ENVIRONMENTAL INDEMNITY AGREEMENT
Dated as of February 15, 2026
by and among
HARBOR POINT DEVELOPMENT JV, LLC a Delaware limited liability company ("Borrower")
and
FAIRWATER REAL ESTATE INVESTMENT TRUST a Maryland real estate investment trust ("Guarantor")
(each an "Indemnitor" and collectively, the "Indemnitors")
in favor of
MERIDIAN NATIONAL BANK, N.A. a national banking association ("Lender")
In connection with a $336,000,000 Construction Loan Facility pursuant to the Construction Loan Agreement of even date hereof between Borrower and Lender
Property: 1500–1580 Wills Street Baltimore, MD 21231 Block 7419, Lots 1–6, Baltimore City, Maryland (as more particularly described in Exhibit A attached hereto)
This Environmental Indemnity Agreement is delivered in connection with and as a condition to Lender's making of the Loan. This document contains material obligations and waivers and should be reviewed carefully by legal counsel.
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "Agreement") is made and entered into as of February 15, 2026 (the "Effective Date"), by and among HARBOR POINT DEVELOPMENT JV, LLC, a Delaware limited liability company (the "Borrower" or the "JV"), and FAIRWATER REAL ESTATE INVESTMENT TRUST, a Maryland real estate investment trust (the "Guarantor" or "Fairwater," and together with the Borrower, each an "Indemnitor" and collectively, the "Indemnitors"), in favor of MERIDIAN NATIONAL BANK, N.A., a national banking association (together with its successors and assigns, the "Lender").
RECITALS
A. The Loan. Lender has agreed to make a construction loan in the principal amount of Three Hundred Thirty-Six Million and 00/100 Dollars ($336,000,000.00) (the "Loan") to Borrower, Harbor Point Development JV, LLC, a Delaware limited liability company, pursuant to that certain Construction Loan Agreement of even date herewith by and between Borrower and Lender (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"). The Loan is secured by, among other things, a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Deed of Trust") from Borrower in favor of Lender, encumbering that certain real property located at 1500–1580 Wills Street, Baltimore, MD 21231, being Block 7419, Lots 1–6, Baltimore City, Maryland, as more particularly described in Exhibit A attached hereto and made a part hereof (the "Property").
B. The Project. The Loan is being made to finance the development and construction of "Harbor Point Towers," a mixed-use project consisting of two (2) twenty-eight (28)-story residential towers containing approximately six hundred ten (610) residential units and approximately forty-five thousand (45,000) square feet of ground-floor retail space, together with associated parking structures, amenity spaces, site improvements, and related infrastructure, on an approximately 8.2-acre waterfront site located in Baltimore's Harbor Point district (the "Project"). The total projected cost of the Project is Five Hundred Seventy-Six Million and 00/100 Dollars ($576,000,000.00), comprised of approximately Fifty-Four Million and 00/100 Dollars ($54,000,000.00) for land acquisition, approximately Four Hundred Thirty-Two Million and 00/100 Dollars ($432,000,000.00) for hard construction costs, and approximately Ninety Million and 00/100 Dollars ($90,000,000.00) for soft costs and development fees. The Loan represents a loan-to-cost ratio of approximately 58.33%. The Loan bears interest at a rate equal to Term SOFR plus 275 basis points per annum and has a term of thirty-six (36) months from the date of initial funding, together with two (2) six (6)-month extension options, in each case subject to satisfaction of the conditions set forth in the Loan Agreement.
C. The Borrower. Harbor Point Development JV, LLC (EIN: 84-6213950, applied for) is a Delaware limited liability company formed on October 22, 2025, with its registered agent at Incorporators & Associates, Inc., 1209 Orange Street, Wilmington, Delaware 19801, and duly qualified to transact business in the State of Maryland. The members of the JV are (i) Fairwater HP Manager, LLC, a Maryland limited liability company and wholly owned subsidiary of Fairwater Real Estate Investment Trust, serving as the Managing Member and holding a thirty percent (30%) membership interest (EIN: 52-2201889), and (ii) Prescott HP Investor, LLC, a Delaware limited liability company and wholly owned subsidiary of Prescott Capital Partners, LP, serving as a Non-Managing Member and holding a seventy percent (70%) membership interest (EIN: 13-4603217). The rights, obligations, and governance of the JV are set forth in the Amended and Restated Operating Agreement of Harbor Point Development JV, LLC, dated as of January 12, 2026 (the "Operating Agreement").
D. The Guarantor. Fairwater Real Estate Investment Trust (EIN: 52-2198437; Maryland State Department of Assessments and Taxation ID: D19847321; NYSE ticker symbol: FWT) is a publicly traded Maryland real estate investment trust with its principal offices located at 7200 Pratt Street, Suite 1400, Baltimore, Maryland 21202, and with its registered agent, National Registered Agents of Maryland, Inc., located at 311 West Saratoga Street, Baltimore, Maryland 21201. Fairwater is the indirect managing member of the JV through its wholly owned subsidiary, Fairwater HP Manager, LLC, and exercises day-to-day management authority over the development and operation of the Project. As a material inducement to Lender's agreement to make the Loan, and as a condition precedent to the closing of the Loan, Fairwater is executing and delivering this Environmental Indemnity Agreement for the benefit of Lender and the other Indemnified Parties (as defined herein).
E. The Property. The Property was acquired by the JV from Harbor East Land Holdings, LLC, a Maryland limited liability company (Vincent A. DeLuca, sole member), for a purchase price of Fifty-Four Million and 00/100 Dollars ($54,000,000.00), pursuant to that certain Purchase and Sale Agreement dated September 18, 2025, with closing occurring on January 30, 2026. In connection with the acquisition and in anticipation of the Loan, a Phase I Environmental Site Assessment was completed on November 25, 2025, by Bayline Environmental Consultants, LLC, a Maryland limited liability company located at 3045 Boston Street, Suite 200, Baltimore, Maryland 21224 (the "Phase I ESA"), a copy of which has been delivered to Lender. A listing of all environmental reports delivered to Lender is set forth on Exhibit B attached hereto and made a part hereof.
F. Inducement. As a material inducement to Lender to make the Loan, and in consideration of Lender's agreement to do so, each of the Indemnitors has agreed to execute and deliver this Environmental Indemnity Agreement for the benefit of Lender and the Indemnified Parties, and each of the Indemnitors acknowledges that Lender would not make the Loan without the execution and delivery of this Agreement.
G. Consideration. The making of the Loan by Lender to Borrower constitutes good, valuable, and adequate consideration for the obligations of each of the Indemnitors under this Agreement, the receipt and sufficiency of which are hereby acknowledged by each Indemnitor.
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants and agreements contained herein, the making of the Loan by Lender, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto 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. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Loan Agreement.
"Agreement" means this Environmental Indemnity Agreement, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Borrower" means Harbor Point Development JV, LLC, a Delaware limited liability company, together with its successors and permitted assigns.
"Deed of Trust" means that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing of even date herewith, from Borrower in favor of Lender, encumbering the Property, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Environmental Claim" means any claim, demand, cause of action, suit, proceeding (whether administrative, judicial, or otherwise), investigation, order, directive, notice of violation, citation, information request, subpoena, inquiry, hearing, or other communication (whether oral or written) by or from any person or entity (including any governmental authority, private party, citizen group, or adjacent property owner) alleging, asserting, or relating to any actual or potential (a) violation of, non-compliance with, or liability under any Environmental Law, (b) Release or threatened Release of Hazardous Materials at, on, under, from, or in the vicinity of the Property, (c) personal injury, property damage, or natural resource damage arising from or relating to exposure to or the presence of Hazardous Materials at, on, under, from, or in the vicinity of the Property, or (d) obligation to conduct any investigation, assessment, monitoring, cleanup, removal, treatment, containment, or other Remedial Action with respect to Hazardous Materials at, on, under, or from the Property.
"Environmental Laws" means any and all federal, state, and local statutes, laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, directives, permits, licenses, approvals, and other governmental requirements, whether now existing or hereafter enacted, promulgated, or issued, relating to (a) pollution or the protection of the environment, natural resources, or human health and safety (as it relates to exposure to Hazardous Materials), (b) the use, generation, manufacture, production, handling, transport, treatment, storage, processing, labeling, recycling, disposal, or Release of Hazardous Materials, (c) air quality, water quality (including surface water and groundwater), wetlands protection, endangered species, or historic preservation to the extent relating to the presence of Hazardous Materials, or (d) noise, odor, indoor air quality (including mold and radon), or any other environmental matter. Without limiting the generality of the foregoing, "Environmental Laws" includes: (i) the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA") (42 U.S.C. §§ 9601 et seq.); (ii) the Resource Conservation and Recovery Act, as amended ("RCRA") (42 U.S.C. §§ 6901 et seq.); (iii) the Federal Water Pollution Control Act (Clean Water Act) (33 U.S.C. §§ 1251 et seq.); (iv) the Clean Air Act (42 U.S.C. §§ 7401 et seq.); (v) the Toxic Substances Control Act ("TSCA") (15 U.S.C. §§ 2601 et seq.); (vi) the Emergency Planning and Community Right-to-Know Act (42 U.S.C. §§ 11001 et seq.); (vii) the Hazardous Materials Transportation Act (49 U.S.C. §§ 5101 et seq.); (viii) the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.); (ix) the Oil Pollution Act of 1990 (33 U.S.C. §§ 2701 et seq.); (x) the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. §§ 4851 et seq.); (xi) the Maryland Environment Article (Md. Code Ann., Envir., §§ 1-101 et seq.); (xii) the Maryland Oil Contaminated Site Environmental Cleanup Fund; (xiii) the Maryland Voluntary Cleanup Program (Md. Code Ann., Envir., §§ 7-501 et seq.); (xiv) Baltimore City environmental ordinances, including without limitation the Baltimore City Code, Article 1, Subtitle 1 (Environmental Control Board) and related provisions; and (xv) all rules, regulations, guidance documents, and orders issued pursuant to any of the foregoing, and any applicable state or local counterparts or equivalents thereof.
"Environmental Liabilities" means any and all losses, costs, damages, expenses (including reasonable attorneys' fees, consultants' fees, expert fees, and court costs), liabilities, obligations, fines, penalties, assessments, judgments, settlements, claims, demands, actions, suits, proceedings, diminution in property value, injunctive relief obligations, natural resource damages, and other amounts of every kind and nature, whether known or unknown, foreseen or unforeseen, direct or indirect, contingent or actual, arising out of, resulting from, or in any way connected with (a) Hazardous Materials at, on, under, from, or in the vicinity of the Property, (b) any violation of or non-compliance with any Environmental Law with respect to the Property, (c) any Environmental Claim relating to the Property, (d) any Remedial Action required with respect to the Property, or (e) any breach of any representation, warranty, covenant, or obligation under this Agreement.
"Guarantor" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust, together with its successors and permitted assigns.
"Hazardous Materials" means any and all pollutants, contaminants, chemicals, wastes, materials, substances, and constituents, of any nature whatsoever, that are regulated, classified, listed, defined, or identified as hazardous, toxic, radioactive, dangerous, or as a pollutant, contaminant, or waste under any Environmental Law, or that could give rise to liability under any Environmental Law or under any common law theory based on nuisance, trespass, negligence, or strict liability relating to environmental contamination. Without limiting the generality of the foregoing, "Hazardous Materials" includes: (a) petroleum and petroleum products (including crude oil and any fraction or by-product thereof), natural gas, natural gas liquids, and synthetic gas usable for fuel; (b) asbestos and asbestos-containing materials ("ACM") in any form; (c) polychlorinated biphenyls ("PCBs") and PCB-containing equipment; (d) lead and lead-based paint; (e) radon and radon gas; (f) mold, mycotoxins, and other biological agents that may pose a threat to human health or the environment; (g) per- and polyfluoroalkyl substances ("PFAS"), including without limitation perfluorooctanoic acid ("PFOA") and perfluorooctane sulfonate ("PFOS"); (h) radioactive materials and wastes; (i) urea formaldehyde foam insulation; (j) chlorofluorocarbons and hydrochlorofluorocarbons; (k) any substance defined as a "hazardous substance" under CERCLA or as a "hazardous waste" under RCRA; (l) any substance defined as a "controlled hazardous substance" under the Maryland Environment Article; and (m) any other substance, material, waste, or mixture that is prohibited, limited, or regulated under any Environmental Law.
"Indemnified Parties" means, collectively, Lender, its parent company, affiliates, subsidiaries, participants, successors and assigns (including any assignee of the Loan or any interest therein, and any purchaser at a foreclosure sale), and each of their respective officers, directors, trustees, partners, members, managers, employees, agents, representatives, attorneys, consultants, contractors, and advisors, and each of their respective heirs, executors, administrators, successors, and assigns.
"Indemnitors" means, collectively, the Borrower and the Guarantor, jointly and severally.
"Lender" means Meridian National Bank, N.A., a national banking association, with its principal office for purposes of this transaction located at 200 South Charles Street, Baltimore, Maryland 21201, together with its successors and assigns.
"Loan" means the construction loan in the original principal amount of Three Hundred Thirty-Six Million and 00/100 Dollars ($336,000,000.00) made by Lender to Borrower pursuant to the Loan Agreement.
"Loan Agreement" means that certain Construction Loan Agreement dated as of the date hereof, by and between Borrower and Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan Documents" means, collectively, the Loan Agreement, the promissory note evidencing the Loan (the "Note"), the Deed of Trust, this Agreement, the Completion Guaranty, the Recourse Carve-Out Guaranty, and all other documents, instruments, agreements, and certificates executed and delivered by or on behalf of Borrower, Guarantor, or any other party in connection with the Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Phase I ESA" means the Phase I Environmental Site Assessment dated November 25, 2025, prepared by Bayline Environmental Consultants, LLC, 3045 Boston Street, Suite 200, Baltimore, Maryland 21224, for the Property located at 1500–1580 Wills Street, Baltimore, Maryland 21231, a copy of which has been delivered to Lender.
"Property" means the real property located at 1500–1580 Wills Street, Baltimore, Maryland 21231, being Block 7419, Lots 1–6, Baltimore City, Maryland, together with all improvements thereon and all appurtenances thereto, as more particularly described by the legal description set forth in Exhibit A attached hereto and incorporated herein by this reference, including without limitation all buildings, structures, fixtures, parking areas, driveways, sidewalks, landscaping, and all subsurface soils, groundwater, and surface water on, under, or adjacent to such real property.
"Remediation" or "Remedial Action" means any and all actions required or undertaken to (a) investigate, assess, sample, test, characterize, monitor, or evaluate the environmental condition of the Property or the extent or nature of any contamination, (b) clean up, remove, contain, treat, detoxify, neutralize, stabilize, or otherwise remediate Hazardous Materials at, on, under, or from the Property, (c) prevent, minimize, or mitigate the Release or threatened Release of Hazardous Materials at, on, under, or from the Property so that such Hazardous Materials do not migrate or threaten to migrate to other properties or media, (d) perform any closure, post-closure, or corrective action required under Environmental Laws, or (e) comply with any order, directive, plan, or agreement relating to the investigation or remediation of Hazardous Materials at, on, under, or from the Property, in each case as required by applicable Environmental Laws or as directed by any governmental authority having jurisdiction.
"Release" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersal, migrating, or releasing of Hazardous Materials into or upon any land, water, air, or other environmental medium, including without limitation any surface water, groundwater, subsurface soils, ambient air, or indoor air, whether intentional or unintentional, gradual or sudden, and whether at, on, under, from, or in the vicinity of the Property.
Section 1.2 — Rules of Construction
(a) Unless the context otherwise requires, all references in this Agreement to Articles, Sections, Exhibits, and Schedules refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. The Exhibits attached hereto are incorporated herein by this reference and shall be deemed a part of this Agreement for all purposes.
(b) Words of the masculine, feminine, or neuter gender shall mean and include the correlative words of the other genders, and words importing the singular number shall mean and include the plural number, and vice versa, as the context may require.
(c) The words "include," "includes," and "including" shall be deemed to be followed by the words "without limitation." The word "or" shall not be exclusive. References to "days" shall mean calendar days unless otherwise specified.
(d) Capitalized terms used in this Agreement and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement to the extent defined therein.
(e) References to any statute, law, rule, or regulation shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting such statute, law, rule, or regulation, and all references to any section of any statute, law, rule, or regulation shall include any successor to such section.
(f) References to "Lender" shall include any subsequent holder of the Loan or any interest therein, including any assignee, transferee, or participant, and any purchaser at a foreclosure sale or transferee under a deed in lieu of foreclosure.
(g) The Recitals set forth above are incorporated into and made a part of this Agreement and shall be binding upon the parties hereto to the same extent as if set forth at length in the body of this Agreement.
ARTICLE II — REPRESENTATIONS AND WARRANTIES OF INDEMNITORS
Each of the Indemnitors, jointly and severally, hereby represents and warrants to Lender and the other Indemnified Parties as follows, as of the date hereof and as of each date on which any advance of Loan proceeds is made:
Section 2.1 — Compliance with Environmental Laws
To the knowledge of the Indemnitors after due inquiry and investigation (including, without limitation, review and analysis of the Phase I Environmental Site Assessment dated November 25, 2025, completed by Bayline Environmental Consultants, LLC, and all other environmental reports, correspondence, and information in the possession or control of the Indemnitors or their agents, employees, officers, directors, managers, or consultants):
(a) The Property is, and at all times during the Indemnitors' ownership or control thereof has been, in compliance in all material respects with all applicable Environmental Laws, and no condition exists on, under, or about the Property that constitutes or, with the passage of time, notice, or both, would constitute a violation of any Environmental Law.
(b) No Hazardous Materials have been Released, discharged, generated, manufactured, refined, treated, stored, used, handled, transported, or disposed of on, under, from, or at the Property, or have migrated onto or from the Property, in violation of any Environmental Laws or in a manner that would reasonably be expected to give rise to liability under any Environmental Laws, except as specifically disclosed in the Phase I ESA delivered to Lender.
(c) No underground storage tanks (whether active, inactive, or abandoned), above-ground storage tanks used for Hazardous Materials, or associated piping systems are located on, under, or about the Property, and no underground storage tanks have been removed from the Property without full compliance with all applicable Environmental Laws, including all closure, assessment, and reporting requirements.
(d) No asbestos-containing materials ("ACM") or presumed asbestos-containing materials are present in any building, structure, or improvement on the Property, or in any soils or fill materials on the Property.
(e) The Property is not listed, and to the knowledge of the Indemnitors has never been listed, on any federal, state, or local environmental registry, list, or database, including without limitation (i) the National Priorities List ("NPL") established under CERCLA, (ii) the Comprehensive Environmental Response, Compensation, and Liability Information System ("CERCLIS") or its successor, the Superfund Enterprise Management System ("SEMS"), (iii) the Maryland Voluntary Cleanup Program list maintained by the Maryland Department of the Environment, (iv) any state equivalent of the NPL or CERCLIS, or (v) any list of sites with known or suspected environmental contamination maintained by Baltimore City or Baltimore County.
Section 2.2 — Environmental Reports
The Indemnitors represent and warrant that true, correct, and complete copies of all environmental reports, assessments, studies, investigations, audits, analyses, correspondence, notices, and other documents or information relating to the environmental condition of the Property that are in the possession or control of the Indemnitors, or any agent, employee, officer, director, manager, contractor, or consultant acting on behalf of any Indemnitor, have been delivered to Lender prior to the date hereof. Such environmental reports include, without limitation, the documents listed on Exhibit B attached hereto, including the Phase I Environmental Site Assessment prepared by Bayline Environmental Consultants, LLC, dated November 25, 2025, and any Phase II Environmental Site Assessment, if completed. The Indemnitors have not withheld, suppressed, or failed to disclose any material environmental report, finding, or information known to the Indemnitors relating to the environmental condition of the Property.
Section 2.3 — No Pending or Threatened Claims
No Environmental Claims are pending or, to the knowledge of the Indemnitors, threatened against the Property, any Indemnitor, or any prior owner, operator, or occupant of the Property with respect to the Property. No Indemnitor has received any notice, citation, summons, order, complaint, directive, letter, or other communication (whether oral or written) from any governmental authority, any former or current owner or operator of the Property, any adjacent property owner, or any other person or entity regarding (a) any actual or alleged violation of any Environmental Law with respect to the Property, (b) any actual or potential liability of any Indemnitor under any Environmental Law in connection with the Property, (c) any actual or threatened Release of Hazardous Materials at, on, under, from, or in the vicinity of the Property, or (d) any obligation to conduct any investigation, assessment, or Remedial Action with respect to the Property.
Section 2.4 — Permits and Licenses
All environmental permits, licenses, approvals, authorizations, registrations, and consents required under applicable Environmental Laws for the current condition and planned development, construction, and operation of the Property and the Project have been obtained, or will be obtained prior to the commencement of any activities requiring such permits, licenses, or approvals. Without limiting the generality of the foregoing, the Indemnitors acknowledge and represent that Baltimore City Planned Unit Development approval has been obtained pursuant to Baltimore City Ordinance No. 24-0417, enacted on June 14, 2024, and that building permits for the Project are expected to be issued during the first quarter of 2026. All such permits, licenses, and approvals are, or upon issuance will be, in full force and effect, and no proceedings are pending or, to the knowledge of the Indemnitors, threatened to revoke, suspend, modify, or fail to renew any such permit, license, or approval.
Section 2.5 — Prior Uses
To the knowledge of the Indemnitors, after due inquiry and investigation (including review of the Phase I ESA and historical use records for the Property), prior uses of the Property, including any industrial, commercial, residential, or other activities conducted on the Property by prior owners, operators, tenants, or other occupants, have not resulted in the presence, generation, storage, treatment, disposal, or Release of Hazardous Materials on, under, or about the Property in violation of any Environmental Laws or in concentrations or quantities that would reasonably be expected to give rise to liability under any Environmental Laws, except as specifically disclosed in the Phase I ESA delivered to Lender.
Section 2.6 — No Material Misstatement
The representations and warranties of the Indemnitors set forth in this Article II and elsewhere in this Agreement do not contain any untrue statement of material fact and do not omit to state any material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading in any material respect. All information, documents, and reports provided by the Indemnitors to Lender in connection with this Agreement and the environmental condition of the Property are true, correct, and complete in all material respects.
ARTICLE III — COVENANTS OF INDEMNITORS
Each of the Indemnitors, jointly and severally, hereby covenants and agrees with Lender as follows:
Section 3.1 — Compliance with Environmental Laws
The Indemnitors shall, at all times during the term of this Agreement, comply, and shall cause the Property and all operations, activities, and conditions thereon to comply, with all applicable Environmental Laws in all material respects. The Indemnitors shall not cause, suffer, or permit any activity, operation, or condition on, under, or about the Property that violates or could reasonably be expected to result in a violation of any Environmental Law. The Indemnitors shall not cause or permit any Release of Hazardous Materials on, under, from, or at the Property in violation of any Environmental Law or in any manner that could reasonably be expected to give rise to any Environmental Liability.
Section 3.2 — Prohibition on Hazardous Materials
The Indemnitors shall not cause or permit any Hazardous Materials to be brought upon, kept, stored, used, generated, manufactured, refined, produced, processed, treated, recycled, or disposed of on, under, or about the Property, or transported to or from the Property, except:
(a) Construction materials and supplies that are necessary for and customarily used in connection with the development, construction, and build-out of Harbor Point Towers, provided that such materials are used, stored, handled, transported, and disposed of in strict compliance with all applicable Environmental Laws. Without limiting the generality of the foregoing, this exception shall encompass materials utilized by Pinnacle General Contractors, Inc., the general contractor engaged by Borrower under the Guaranteed Maximum Price ("GMP") contract executed on December 20, 2025, and by all subcontractors and materialmen engaged thereunder, in each case in compliance with all applicable Environmental Laws and the environmental provisions of the Loan Documents.
(b) Customary quantities of cleaning supplies, office products, maintenance supplies, pesticides, fertilizers, paints, solvents, fuels, and other household and commercial products that are ordinarily used in the day-to-day operation, management, and maintenance of a first-class residential and retail mixed-use property of similar size and character, provided that all such materials are used, stored, handled, and disposed of in compliance with all applicable Environmental Laws, in quantities that do not constitute a reportable quantity under any Environmental Law, and in a manner consistent with the ordinary and prudent operation of such a property.
(c) Materials that are otherwise expressly permitted under the Loan Agreement or the other Loan Documents, subject in all cases to compliance with all applicable Environmental Laws.
Notwithstanding the foregoing exceptions, in no event shall any Indemnitor permit any Hazardous Materials to be stored, used, or disposed of on the Property in a manner that would require the Property to be listed on any federal, state, or local environmental registry, or that would require the filing of a notice or report under CERCLA, RCRA, or any analogous state or local law, unless such storage, use, or disposal is in strict compliance with all applicable permits and Environmental Laws and has been approved in writing by Lender.
Section 3.3 — Notice of Environmental Events
The Indemnitors shall promptly, and in any event within five (5) business days after obtaining knowledge thereof, notify Lender in writing of the occurrence of any of the following events or circumstances:
(a) Any Release or threatened Release of any Hazardous Materials at, on, under, from, or in the vicinity of the Property, regardless of whether such Release is in violation of any Environmental Law or gives rise to any reporting obligation, except for de minimis releases of substances described in Section 3.2(b) above that are contained and remediated promptly in compliance with all applicable Environmental Laws.
(b) Any Environmental Claim made, filed, or threatened against any Indemnitor, the Property, or any prior owner, operator, or occupant of the Property with respect to the Property, including any notice, citation, complaint, order, directive, or inquiry from any governmental authority, private party, or other person or entity.
(c) Any notice, letter, order, directive, warning, citation, complaint, or other communication from any federal, state, or local governmental authority regarding any actual or potential violation of any Environmental Law with respect to the Property or any activity conducted thereon, or regarding any actual or potential Environmental Liability of any Indemnitor in connection with the Property.
(d) Any change in the environmental condition of the Property that could reasonably be expected to have a material adverse effect on (i) the value of the Property, (ii) the ability of the Indemnitors to perform their obligations under this Agreement or any other Loan Document, (iii) the environmental compliance status of the Property, or (iv) the security interest of Lender in the Property.
(e) The discovery of any previously unknown environmental condition at, on, under, or about the Property, including without limitation the discovery of any underground storage tanks, contaminated soils, contaminated groundwater, asbestos-containing materials, lead-based paint, PFAS, or other Hazardous Materials that were not previously known to the Indemnitors or disclosed in the Phase I ESA or any other environmental report delivered to Lender.
Each such notice shall describe in reasonable detail the nature and extent of the event or condition, the Hazardous Materials involved (if any), the actions being taken or proposed to be taken by the Indemnitors in response thereto, and any other information reasonably required by Lender. The Indemnitors shall furnish Lender with copies of all correspondence, notices, reports, test results, and other documents relating to such event or condition promptly upon receipt or generation thereof.
Section 3.4 — Remediation Obligations
In the event of any Release or threatened Release of any Hazardous Materials at, on, under, or from the Property (whether such Release occurred before or during the term of this Agreement), or in the event that any Remedial Action is otherwise required with respect to the Property under any Environmental Law or by any governmental authority:
(a) The Indemnitors shall promptly investigate and, to the extent required by any applicable Environmental Law or any governmental authority having jurisdiction, take all Remedial Actions necessary to clean up, remove, contain, treat, and otherwise remediate such Hazardous Materials and restore the Property to a condition that complies with all applicable Environmental Laws, all at the Indemnitors' sole cost and expense and without any right of reimbursement from or contribution by any Indemnified Party.
(b) All Remedial Actions shall be conducted in accordance with all applicable Environmental Laws, all orders and directives of applicable governmental authorities, and in a manner, and to a standard of completion, reasonably satisfactory to Lender. The Indemnitors shall employ qualified environmental consultants and contractors approved by Lender (such approval not to be unreasonably withheld, conditioned, or delayed) to perform such Remedial Actions.
(c) The Indemnitors shall keep Lender fully informed of the progress and results of any Remedial Actions, including by providing Lender with copies of all sampling data, laboratory results, work plans, progress reports, closure reports, regulatory correspondence, and other documents and information relating to such Remedial Actions, promptly upon generation or receipt thereof. The Indemnitors shall permit Lender and its representatives to observe and monitor any Remedial Actions.
(d) Lender shall have the right, but not the obligation, to join, participate, and appear (at the Indemnitors' expense) in any proceedings, investigations, hearings, or negotiations involving any Environmental Claims relating to the Property or any Remedial Actions with respect to the Property. Lender's participation shall not constitute an assumption by Lender of any Environmental Liability or any obligation to conduct or complete any Remedial Action. Nothing in this Section shall be construed to limit or impair Lender's rights under Section 6.4 of this Agreement.
Section 3.5 — Environmental Assessments
Lender shall have the right, at any time and from time to time during the term of this Agreement, upon reasonable prior written notice to the Indemnitors (which notice shall not be required in the case of an emergency or exigent circumstances), to cause environmental site assessments, inspections, investigations, sampling, testing, and monitoring (including Phase I Environmental Site Assessments, Phase II Environmental Site Assessments, asbestos surveys, lead-based paint surveys, radon testing, mold assessments, PFAS sampling, and any other assessments deemed appropriate by Lender) to be conducted on, under, or about the Property by environmental consultants selected by Lender.
If Lender has a reasonable basis to believe that a Release of Hazardous Materials has occurred at, on, under, or from the Property, or that a violation of any Environmental Law exists or may exist with respect to the Property, the cost of such assessments shall be borne by the Indemnitors and shall be payable within thirty (30) days after written demand therefor, together with reasonable documentation of such costs. In the absence of such reasonable basis, assessments requested by Lender shall be at Lender's sole cost and expense, unless such assessments reveal a Release or violation, in which case the cost thereof shall be borne by the Indemnitors. The Indemnitors shall cooperate fully with Lender and its consultants in the conduct of any such assessments, including by providing access to the Property, providing all relevant documents and information, and making the Indemnitors' employees, agents, and consultants available for interviews.
Section 3.6 — Insurance
The Indemnitors shall obtain and maintain, at the Indemnitors' sole cost and expense, such environmental liability insurance (including pollution legal liability insurance, if required by Lender) and builder's risk insurance with coverage for pollution conditions as Lender may reasonably require from time to time, in amounts, with deductibles, and with carriers reasonably satisfactory to Lender. Without limiting the generality of the foregoing, the Indemnitors shall maintain builder's risk insurance through a carrier rated no lower than "A-" (VIII) by A.M. Best Company, which the parties acknowledge shall initially be Greystone Mutual Insurance Company, with coverage amounts and terms consistent with the requirements of the Loan Agreement. The Indemnitors' overall insurance program shall include, at a minimum, commercial general liability insurance with limits of not less than Ten Million and 00/100 Dollars ($10,000,000.00) per occurrence and Twenty Million and 00/100 Dollars ($20,000,000.00) in the aggregate, and umbrella/excess liability insurance with limits of not less than Fifty Million and 00/100 Dollars ($50,000,000.00) in the aggregate, in each case with Lender named as an additional insured and loss payee, as applicable. All such policies shall provide for at least thirty (30) days' prior written notice to Lender of cancellation, non-renewal, or material reduction in coverage.
Section 3.7 — Contractor Environmental Compliance
The Indemnitors shall require, by express written provision in all construction contracts, subcontracts, and other agreements entered into in connection with the development of the Property, that all contractors, subcontractors, materialmen, suppliers, and other parties performing work at or delivering materials to the Property (including, without limitation, Pinnacle General Contractors, Inc., the general contractor under the GMP contract executed December 20, 2025, and all subcontractors, sub-subcontractors, and suppliers engaged thereunder) comply with all applicable Environmental Laws and with the environmental provisions of the Loan Documents. The Indemnitors shall enforce such provisions and shall promptly take action to cure or remedy any breach thereof. The Indemnitors shall require that all such contractors and subcontractors maintain Hazardous Materials handling and disposal procedures in compliance with applicable Environmental Laws, and shall furnish to Lender, upon request, evidence of such compliance, including copies of all manifests, disposal certifications, and regulatory filings.
Section 3.8 — Governmental Approvals and Filings
The Indemnitors shall make, or cause to be made, all filings, reports, notifications, and registrations required under any Environmental Laws in connection with the development, construction, use, and operation of the Property, and shall obtain and maintain in full force and effect all governmental permits, licenses, approvals, authorizations, registrations, and consents required under any Environmental Laws for the development, construction, use, and operation of the Property. The Indemnitors shall promptly furnish to Lender copies of all such filings, permits, and approvals, and shall promptly notify Lender of any denial, revocation, suspension, or material modification of any such permit or approval.
ARTICLE IV — INDEMNIFICATION
Section 4.1 — General Indemnification
The Indemnitors, jointly and severally, hereby agree to indemnify, defend (with counsel reasonably acceptable to the Indemnified Parties), protect, and hold harmless each Indemnified Party from and against any and all Environmental Liabilities arising out of, resulting from, or in any way related to:
(a) Any breach of any representation, warranty, covenant, or obligation of any Indemnitor contained in this Agreement, including any inaccuracy in any representation or warranty at the time such representation or warranty was made or deemed made;
(b) The presence, existence, Release, or threatened Release of any Hazardous Materials at, on, in, under, from, or in the vicinity of the Property at any time, whether such presence, existence, Release, or threatened Release occurred or occurs before, during, or after the term of the Loan, and regardless of whether any Indemnitor caused or contributed to such presence, existence, Release, or threatened Release;
(c) Any Environmental Claim of any nature whatsoever relating to or affecting the Property, whether brought by any governmental authority, private party, adjacent property owner, tenant, occupant, or any other person or entity;
(d) Any violation of or non-compliance with any Environmental Law with respect to the Property or any activity conducted thereon, whether by any Indemnitor, any prior owner or operator of the Property, any contractor, subcontractor, tenant, occupant, or any other person or entity;
(e) Any Remedial Action required, necessary, or appropriate with respect to the Property, whether pursuant to any Environmental Law, any order or directive of any governmental authority, any court order, any settlement agreement, or otherwise;
(f) Any third-party claims (whether based on contract, tort, strict liability, or any other legal theory) for personal injury, bodily injury, sickness, disease, wrongful death, property damage, diminution in property value, loss of use, or natural resource damage arising from or relating to the presence, Release, or exposure to Hazardous Materials at, on, in, under, from, or in the vicinity of the Property.
The foregoing indemnification obligations shall apply regardless of whether any Indemnified Party is alleged to be, or is determined to be, contributorily negligent with respect to the Environmental Liabilities from which indemnification is sought, except to the extent that such Environmental Liabilities are finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of the Indemnified Party seeking indemnification.
Section 4.2 — Scope of Indemnified Costs
The Environmental Liabilities covered by the indemnification obligations set forth in Section 4.1 above include, without limitation, all of the following:
(a) All costs of investigation, assessment, sampling, testing, analysis, monitoring, characterization, delineation, containment, removal, treatment, storage, transportation, and disposal of Hazardous Materials at, on, in, under, or from the Property, including costs of laboratory analyses, data evaluation, risk assessments, and feasibility studies;
(b) All costs of Remedial Actions required, directed, or approved by any federal, state, or local governmental authority, including costs of preparing and implementing work plans, remedial investigation/feasibility studies, remedial action plans, risk management plans, closure plans, post-closure plans, and institutional and engineering controls;
(c) All damages for injury to, destruction of, or loss of natural resources (including groundwater, surface water, wetlands, soils, air, flora, and fauna), real property, or personal property, including damages assessed under CERCLA Section 107(a)(4)(C) (42 U.S.C. § 9607(a)(4)(C)) or any analogous state or local law;
(d) All fines, penalties, assessments, sanctions, and punitive damages imposed or assessed by any federal, state, or local governmental authority or any court in connection with any violation of any Environmental Law or any Environmental Claim relating to the Property;
(e) Any diminution in the fair market value, rental value, or development potential of the Property resulting from the presence of Hazardous Materials at, on, under, or about the Property, or resulting from any stigma or market perception associated with environmental contamination;
(f) All reasonable attorneys' fees, consultants' fees, environmental engineers' fees, expert witness fees, court costs, filing fees, recording costs, and other litigation expenses incurred by any Indemnified Party in connection with the enforcement of this Agreement or the defense, investigation, or resolution of any Environmental Claim or Environmental Liability relating to the Property;
(g) All costs of any health assessments, health-effect studies, epidemiological studies, medical monitoring programs, or similar investigations or programs required or undertaken in connection with any Release of Hazardous Materials at, on, under, or from the Property or any alleged exposure to Hazardous Materials originating from the Property;
(h) All costs incurred in connection with any judicial, administrative, regulatory, or arbitral investigation, proceeding, hearing, trial, or appeal relating to any Environmental Claim or Environmental Liability in connection with the Property, including costs of discovery, depositions, document production, and expert reports;
(i) Any loss of use, business interruption, lost profits, consequential damages, incidental damages, or other economic losses suffered by any Indemnified Party as a result of any Environmental Claim, Environmental Liability, Remedial Action, or any other matter covered by the indemnification obligations set forth in this Article IV;
(j) All costs and expenses incurred by any Indemnified Party in responding to or complying with any information request, subpoena, demand letter, or inquiry from any governmental authority relating to the environmental condition of the Property.
Section 4.3 — Payment of Indemnification Amounts
The Indemnitors shall pay all amounts due under this Article IV within thirty (30) days after receipt of written demand therefor from Lender or any other Indemnified Party, accompanied by reasonable documentation of the Environmental Liabilities incurred or claimed (which documentation may include invoices, receipts, statements, cost summaries, estimates from qualified consultants, and such other evidence as Lender reasonably deems appropriate). Any amounts not paid within such thirty (30)-day period shall bear interest at the default rate specified in the Loan Agreement (or if the Loan has been repaid, at the rate of interest equal to the greater of (x) Term SOFR plus 500 basis points per annum, or (y) the maximum rate permitted by applicable law) from the date of Lender's written demand until paid in full. The Indemnitors' obligation to pay such amounts shall not be subject to any defense, counterclaim, set-off, or deduction, except as expressly set forth in this Agreement.
Section 4.4 — Defense of Claims
Upon Lender's written request, the Indemnitors shall promptly assume the defense of any Environmental Claim against any Indemnified Party at the Indemnitors' sole cost and expense, using legal counsel experienced in environmental matters and reasonably satisfactory to Lender. If the Indemnitors fail to assume such defense within fifteen (15) days after Lender's request, Lender shall have the right to assume such defense at the Indemnitors' sole cost and expense.
Lender reserves the right, at any time and regardless of whether the Indemnitors have assumed the defense of any Environmental Claim, to retain its own separate legal counsel and to participate in the investigation, defense, and resolution of any Environmental Claim, and the reasonable fees and expenses of Lender's separate counsel shall be borne by the Indemnitors if (i) Lender reasonably determines that a conflict of interest exists between the interests of Lender and the interests of any Indemnitor, (ii) the Environmental Claim involves potential Environmental Liabilities in excess of Five Million and 00/100 Dollars ($5,000,000.00), or (iii) the Indemnitors have failed to diligently and competently prosecute the defense of such Environmental Claim.
No settlement, compromise, consent decree, or other resolution of any Environmental Claim may be entered into by any Indemnitor without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that Lender may withhold its consent in its sole discretion if any proposed settlement (A) includes any admission of liability on the part of any Indemnified Party, (B) imposes any obligation (including any institutional or engineering control, use restriction, or monitoring obligation) on the Property, (C) does not include an unconditional release of all Indemnified Parties from all Environmental Liabilities arising from the subject Environmental Claim, or (D) involves the payment of monetary damages in excess of One Million and 00/100 Dollars ($1,000,000.00).
ARTICLE V — SURVIVAL AND UNSECURED OBLIGATION
Section 5.1 — Survival
The representations, warranties, covenants, agreements, indemnification obligations, and all other obligations of the Indemnitors under this Agreement shall survive, and shall remain in full force and effect following, each and all of the following events:
(a) The repayment, satisfaction, or discharge of the Loan in full, whether by payment, prepayment, refinancing, or otherwise;
(b) The foreclosure of the Deed of Trust, or the acceptance by Lender (or any other Indemnified Party) of a deed in lieu of foreclosure, or any other realization upon the Property or any other collateral securing the Loan;
(c) Any sale, transfer, conveyance, assignment, or other disposition of the Property or any interest therein, whether voluntary or involuntary, by operation of law or otherwise;
(d) Any release, reconveyance, discharge, termination, or satisfaction of the Deed of Trust or any other Loan Document, in whole or in part, whether by payment, foreclosure, deed in lieu, or otherwise;
(e) Any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, liquidation, receivership, assignment for the benefit of creditors, dissolution, or similar proceeding involving any Indemnitor, whether voluntary or involuntary, under Title 11 of the United States Code (the Bankruptcy Code) or any other applicable federal, state, or foreign bankruptcy, insolvency, or similar law.
The obligations of the Indemnitors under this Agreement shall continue and survive indefinitely, without limitation as to time, and shall not be subject to, and each Indemnitor hereby irrevocably waives, any defense based on any applicable statute of limitations, statute of repose, laches, estoppel, or other temporal defense. The parties acknowledge and agree that Environmental Liabilities may arise or be discovered at any time, including many years after the date hereof, and that the survival provisions of this Section are essential to protect the Indemnified Parties from such Environmental Liabilities.
Section 5.2 — Unsecured Obligation; Separate Obligation
The obligations of the Indemnitors under this Agreement are:
(a) Unsecured personal obligations of each Indemnitor and are not secured by the Deed of Trust, the Property, or any other collateral under the Loan Documents. The obligations hereunder are not limited to the value of the Property, the amount of the Loan, or the value of any other collateral, and Lender and the other Indemnified Parties may seek satisfaction of such obligations from any assets of the Indemnitors, whether or not related to the Property or the Loan.
(b) Separate from and in addition to any and all obligations of the Indemnitors (or either of them) under the Loan Agreement, the Note, the Deed of Trust, the Completion Guaranty delivered by Fairwater Real Estate Investment Trust to Lender of even date herewith, the Recourse Carve-Out Guaranty (the "bad boy" guaranty) delivered by Fairwater Real Estate Investment Trust to Lender of even date herewith, and all other Loan Documents. The obligations hereunder are independent of, and shall not be limited, reduced, discharged, or otherwise affected by, any rights, obligations, limitations, or exculpatory provisions contained in any other Loan Document.
(c) Full recourse obligations of each Indemnitor and are not subject to, and each Indemnitor hereby irrevocably waives the benefit of, any non-recourse, exculpatory, or limited-liability provisions contained in the Loan Agreement, the Note, the Deed of Trust, or any other Loan Document. The parties acknowledge and agree that the environmental indemnification obligations set forth herein are intended to constitute full personal recourse obligations of each Indemnitor, enforceable against all assets of each Indemnitor, without limitation.
Section 5.3 — Joint and Several Liability
The obligations of the Borrower and the Guarantor under this Agreement are joint and several. Lender may proceed against either or both of the Indemnitors, in any order, simultaneously or successively, and may enforce this Agreement against any one or more of the Indemnitors, without first proceeding against the Property, any other collateral securing the Loan, or any other person or entity. The release, settlement, compromise, or discharge of any one Indemnitor shall not release, settle, compromise, or discharge any other Indemnitor, unless Lender expressly agrees otherwise in writing. The obligations of each Indemnitor hereunder are primary obligations and not obligations of a surety, and Lender shall not be required to exhaust any remedy or proceed against any other person or any collateral before proceeding against any Indemnitor.
ARTICLE VI — LENDER'S RIGHTS AND REMEDIES
Section 6.1 — Cumulative Remedies
The rights and remedies of Lender and the other Indemnified Parties under this Agreement are cumulative and are in addition to, and not in limitation of, any other rights and remedies available to Lender or any other Indemnified Party under the Loan Agreement, the Deed of Trust, any other Loan Document, any Environmental Law, or at law or in equity. The exercise or enforcement of any right or remedy under this Agreement shall not prevent the concurrent or subsequent exercise or enforcement of any other right or remedy, whether under this Agreement, the Loan Documents, or otherwise.
Section 6.2 — No Waiver
No delay, failure, or omission by Lender or any other Indemnified Party in exercising any right, power, privilege, or remedy under this Agreement shall operate as a waiver thereof or impair such right, power, privilege, or remedy. No waiver shall be effective unless made in writing and signed by Lender. No single or partial exercise of any right, power, privilege, or remedy under this Agreement shall preclude any other or further exercise thereof, or the exercise of any other right, power, privilege, or remedy. No waiver of any default or breach of this Agreement shall constitute a waiver of any subsequent or other default or breach, whether of the same or a different character.
Section 6.3 — Subrogation
Each Indemnitor hereby unconditionally and irrevocably waives any and all rights of subrogation, contribution, reimbursement, exoneration, indemnification, or other similar rights against Lender or any other Indemnified Party, and any rights to participate in or benefit from any security, collateral, or guaranty held by Lender, to the extent of any Environmental Liabilities paid or incurred by such Indemnitor under this Agreement. The foregoing waiver shall be effective until all obligations of the Indemnitors under this Agreement have been fully performed and satisfied, and no Environmental Liabilities remain outstanding or contingent.
Section 6.4 — Right to Cure
If any Indemnitor fails to perform any obligation required to be performed by such Indemnitor under this Agreement, including without limitation any obligation to conduct any investigation, assessment, Remedial Action, or other environmental response activity, or to comply with any Environmental Law, then Lender shall have the right (but not the obligation), at any time and from time to time, to take such action on behalf of or in the name of such Indemnitor (or in Lender's own name), at the sole cost and expense of the Indemnitors. All costs, expenses, and amounts expended or incurred by Lender in exercising its rights under this Section 6.4, including without limitation reasonable attorneys' fees, consultants' fees, contractors' fees, laboratory costs, permit fees, regulatory costs, and all other direct and indirect costs, shall be paid by the Indemnitors on demand and shall bear interest from the date of expenditure or incurrence by Lender until the date of repayment in full at the default rate of interest specified in the Loan Agreement. Nothing in this Section shall be construed to impose upon Lender any obligation to take any action or to assume any Environmental Liability, and Lender's exercise of its rights under this Section shall not constitute an assumption of any Environmental Liability by Lender.
ARTICLE VII — WAIVERS
Section 7.1 — Waiver of Defenses
Each Indemnitor hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable law:
(a) Any right to require Lender or any other Indemnified Party to (i) proceed against the Property or any other collateral securing the Loan before proceeding against such Indemnitor, (ii) proceed against any other Indemnitor or any other person or entity before proceeding against such Indemnitor, (iii) pursue any other remedy available to Lender before proceeding against such Indemnitor, or (iv) marshal any assets or collateral;
(b) Any defense based on the anti-deficiency laws, one-action rules, or any similar laws