions of Membership Interests delivered at Closing and shall not constitute a separate conveyance of the underlying real property.
ARTICLE III — PURCHASE PRICE
Section 3.1 — Purchase Price
The purchase price for the Interests shall be One Billion One Hundred Million Dollars ($1,100,000,000) (the "Purchase Price"). The Purchase Price shall be payable as follows:
(a) Assumed Debt. At Closing, Buyer shall assume (or cause the Target Entities to continue to be obligated under) the Assumed Loans in the aggregate outstanding principal balance of Six Hundred Twelve Million Dollars ($612,000,000), allocated among the three lender facilities as follows:
(i) Pinnacle Federal Bank, N.A.: Four Hundred Twenty-One Million Six Hundred Thousand Dollars ($421,600,000) (Loans 1-A through 1-H);
(ii) Veltrano Capital Lending Corp.: One Hundred Forty-Two Million Three Hundred Thousand Dollars ($142,300,000) (Loans 2-A through 2-D); and
(iii) Sycamore Life Insurance Company: Forty-Eight Million One Hundred Thousand Dollars ($48,100,000) (Loans 3-A and 3-B).
(b) Cash Equity at Closing. The balance of the Purchase Price, in the amount of Four Hundred Eighty-Eight Million Dollars ($488,000,000), shall be payable by Buyer to Seller at Closing by wire transfer of immediately available funds, subject to adjustment as provided in Section 3.3 hereof and Article XII hereof.
Section 3.2 — Earnest Money Deposit and Additional Deposit
(a) Earnest Money Deposit. Within two (2) Business Days after the Effective Date (i.e., no later than March 1, 2024), Buyer shall deposit the sum of Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000) (the "Earnest Money Deposit"), representing 2.5% of the Purchase Price, with Commonwealth National Title Insurance Company, as Escrow Agent, by wire transfer of immediately available funds, to be held in escrow pursuant to the terms of the Escrow Agreement attached hereto as Exhibit G.
(b) Additional Deposit. Upon the expiration of the Due Diligence Period (i.e., at 5:00 p.m. Eastern Time on April 15, 2024), if Buyer has not theretofore terminated this Agreement in accordance with Section 4.4, Buyer shall deposit an additional Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000) (the "Additional Deposit") with the Escrow Agent no later than the first Business Day following expiration of the Due Diligence Period (April 16, 2024). The Additional Deposit shall be non-refundable (hard) upon deposit, except as expressly provided in Sections 5.3(d), 6.6, 10.1, 14.1, and 14.3.
(c) Total Deposits. The aggregate Deposit shall be Fifty-Five Million Dollars ($55,000,000), comprised of the Earnest Money Deposit ($27,500,000) plus the Additional Deposit ($27,500,000).
(d) Application. The Deposit (together with all interest earned thereon) shall be credited against the Cash Equity portion of the Purchase Price at Closing, or shall be disbursed in accordance with Article XIV (Default and Termination) if the Closing does not occur.
(e) Interest. All interest earned on the Deposit while held in escrow shall be for the account of the party entitled to receive the Deposit upon its release. The Escrow Agent shall invest the Deposit in interest-bearing accounts or short-term United States Treasury obligations, as directed by the parties, in accordance with the Escrow Agreement.
Section 3.3 — Purchase Price Adjustments
(a) PCA Credit. The Purchase Price shall be reduced at Closing by the amount of One Million Seventy Thousand Dollars ($1,070,000) (the "PCA Credit"), representing fifty percent (50%) of the aggregate estimated immediate repair costs of Two Million One Hundred Forty Thousand Dollars ($2,140,000) identified in the property condition assessments prepared by Rampart Building Sciences, Inc. The PCA Credit is allocated among the following Properties:
(i) Buckhead Place Office Tower (GMP Buckhead LLC): $890,000 of $1,780,000 estimated immediate repair cost;
(ii) Cool Springs Office Park (GMP Cool Springs LLC): $620,000 of $1,240,000 estimated immediate repair cost;
(iii) Lakeland Crossings Industrial (GMP Lakeland LLC): $380,000 of $760,000 estimated immediate repair cost; and
(iv) SouthPark Corporate Center (GMP SouthPark LLC): $250,000 of $500,000 estimated immediate repair cost.
The remaining fifty percent (50%) of such estimated immediate repair costs shall be the responsibility of Buyer following Closing.
(b) Adjusted Purchase Price. After giving effect to the PCA Credit, the Adjusted Purchase Price is One Billion Ninety-Eight Million Nine Hundred Thirty Thousand Dollars ($1,098,930,000) ($1,100,000,000 minus $1,070,000).
(c) Net Cash to Seller. The net cash payable by Buyer to Seller at Closing, prior to prorations under Article XII, shall be Four Hundred Eighty-Six Million Nine Hundred Thirty Thousand Dollars ($486,930,000) ($488,000,000 minus $1,070,000), subject to further adjustment for prorations and other items as set forth in Article XII.
(d) Cross-Reference. The parties shall prepare a settlement statement at Closing reflecting the Adjusted Purchase Price and all proration adjustments determined in accordance with Article XII.
Section 3.4 — Purchase Price Allocation
The Purchase Price shall be allocated among the fourteen (14) Properties in accordance with the allocation schedule attached hereto as Exhibit K (the "Purchase Price Allocation Schedule"), which has been prepared based upon appraised values determined by Stonebridge Valuation Advisors, LLC, and utilizing the methodology described in Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"). Each of Seller and Buyer agrees to (i) report the transactions contemplated by this Agreement in a manner consistent with the Purchase Price Allocation Schedule for all federal, state, and local tax purposes, including without limitation on IRS Form 8594, and (ii) not take any position on any tax return, in any tax proceeding, or otherwise that is inconsistent with the Purchase Price Allocation Schedule. Each party shall promptly provide the other with any additional information and shall cooperate in the preparation and filing of all forms and documents required under Section 1060 of the Code or any applicable Treasury Regulations promulgated thereunder.
Section 3.5 — Independent Consideration
Simultaneously with the execution and delivery of this Agreement, Buyer has paid to Seller the sum of One Hundred Dollars ($100.00) (the "Independent Consideration") as independent consideration for Seller's grant to Buyer of the Due Diligence Period, the inspection and access rights set forth in Article IV, and the exclusive right to acquire the Interests during the term of this Agreement. The Independent Consideration is non-refundable under all circumstances and shall be retained by Seller in all events, whether or not the Closing occurs. The Independent Consideration shall not be credited against the Purchase Price. The Independent Consideration has been paid from the Earnest Money Deposit.
ARTICLE IV — DUE DILIGENCE
Section 4.1 — Due Diligence Period
The Due Diligence Period shall commence on the Effective Date (February 28, 2024) and shall expire at 5:00 p.m. Eastern Time on April 15, 2024, constituting a period of forty-six (46) days. During the Due Diligence Period, Buyer shall have the right to conduct investigations, inspections, and analyses of the Target Entities and the Properties as Buyer deems necessary or desirable in its sole discretion, including without limitation review and analysis of all title, survey, environmental, physical condition, mechanical, structural, zoning, land use, lease, financial, organizational, operational, insurance, and tax matters relating to the Target Entities and the Properties.
Section 4.2 — Access and Inspection Rights
During the Due Diligence Period, and continuing through the Closing Date (subject to the limitations set forth below), Seller shall provide Buyer and its authorized representatives, including without limitation Buyer's legal counsel (Calderwood & Harkness LLP), tax counsel (Ashford Prewitt LLP), environmental consultants (Trident Environmental Group LLC), property condition consultants (Rampart Building Sciences, Inc.), surveyors (Meridian Land Surveying, Inc.), and appraisers (Stonebridge Valuation Advisors, LLC), with reasonable access to (i) the Properties (including the right to conduct non-invasive physical inspections and testing), (ii) all books and records of the Target Entities, (iii) all lease files and tenant correspondence, (iv) all contracts and agreements to which any Target Entity is a party, and (v) all financial information relating to the Target Entities and the Properties, including financial statements, tax returns, and operating budgets.
All physical inspections of the Properties shall be conducted (a) upon not less than two (2) Business Days' prior written notice to Seller, (b) during normal business hours, (c) subject to the rights of tenants under existing leases, (d) in the presence of a representative of Seller or Argyle Property Services LLC (at Seller's election), and (e) in compliance with all applicable laws and regulations. Prior to any physical inspection, Buyer shall provide Seller with evidence of commercial general liability insurance with limits of not less than Two Million Dollars ($2,000,000) per occurrence and Five Million Dollars ($5,000,000) in the aggregate, naming Seller, each Target Entity, and Argyle Property Services LLC as additional insureds.
Buyer shall indemnify, defend, and hold harmless Seller and each Target Entity from and against any Losses arising from Buyer's physical inspections of the Properties, except to the extent that such Losses are attributable to pre-existing conditions discovered by Buyer in the course of such inspections. Buyer shall promptly restore each Property to its condition prior to any such inspection. The obligations of Buyer under this Section 4.2 shall survive the termination of this Agreement.
Section 4.3 — Data Room
Prior to the Effective Date, Seller has established and made available to Buyer a virtual data room (hosted by Westvale Software) containing due diligence materials relating to the Target Entities and the Properties. Access to the data room is governed by the data room protocol and procedures established between Calderwood & Harkness LLP (on behalf of Buyer) and Blackridge Hayes LLP (on behalf of Seller). The data room shall remain accessible to Buyer through the Closing Date. Seller shall promptly supplement the data room with any additional materials reasonably requested by Buyer, to the extent such materials are in Seller's possession or control.
Section 4.4 — Buyer's Right to Terminate During Due Diligence Period
Buyer may terminate this Agreement at any time prior to the expiration of the Due Diligence Period (i.e., at or before 5:00 p.m. Eastern Time on April 15, 2024), for any reason or no reason, by delivery of written notice to Seller. Upon such termination, (i) the Earnest Money Deposit, together with all interest earned thereon, shall be returned to Buyer within five (5) Business Days following Buyer's delivery of the termination notice, (ii) neither party shall have any further liability or obligation to the other under this Agreement (except for surviving obligations, including the Confidentiality Agreement and Buyer's indemnification obligations under Section 4.2), and (iii) this Agreement shall be null and void and of no further force or effect.
Section 4.5 — Waiver of Due Diligence Contingency
If Buyer does not deliver a written termination notice to Seller prior to the expiration of the Due Diligence Period as set forth in Section 4.4, then (i) Buyer shall be deemed to have irrevocably waived its due diligence contingency and its right to terminate this Agreement under Section 4.4, (ii) Buyer shall deposit the Additional Deposit with the Escrow Agent in accordance with Section 3.2(b), and (iii) the Deposit shall thereupon become non-refundable except as expressly set forth in this Agreement.
Section 4.6 — Confidentiality
All information and materials provided to Buyer or its representatives in connection with Buyer's due diligence investigations shall remain subject to the Confidentiality Agreement dated October 10, 2023, by and between Seller and Buyer, the terms and provisions of which are hereby incorporated by reference and shall survive any termination of this Agreement.
ARTICLE V — TITLE AND SURVEY
Section 5.1 — Title Commitments
Prior to or promptly following the Effective Date, Seller has delivered or caused to be delivered to Buyer commitments for title insurance (the "Title Commitments") issued by Commonwealth National Title Insurance Company for each of the fourteen (14) Properties, together with legible copies of all exception documents referenced therein. The Title Commitments are dated within sixty (60) days of the Effective Date and commit the Title Company to issue ALTA Owner's Policies (2021 form) for each Property upon satisfaction of the requirements set forth therein.
Section 5.2 — Surveys
Buyer has ordered, at Buyer's sole cost and expense, new ALTA/NSPS Land Title Surveys (prepared in accordance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys) from Meridian Land Surveying, Inc. for each of the fourteen (14) Properties. Each survey shall include the following Table A items: Items 1, 2, 3, 4, 6(a), 6(b), 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(a), 11(b), 13, 14, 16, 17, 18, and 19. Each survey shall be certified to Buyer, the Title Company, and Buyer's lenders (if applicable).
Section 5.3 — Title Objections
(a) Title Objection Deadline. On or before March 29, 2024 (thirty (30) days from the Effective Date), Buyer shall deliver to Seller a written notice (the "Title Objection Notice") identifying any matters disclosed in the Title Commitments or the surveys that are unacceptable to Buyer (each, a "Title Objection"). Any matter disclosed in the Title Commitments or the surveys that is not identified as a Title Objection in the Title Objection Notice shall be deemed a Permitted Exception accepted by Buyer.
(b) Seller Cure Period. Seller shall have fifteen (15) Business Days from receipt of Buyer's Title Objection Notice to (i) cure or remove each Title Objection, (ii) commit in writing to cure or remove each Title Objection on or before the Closing Date, or (iii) notify Buyer in writing that Seller is unwilling or unable to cure or remove one or more Title Objections.
(c) Mandatory Cure Items. Notwithstanding the foregoing, Seller shall be obligated to cure (regardless of whether Buyer objects) all Mandatory Cure Items, including (i) monetary liens and encumbrances (other than the Assumed Loans), (ii) mechanic's liens, (iii) delinquent real property taxes and assessments, (iv) judgments against any Target Entity, and (v) any matters arising by, through, or under Seller or any Target Entity after the effective date of the applicable Title Commitment. Seller shall cure all Mandatory Cure Items at or prior to Closing, and the Cash Equity at Closing may be reduced by the amount necessary to satisfy and discharge any such Mandatory Cure Items.
(d) Failure to Cure. If Seller fails or is unwilling to cure any non-mandatory Title Objection(s) within the cure period set forth in Section 5.3(b) above, Buyer shall have the right, exercisable by written notice to Seller within five (5) Business Days following expiration of such cure period, to (i) waive such Title Objection(s) and proceed to Closing, in which case the uncured Title Objection(s) shall be deemed Permitted Exceptions, or (ii) terminate this Agreement, in which case the Deposit, together with all interest earned thereon, shall be promptly returned to Buyer, and neither party shall have any further liability or obligation hereunder (except for surviving obligations).
Section 5.4 — Permitted Exceptions
The Interests (and, indirectly, the Properties) shall be transferred subject only to the Permitted Exceptions set forth on Exhibit P attached hereto. For the avoidance of doubt, the Permitted Exceptions include, without limitation, (i) the Assumed Loans and all documents and instruments related thereto, (ii) all matters disclosed in the Title Commitments that have been accepted or deemed accepted by Buyer, (iii) the rights of tenants under existing leases, (iv) current real property taxes and assessments not yet due and payable, (v) applicable zoning and land use regulations, and (vi) any additional matters that become Permitted Exceptions through the operation of Section 5.3.
Section 5.5 — Title Policies
At Closing, the Title Company shall issue an ALTA Owner's Policy of Title Insurance (2021 form) for each of the fourteen (14) Properties (collectively, the "Title Policies"), insuring Buyer's indirect interest in each Property through its ownership of the applicable Target Entity, subject only to the Permitted Exceptions. The aggregate insured amount under all Title Policies shall be One Billion One Hundred Million Dollars ($1,100,000,000), with the insured amount allocated among the individual Properties in accordance with the Purchase Price Allocation Schedule attached as Exhibit K.
Title insurance premiums (including owner's and loan policy premiums and endorsement charges), estimated at Two Million Four Hundred Twenty Thousand Dollars ($2,420,000) in the aggregate, shall be the sole responsibility of Buyer.
Section 5.6 — Gap Coverage
The Title Company shall provide "gap" coverage from the effective date of each Title Commitment through the date and time of recording of the applicable Closing documents (if any recording is required) or, if no recording is required, through the Closing Date, to insure Buyer against any liens, encumbrances, or other matters that may arise during such gap period.
Section 5.7 — Survey Costs
All survey costs, including the costs of the new ALTA/NSPS surveys ordered by Buyer and any revisions thereto, estimated at One Hundred Ninety-Six Thousand Dollars ($196,000) in the aggregate, shall be the sole responsibility of Buyer.
ARTICLE VI — ASSUMED DEBT AND LENDER CONSENTS
Section 6.1 — Assumption of Existing Mortgage Debt
At Closing, Buyer shall assume (or cause each Target Entity to continue to be obligated under) the Assumed Loans, with an aggregate outstanding principal balance of Six Hundred Twelve Million Dollars ($612,000,000) as of the anticipated Closing Date, consisting of the following three lender facilities:
(a) Pinnacle Loans. Loans 1-A through 1-H, having an aggregate outstanding principal balance of Four Hundred Twenty-One Million Six Hundred Thousand Dollars ($421,600,000). The Pinnacle Loans bear interest at a fixed rate of 4.22% per annum and mature on July 1, 2028. The Pinnacle Loans are secured by first-priority mortgages (or deeds of trust, as applicable) on the eight (8) logistics properties identified as Properties 1 through 8 in the table set forth in Section 2.2 (Fairfield Logistics Center I, Fairfield Logistics Center II, Westlake Distribution Hub, Katy Freeway Logistics Park, Alliance Commerce Center, Lakeland Crossings Industrial, Southport Logistics Park, and Murfreesboro Distribution Center). The Pinnacle Loans are governed by the Master Loan Agreement dated September 15, 2020, by and between each applicable Target Entity (as borrower) and Pinnacle Federal Bank, N.A. (as lender), as amended. The lender's address is 600 Travis Street, Suite 4400, Houston, Texas 77002. The lender's counsel is Whitfield & Archer LLP (Attention: Sandra Whitfield).
(b) Veltrano Loans. Loans 2-A through 2-D, having an aggregate outstanding principal balance of One Hundred Forty-Two Million Three Hundred Thousand Dollars ($142,300,000). The Veltrano Loans bear interest at a fixed rate of 4.68% per annum and mature on March 1, 2029. The Veltrano Loans are secured by first-priority mortgages (or deeds of trust, as applicable) on the four (4) office properties identified as Properties 9 through 12 in the table set forth in Section 2.2 (Buckhead Place Office Tower, SouthPark Corporate Center, Cool Springs Office Park, and Brickell Bay Office Building). The Veltrano Loans are governed by the Loan Agreement dated February 1, 2021, by and between each applicable Target Entity (as borrower) and Veltrano Capital Lending Corp. (as lender), as amended. The lender's address is 200 South Biscayne Boulevard, Suite 3100, Miami, Florida 33131. The lender's counsel is Cranford McCabe LLP (Attention: Leo Cranford).
(c) Sycamore Loans. Loans 3-A and 3-B, having an aggregate outstanding principal balance of Forty-Eight Million One Hundred Thousand Dollars ($48,100,000). The Sycamore Loans bear interest at a fixed rate of 3.95% per annum and mature on December 1, 2030. The Sycamore Loans are secured by first-priority mortgages (or deeds of trust, as applicable) on the two (2) logistics properties identified as Properties 13 and 14 in the table set forth in Section 2.2 (Peachtree Corners Logistics Center and Mount Juliet Commerce Park). The Sycamore Loans are governed by the Note Purchase Agreement dated November 22, 2019, by and between each applicable Target Entity (as borrower) and Sycamore Life Insurance Company (as lender), as amended. The lender's address is 100 Constitution Plaza, Hartford, Connecticut 06103. The lender's counsel is Partridge Wynn & Slater LLP (Attention: Claire Wynn).
Section 6.2 — Change of Control Consent Requirement
The transfer of the Interests in each Target Entity from Seller to Buyer constitutes a "Change of Control" (or comparable event) under each Assumed Loan Agreement, requiring the prior written consent of the applicable lender as a condition to such transfer. Receipt of all three Lender Consents (one from each of Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company) is a condition precedent to both Seller's and Buyer's obligations to close, as set forth in Sections 10.1(d) and 10.2(d).
Seller and Buyer shall cooperate in good faith and use commercially reasonable efforts to obtain all Lender Consents as promptly as practicable after the Effective Date. Each party shall promptly provide to the other copies of all written communications with or from any lender relating to the Lender Consents. Neither Seller nor Buyer shall agree to any material modification of the terms of any Assumed Loan as a condition to obtaining a Lender Consent without the prior written consent of the other party, such consent not to be unreasonably withheld, conditioned, or delayed.
Section 6.3 — Consent Fees
The Consent Fees payable to the Assumed Loan lenders in connection with the Lender Consents shall be as follows:
The Consent Fees shall be borne equally by Buyer and Seller, with each party responsible for fifty percent (50%) of the aggregate Consent Fees. Buyer's share of the Consent Fees shall be Nine Hundred Twelve Thousand Eight Hundred Twelve Dollars and Fifty Cents ($912,812.50), and Seller's share shall be Nine Hundred Twelve Thousand Eight Hundred Twelve Dollars and Fifty Cents ($912,812.50). Each party's share of the Consent Fees shall be payable at Closing (or, if required by the applicable lender, at such earlier time as the lender conditions its consent on payment, in which case the parties shall each fund their respective share at such time).
Section 6.4 — Replacement Guaranty
At Closing, Buyer (Fairwater Real Estate Investment Trust) shall execute and deliver a Replacement Guaranty in the form attached hereto as Exhibit S in favor of each Assumed Loan lender (i.e., three separate Replacement Guaranties, one for each of Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company), replacing Greystone Meridian Partners Fund III, L.P. (and/or its affiliates, including Seller GP) as the carve-out guarantor under each Assumed Loan. Upon the effectiveness of each Replacement Guaranty at Closing, Seller and its affiliates shall be released from all guaranty obligations under the applicable Assumed Loan.
Each Replacement Guaranty shall include, among other customary terms, the following financial covenants to be maintained by Buyer throughout the term of the applicable Assumed Loan:
(i) Minimum Tangible Net Worth: Five Hundred Million Dollars ($500,000,000), calculated in accordance with generally accepted accounting principles; and
(ii) Minimum Liquid Assets: Fifty Million Dollars ($50,000,000), consisting of unrestricted cash and cash equivalents plus undrawn availability under committed credit facilities.
Buyer represents and warrants that, as of the Effective Date, Buyer satisfies each of the foregoing financial covenants, and Buyer covenants that it shall satisfy each of the foregoing financial covenants as of the Closing Date.
Section 6.5 — Assumption Agreements
At Closing, Buyer shall execute and deliver an assumption agreement for each Assumed Loan lender (in form and substance reasonably satisfactory to the applicable lender), pursuant to which Buyer (or, as applicable, the Target Entities under Buyer's control) assumes all borrower obligations under the applicable Assumed Loans arising from and after the Closing Date. The assumption agreements shall be in addition to, and not in lieu of, the continuing obligations of the Target Entities as borrowers under the Assumed Loan documents.
Section 6.6 — Lender Consent Deadline
All Lender Consents must be obtained on or before May 24, 2024 (the "Lender Consent Deadline"). If any Lender Consent has not been obtained by the Lender Consent Deadline, either party may, by written notice to the other delivered on or before the Lender Consent Deadline, elect to extend the Scheduled Closing Date by up to fourteen (14) calendar days (to June 14, 2024) to permit additional time for the parties to obtain the outstanding Lender Consent(s). If, following such extension (or if neither party elects to extend), any Lender Consent has not been obtained by the Outside Date (June 14, 2024), either party may terminate this Agreement by written notice to the other, and upon such termination the Deposit, together with all interest earned thereon, shall be promptly returned to Buyer, and neither party shall have any further liability or obligation hereunder (except for surviving obligations).
Section 6.7 — Loan Documents List
The complete list of all Assumed Loan documents for each of the three lender facilities (including all amendments, supplements, modifications, and ancillary agreements) is set forth on Exhibit Q attached hereto. The parties acknowledge that they have reviewed the Assumed Loan documents and are familiar with the terms and conditions thereof.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes the following representations and warranties to Buyer as of the Effective Date and as of the Closing Date (except where a representation or warranty is expressly stated to be made as of a specific date, in which case it shall be made only as of such date), subject to the qualifications, exceptions, and disclosures set forth in the Disclosure Schedules:
Section 7.1 — Organization and Authority
Seller is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware. Seller GP (Greystone Meridian Capital LLC) is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware and serves as the sole general partner of Seller. Seller has the full power and authority, acting through Seller GP, to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby.
Section 7.2 — Authorization; Enforceability
The execution, delivery, and performance of this Agreement by Seller, and the consummation of the transactions contemplated hereby, have been duly authorized by all necessary action on the part of Seller and Seller GP, including all requisite approvals and consents of the partners of Seller and the members and managers of Seller GP. This Agreement has been duly executed and delivered by Seller and constitutes the legal, valid, and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity.
Section 7.3 — No Conflicts; Consents
The execution, delivery, and performance of this Agreement by Seller, and the consummation of the transactions contemplated hereby, do not and will not (a) violate or conflict with the organizational documents of Seller, Seller GP, or any Target Entity, (b) violate or conflict with any applicable law, rule, regulation, order, judgment, or decree binding upon Seller, Seller GP, or any Target Entity, or (c) result in a breach of, or default under, or give rise to any right of termination, cancellation, or acceleration under, any material agreement, instrument, or obligation to which Seller, Seller GP, or any Target Entity is a party or by which any of them or their respective properties or assets are bound, except, in each case, for the requirement to obtain the Lender Consents pursuant to Article VI.
Section 7.4 — Title to Interests
Seller is the sole member of each Target Entity and is the record and beneficial owner of one hundred percent (100%) of the membership interests (i.e., all of the Interests) in each Target Entity, free and clear of all liens, encumbrances, pledges, security interests, options, warrants, rights of first refusal, rights of first offer, and other restrictions or claims of any kind or nature whatsoever (other than (i) those arising under the Assumed Loans as disclosed herein and (ii) restrictions on transfer contained in the organizational documents of the Target Entities). At Closing, Seller shall transfer to Buyer good and valid title to one hundred percent (100%) of the Interests, free and clear of all such liens and encumbrances (other than those described in the preceding sentence).
Section 7.5 — Organization and Good Standing of Target Entities
Each Target Entity is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware and is duly qualified to transact business and is in good standing in the state in which its Property is located. The Target Entities and their respective employer identification numbers are as follows:
Each Target Entity is a single-purpose entity formed solely for the purpose of owning and operating its respective Property. No Target Entity has any subsidiaries or owns any equity interest in any other entity.
Section 7.6 — No Bankruptcy
Neither Seller, Seller GP, nor any Target Entity is the subject of any voluntary or involuntary petition in bankruptcy, any application for appointment of a receiver, or any filing or commencement of any similar proceeding under any federal, state, or foreign bankruptcy, insolvency, reorganization, or similar law. Neither Seller, Seller GP, nor any Target Entity has made a general assignment for the benefit of creditors, admitted in writing its inability to pay its debts as they become due, or taken any corporate or entity action in furtherance of any of the foregoing.
Section 7.7 — Leases
(a) The Rent Roll attached hereto as Exhibit H is true, correct, and complete in all material respects as of December 31, 2023. Except as set forth on the Disclosure Schedules, there are no leases, licenses, occupancy agreements, or other agreements granting any person or entity the right to occupy any portion of any Property other than those reflected on the Rent Roll.
(b) As of December 31, 2023, there are eighty-seven (87) leases in effect across the Portfolio. The weighted-average portfolio occupancy rate is 93.2% (logistics: 96.1%; office: 82.7%). The aggregate annual in-place base rent under all leases is Seventy-Four Million Eight Hundred Thousand Dollars ($74,800,000), resulting in an in-place capitalization rate of approximately 6.80% based on the Purchase Price. The weighted-average remaining lease term across the Portfolio is approximately 5.8 years.
(c) The five (5) largest tenants by ABR are as follows:
(d) The aggregate tenant security deposits held by the Target Entities are Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000), which are maintained in deposit accounts at Magnolia Commerce Bank, N.A.
(e) Except as disclosed on the Disclosure Schedules, (i) no Target Entity (as landlord) is in material default under any lease, (ii) to Seller's Knowledge, no tenant is in material default under any lease, and (iii) no tenant has asserted any material claim, offset, or defense with respect to its lease obligations.
Section 7.8 — Service Contracts
Exhibit I attached hereto sets forth a true, correct, and complete list of all service contracts, maintenance agreements, management agreements, and other agreements to which any Target Entity is a party with respect to the ownership, operation, or maintenance of its respective Property. As of the Effective Date, there are sixty-three (63) service contracts in effect across the Portfolio. Except as set forth on the Disclosure Schedules, each such service contract is in full force and effect, no Target Entity is in material default thereunder, and, to Seller's Knowledge, no counterparty is in material default thereunder.
Section 7.9 — Environmental Matters
To Seller's Knowledge, no Target Entity or Property is in material violation of any Environmental Laws, except as disclosed in the Phase I Environmental Site Assessments listed on Exhibit N, which were prepared by Trident Environmental Group LLC. Twelve (12) of the fourteen (14) Properties have clean Phase I ESAs with no recognized environmental conditions ("RECs"). Two (2) Properties — Westlake Distribution Hub (Property 3) and Lakeland Crossings Industrial (Property 6) — have been identified as having de minimis recognized environmental conditions, which are controlled and do not require remediation or further investigation at this time. No Phase II Environmental Site Assessment has been required or recommended for any Property. To Seller's Knowledge, (i) no Target Entity has received any notice of violation or other communication from any governmental authority regarding Environmental Laws, (ii) no hazardous substances have been released, stored, disposed of, or generated at any Property in material violation of Environmental Laws, and (iii) there are no underground storage tanks at any Property.
Section 7.10 — Litigation
Except as set forth on Exhibit J attached hereto, there is no action, suit, proceeding, claim, arbitration, or governmental investigation, at law or in equity, pending or, to Seller's Knowledge, threatened against or affecting any Target Entity or any Property, before any court, arbitrator, or governmental authority. To Seller's Knowledge, no facts or circumstances exist that would reasonably be expected to give rise to any such action, suit, or proceeding.
Section 7.11 — Taxes
Each Target Entity has (i) timely filed (taking into account all applicable extensions) all federal, state, and local tax returns required to be filed by it and (ii) paid all taxes shown thereon as due and owing. Each Target Entity has withheld and paid all taxes required to be withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, tenant, or other third party. There are no pending or, to Seller's Knowledge, threatened audits, assessments, or other proceedings with respect to the taxes of any Target Entity. The representations and warranties set forth in this Section 7.11 shall survive Closing for a period of thirty-six (36) months (through June 6, 2027, based on an actual Closing Date of June 6, 2024).
Section 7.12 — Compliance with Laws; Zoning
Each Property is in material compliance with all applicable federal, state, and local laws, rules, regulations, orders, codes, and ordinances, including without limitation all building codes, fire codes, health and safety codes, and accessibility requirements (including the Americans with Disabilities Act). Zoning confirmation letters have been obtained from the applicable governmental authorities for all fourteen (14) Properties, confirming that the current use of each Property is a permitted use under the applicable zoning classification. Copies of all zoning confirmation letters have been made available to Buyer in the data room.
Section 7.13 — Insurance
Each Target Entity maintains (or Seller maintains on its behalf) insurance coverage in the types, amounts, and with the carriers required under the applicable Assumed Loan documents. All such insurance policies are in full force and effect, all premiums currently due thereunder have been paid, and no notice of cancellation, non-renewal, or material change has been received with respect to any such policy.
Section 7.14 — FIRPTA
Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code, as amended. Seller's employer identification number is 83-1647205. At Closing, Seller shall deliver to Buyer a non-foreign person affidavit in the form attached hereto as Exhibit O.
Section 7.15 — Brokers
No broker, finder, investment banker, or similar agent has been retained by or is authorized to act on behalf of Seller in connection with the transactions contemplated by this Agreement, and no fee, commission, or similar payment is or will become due or payable to any such person or entity as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby. To the extent any such fee is claimed by any party based on the alleged actions of Seller, Seller shall be solely responsible for the payment thereof and shall indemnify Buyer against any such claim.
Section 7.16 — Assumed Loans
The information regarding the Assumed Loans set forth in this Agreement and on Exhibit Q attached hereto is true, correct, and complete in all material respects. As of the Effective Date, (i) no default or event of default exists under any Assumed Loan, (ii) no Target Entity has received written notice from any lender alleging a default or event of default under any Assumed Loan, and (iii) no prepayment penalties or yield maintenance premiums will be triggered by the transactions contemplated by this Agreement, subject to the receipt of the Lender Consents. Each Assumed Loan is in full force and effect, and all required payments of principal and interest thereunder have been made when due.
Section 7.17 — Property Condition
Except as disclosed in the property condition assessments prepared by Rampart Building Sciences, Inc. (which identify aggregate estimated immediate repair costs of Two Million One Hundred Forty Thousand Dollars ($2,140,000), as described in Section 3.3(a)), to Seller's Knowledge, there are no material structural or mechanical defects at any Property. The foregoing representation is qualified in its entirety by Buyer's right to conduct its own independent inspections during the Due Diligence Period.
Section 7.18 — Operating Accounts
Each Target Entity maintains its operating accounts and s