Loan Agreement by and among LF3 RIFC, LLC, LF3 RIFC TRS, LLC, and Legendary A-1 Bonds, LLC related to the Residence Inn Fort Collins Property, dated as of August 3, 2022
Ex 10.219
Loan Agreement
between
LF3 RIFC, LLC
and
LF3 RIFC TRS, LLC
Collectively, as Borrower
and
LEGENDARY A-1 BONDS, LLC
as Lender
AUGUST 3, 2022
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TABLE OF CONTENTS
Page
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LIST OF SCHEDULES
Schedule 1 -Form of Notes
Schedule 2 -Required Repairs
Schedule 3 -Organization of Borrower
Schedule 4 -Definition of Special Purpose Bankruptcy Remote Entity
Schedule 5 -Service Contracts
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Loan Agreement
This Loan Agreement (this “Agreement”), dated as of August 3, 2022 (the “Effective Date”) is made by and between LF3 RIFC, LLC, a Delaware limited liability company (“SPE Owner”) and LF3 RIFC TRS, LLC, a Delaware limited liability company (“TRS Lessee”; and collectively with SPE Owner, “Borrower”), and LEGENDARY A-1 BONDS, LLC, a Delaware limited liability company (“Lender”).
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by, or is under common Control with such Person or is a director or officer of such Person or of an Affiliate of such Person.
“Approved Capital Expenses” means those Capital Expenses incurred by Borrower that are approved by Lender in its reasonable discretion.
“Approved Operating Expenses” means Operating expenses incurred by Borrower which (i) are for real estate taxes, insurance premiums, electric, gas, oil, water, sewer or other utility service to the Property, (ii) are for sales, use, occupancy, liquor or similar taxes at the Hotel, (iii) as customarily occurred in the normal course of business in the operation of the Hotel, or (iv) have been approved in writing by Lender.
“Borrower Representative” means individually or collectively, as the context may require, SPE Owner’s Member, SPE Owner’s Member GP, and TRS Lessee’s Member.
“Business Day” means any day other than a Saturday or a Sunday or any day on which commercial banks in Fort Collins, Colorado are authorized or required to close.
“Capital Expenses” means expenses that are necessary for the repair and improvement of the Property which are required to be capitalized under GAAP.
“Change in Control” means if Control Party no longer has the power to direct or cause the direction of the management and policies of Borrower or Borrower Representative.
“Code” means the Internal Revenue Code of 1986, as amended and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.
“Contributor” means RLC V RIFC, LLC, a Colorado limited liability company.
“Control” means with respect to any Person, either (i) ownership directly or indirectly of 25 percent or more of all equity interests in such Person or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract or otherwise.
“Control Party” means SPE Owner’s Member GP, or any Successor Control Party.
“Debt” means the unpaid Principal, all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan or under any Loan Document.
“Debt Service” means with respect to any particular period, the scheduled Principal and interest payments due under the Notes in such period.
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“Debt Service Amount” means Debt Service due on the Loan during the 12 month period ending on the applicable Determination Date; provided, during the first 12 months after the Effective Date, the Debt Service Amount will be calculated based on Debt Service made to the applicable Determination Date, provided such payments will be annualized; and provided further, if at any time during the 12 month period ending on the applicable Determination Date, interest-only payments are due, then with respect to such interest-only period, the Debt Service Amount will be the monthly payment of Principal and interest that would be due based on a 25 year amortization schedule using the then-current interest rate.
Default” means the occurrence of any event under any Loan Document which, with the giving of notice or passage of time, or both, would be an Event of Default.
“Determination Date” means the last day of each Fiscal Quarter occurring after the Effective Date.
“ERISA” means the Employment Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means all members of a controlled group of corporations and all trades and business (whether or not incorporated) under common control and all other entities which, together with Borrower, are treated as a single employer under any or all of Section 414(b), (c), (m) or (o) of the Code.
“Excusable Delay” means a delay due to acts of God, governmental restrictions, stays, judgments, orders, decrees, war, other enemy actions, terrorism, civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable control of the party in question.
“Exit Fee” means a fee due to Lender at repayment of the Tranche 1 portion of the Loan (whether at or prior to the Maturity Date) equal to one and three-quarters percent (1.75%) of the full amount due under the Loan at the time of such repayment.
“FF&E” means fixtures, furnishings, equipment, furniture, and other items of tangible personal property now or hereafter located in or on the Property or the Improvements or used in connection with the use, occupancy, operation and maintenance of all or any part of the hotel located on the Property, other than stocks of food and other supplies held for consumption in normal operation but including, without limitation, appliances, machinery, equipment, signs, artwork, office furnishings and equipment, guest room furnishings, and specialized equipment for kitchens, laundries, bars, restaurant, public rooms, health and recreational facilities, linens, dishware, all partitions, screens, awnings, shades, blinds, floor coverings, hall and lobby equipment, heating, lighting, plumbing, ventilating, refrigerating, incinerating, elevators, escalators, air conditioning and communication plants or systems with appurtenant fixtures, vacuum cleaning systems, call or beeper systems, security systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, reservation system computer and related equipment, all equipment, manual, mechanical or motorized, for the construction, maintenance, repair and cleaning of, parking areas, walks, underground ways, truck ways, driveways, common areas, roadways, highways and streets, and the Vehicles (as defined in the Uniform System of Accounts for Hotels).
“Fiscal Quarter” means, the quarterly accounting periods of Borrower consistent with the Borrower’s accounting and reporting practices in effect on the Effective Date.
“Force Majeure Event” means any damage to the Improvements or disruption to the operation of the Property that is caused by fire or acts of God (such as flood, lightning, earthquake, or hurricane), war, strikes, other labor disputes, or riots or similar civil disturbance, but only to the extent such damage or disruption (a) is beyond the control of and not caused in whole or in part by negligence, illegal acts, or willful misconduct of Borrower, its employees, or any Person acting under Borrower’s control or with the
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approval or authorization of Borrower and (b) could not have been avoided or overcome by the exercise of due diligence or reasonable foresight on the part of Borrower or any other such Person.
“Franchise Agreement” means the Relicensing Franchise Agreement dated as of August 3, 2022, between TRS Lessee, as licensee, and Franchisor, as licensor.
“Franchisor” means Marriott International, Inc..
“GAAP” means generally accepted accounting principles in the United States of America as of the date of the applicable financial report.
“Governmental Authority” means any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) now or hereafter in existence.
“Gross Revenues” means, for any period, the Rents actually received by Borrower or Manager.
“Guarantor” means SPE Owner’s Member.
“Guaranty” means the Guaranty Agreement dated as of the Effective Date by SPE Owner’s Member, guarantying the obligations of Borrower under the Loan Documents.
“Hotel Transactions” means, collectively, (i) occupancy arrangements for customary hotel transactions in the ordinary course of Borrower’s business conducted at the hotel located at the Property, including nightly rentals (or licensing) of individual hotel rooms or suites, banquet room use, and food and beverage services, and (ii) informational or guest services that are terminable on one month’s notice or less without cause and without penalty or premium, including co-marketing, promotional services, and outsourced services.
“Improvements” means all buildings and other improvements on the Land.
“Insurance Requirements” means collectively, (i) all material terms of any insurance policy required pursuant to this Agreement and (ii) all material regulations and then-current standards applicable to or affecting the Property or any part thereof or any use or condition thereof, which may, at any time, be recommended by the Board of Fire Underwriters, if any, or such other body exercising similar functions, having jurisdiction over the Property.
“Interest Period” means (i) the period beginning on and including the Effective Date and ending on the last day of the calendar month in which the Effective Date occurs, (ii) each calendar month thereafter until the calendar month before the month in which the Maturity Date occurs, and (iii) the period beginning on the first day of the calendar month in which the Maturity Date occurs and ending on the Maturity Date.
“Interest Rate” means, (i) with respect to Note 1, seven percent (7.0%) per annum, (ii) with respect to Note 2, seven percent (7.0%) per annum, and (iii) with respect to Note 3, seven percent (7.0%) per annum.
“Inventory” means, as defined in the UCC, and including items which would be entered on a balance sheet under the line items for “Inventories” or “china, glassware, silver, linen and uniforms” under the Uniform System of Accounts for Hotels.
“Land” means the tract of land located in Larimer County, Colorado described on Exhibit A to the Security Instrument.
“Leases” means all leases, licenses, and other agreements or arrangements heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the
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Property or the Improvements, including any guarantees, extensions, renewals, modifications or amendments thereof and all additional remainders, reversions and other rights and estates appurtenant thereunder. As used herein, the term “Leases” will not include Hotel Transactions.
“Legal Requirements” means statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower, any Loan Document or all or part of the Property or the construction, ownership, use, alteration or operation thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instrument, either of record or known to Borrower, at any time in force affecting all or part of the Property.
“Lien” means any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement, restrictive covenant, preference, assignment, security interest or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting all or any part of the Property or any interest therein, or any direct or indirect interest in Borrower or Borrower Representative, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
“Loan” means the loan in the Principal amount made pursuant to this Agreement and evidenced by the Notes.
“Loan Documents” means this Agreement and all other documents, agreements and instruments now or hereafter evidencing, securing or delivered to Lender in connection with the Loan, including, but not limited to, the following, each of which is dated as of the Effective Date (a) the Loan Agreement, (b) the Notes, (c) the Security Instrument, (d) the Guaranty, and (e) the Environmental Indemnity Agreement made by Guarantor and Borrower (the “Environmental Indemnity”), as each of the foregoing may be (and each of the foregoing defined terms will refer to such documents as they may be) amended, restated, replaced, supplemented or otherwise modified from time to time.
“Management Agreement” means the Management Agreement dated August 3, 2022, between TRS Lessee and Manager, as each of the same may be amended, restated, replaced, supplemented or otherwise modified from time to time in accordance with Section 5.11.
“Manager” means initially NHS LLC dba National Hospitality Services, a North Dakota limited liability company, and will include any successor, assignee or replacement manager appointed by a Borrower in accordance with Section 5.11.
“Material Alteration” means any alteration affecting structural elements of the Property, any utility or HVAC system contained in the Property, or the exterior of any building constituting a part of the Property, or any alteration at the Property the cost of which exceeds $200,000, in each case, however, other than the following, which will not constitute Material Alterations means (i) Required Repairs, (ii) alterations performed as part of a Restoration, or (iii) alterations performed in connection with Approved Capital Expenses (iv) any Property Improvement Plan consented to by Lender.
“Maturity Date” means the date on which the final payment of principal of the Notes becomes due and payable as therein provided, whether at the Stated Maturity Date, by declaration of acceleration, or otherwise.
“Net Cash Flow” means for any period Gross Revenues actually received by Borrower or Manager, annualized, less the greater of (1) Approved Operating Expenses and (2) operating expenses actually paid by Borrower or Manager for the 12 month period ending with the most recent calendar month reporting. For the purpose of determining Net Cash Flow, operating expenses will (x) not include
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depreciation, amortization and other non-cash items, debt service, Capital Expenses, any contributions to any of the Reserve Funds, income taxes or other taxes in the nature of income taxes on sales, or use taxes required to be paid to any Governmental Authority, equity distributions, and other extraordinary and non-recurring items, and legal or other professional services fees and expenses unrelated to the operation of the Property, (y) be increased to reflect known increases in operating expenses that are anticipated, in Lender’s reasonable determination, to occur within the succeeding 12-month period including without limitation those related to Taxes and Insurance Premiums and (z) include (I) the actual fees paid to the Manager pursuant to the Management Agreement for such period of determination and (II) an amount equal to the greater of (x) an imputed capital improvement/FF&E requirement amount equal to the Required Percentage (as defined in Section 3.10(b) of Gross Revenue per annum (regardless of whether a reserve therefor is required hereunder or the amount of such reserve) and (y) the amount actually deposited into the FF&E Reserve Subaccount.
“Note 1” means the Promissory Note in the form of Schedule 1A hereto made by Borrower to Lender, in the original amount of $10,298,535.00, as the same may be amended, restated, modified, or assigned, dated June 30, 2022 by and between Borrower and Lender.
“Note 2” means the Promissory Note in the form of Schedule 1B hereto made by Borrower to Lender, in the original amount of $700,000.00, as the same may be amended, restated, modified, or assigned, dated June 30, 2022 by and between Borrower and Lender.
“Note 3” means the Promissory Note in the form of Schedule 1C hereto made by Borrower to Lender, in the original amount of $501,465.00, as the same may be amended, restated, modified, or assigned, dated June 30, 2022 by and between Borrower and Lender.
“Notes” means collectively, Note 1, Note 2 and Note 3.
“Obligations” means (a) Borrower’s obligations for the payment of the Debt (b) the performance of all obligations of Borrower contained herein, (c) the performance of each obligation of Borrower contained in any other Loan Document, (d) the payment of all costs, expenses, legal fees and liabilities incurred by Lender in connection with the enforcement of any of Lender’s rights or remedies under the Loan Documents, or any other instrument, agreement or document which evidences or secures any other Obligations or collateral therefor, whether now in effect or hereafter executed, and (e) the payment, performance, discharge and satisfaction of all other liabilities and obligations of Borrower to Lender, whether now existing or hereafter arising, direct or indirect, absolute or contingent, and including, without limitation, each liability and obligation of Borrower under any one or more of the Loan Documents and any amendment, extension, modification, replacement or recasting of any one or more of the instruments, agreements and documents referred to herein or therein or executed in connection with the transactions contemplated hereby or thereby.
“Officer’s Certificate” means a certificate delivered to Lender by Borrower which is signed by an authorized officer of the appropriate entity and the person executing such Officer’s Certificate has the power and authority to execute the same.
“Operating Lease” means the Lease Agreement dated August 3, 2022, between SPE Owner, as landlord, and TRS Lessee, as tenant, as it may be further amended, restated, replaced, supplemented, extended or otherwise modified from time to time in accordance with the terms of the Loan Documents.
“Payment Date” means (i) the Effective Date and (ii) the first Business Day of each calendar month after the month in which the Effective Date occurs..
“Permitted Encumbrances” means (i) the Liens created by the Loan Documents, (ii) all Liens and other matters disclosed in the title insurance policy insuring the Lien of the Security Instrument, (iii) Liens,
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if any, for Taxes or other charges not yet due and payable and not delinquent, (iv) any workers’, mechanics’ or other similar Liens on the Property provided that any such Lien is bonded or discharged within 30 days after Borrower first receives notice of such Lien and (v) such other title and survey exceptions as Lender approves in writing in Lender’s discretion.
“Permitted FF&E Financing” means, collectively any purchase agreement, equipment leases, financing leases and other agreements relating to the acquisition of FF&E related to the ownership and operation of the Property provided that (i) such financing and/or leasing is subject to commercially reasonable terms and conditions and at a market rate of interest and/or leasing rate, (ii) the aggregate annual amount of payments (including principal and interest) of such financing and/or leasing for FF&E will at all times be less than one percent of the then-Principal, (iii) the removal of any FF&E which is the subject of such financing and/or leasing will not materially damage or impair the value of the Property, (iv) the financing and/or leasing does not create a lien or security interest on any Property other than the FF&E being financed and/or leased, (v) such financing and/or leasing is not evidenced by a note, and (vi) upon request by Lender, Borrower will provide Lender with copies of the documentation for such financing and/or leasing.
“Permitted Transfer” means
| (i) | a Lease, easement, license, or Hotel Transaction entered into in accordance with the Loan Documents, |
| (ii) | a Permitted Encumbrance or Permitted FF&E Financing, |
| (iii) | any Transfer of direct limited liability company interests in SPE Owner or any Transfer of direct limited liability company interests in TRS Lessee, provided, however, (a) Borrower will give Lender notice of such Transfer not less than ten Business Days prior to the date of such Transfer together with all instruments effecting such Transfer and such other information regarding the Transfer as Lender may reasonable require, (b) Borrower will pay all of Lender’s out-of-pocket costs of review and (c) all the Transfers in this subparagraph (iii) must satisfy the Transfer Conditions; |
| (iv) | any Transfer, directly as a result of the death of a natural person, of stock, membership interests or other ownership interests previously held by the decedent in question to the Person or Persons lawfully entitled thereto, or |
| (v) | Transfers of ownership interests in any entity that is a publicly traded entity on a nationally recognized stock exchange. |
“Person” means any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other person or entity, and any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
“Personalty” means the property described in Section 1.02(b) of the Security Instrument.
“PIP” means the Property Improvement Plan issued for Residence Inn Fort Collins issued by Marriott International in connection with the proposed change of ownership, acknowledged on or about the Effective Date by Borrower and any subsequent property improvement plan Property Improvement Plan pursuant to the Franchise Agreement.
“PIP Requirements” means those items set forth in any PIP.
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“Plan” means (i) an employee benefit or other plan established or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate makes or is obligated to make contributions and (ii) that is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
“Principal” means the principal amount of the Notes, which on the date hereof is $11,500,000.00
“Property” means the Land and Improvements thereon consisting of an approximately 113-key Residence Inn by Marriott hotel owned by Borrower and encumbered by the Security Instrument, together with all rights pertaining to such real property and Improvements, and all other collateral for the Loan as more particularly described in the granting clauses of the Security Instrument and referred to therein as the Property. The street address of the Property is 1127 Oakridge Drive, Fort Collins, Colorado 80525.
“Rents” means all rents, additional rents, rent equivalents, moneys payable as damages (including, without limitation, payments in the nature of Lease termination payments and payments by reason of the rejection of a Lease in a Bankruptcy Proceeding) or in lieu of rent or rent equivalents, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other payment and consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower, Manager or any of their agents or employees from any and all sources arising from or attributable to the Property and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of all or any portion(s) of the Property and/or the Improvements or rendering of services by Borrower, Manager or any of their agents or employees and proceeds, if any, from business interruption or other loss of income insurance. Rents will include revenues from the rental of rooms, guest suites, conference and banquet rooms, food and beverage facilities, health clubs, spas or other amenities, telephone services, laundry, vending, television and parking and all other items of revenue, receipts or other income as identified in the Uniform System of Accounts of Hotels.
“Reserve Funds” means, collectively, the Tax and Insurance Escrow Funds, the Operating Expense Reserve Funds, the Excess Cash Flow and any other escrow or reserve fund established pursuant to the Loan Documents.
“Security Instrument” means the Deed of Trust, Security Agreement, Assignment of Leases, Assignment of Rents, and Financing Statement concerning property located in Larimer County, Colorado, to be filed for record on or about the date hereof in the appropriate public records.
“SPE Owner’s Member” means Lodging Fund REIT III OP, LP, a Delaware limited partnership.
“SPE Owner’s Member GP” means Lodging Fund REIT III, Inc., a Maryland corporation.
“State” means the State of Colorado.
“Stated Maturity Date” means initially, (i) with respect to Tranche 1 only, August 2, 2023, or the Tranche 1 Extended Stated Maturity Date if such Tranche 1 Stated Maturity Date is extended pursuant to Section 2.6, (ii) with respect to Tranche 2 only, August 2, 2023, or the Tranche 2 Extended Stated Maturity Date if such Tranche 2 Stated Maturity Date is extended pursuant to Section 2.6, and (iii) with respect to Tranche 3 only, August 2, 2028.
“Subordination Agreement” means the Collateral Assignment, Subordination, Non- Disturbance and Attornment Agreement by and between Borrower, Lender, and Manager, and will include the Collateral Assignment, Subordination, Non- Disturbance and Attornment Agreement by and between Borrower, Lender, and Franchisor if executed and delivered pursuant to Section 5.22(c).
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“Successor Control Party” means any Person that succeeds to the ownership of all or substantially all of the assets of the Control Party, provided that such Person directly or indirectly owns assets, or has assets under management, equal to or greater than $300,000,000.00.
“Taxes” means all real estate and personal property taxes, assessments, water rates or sewer rents, maintenance charges, impositions, vault charges and license fees, now or hereafter levied or assessed or imposed against all or part of the Property, provided that Taxes will not include income taxes, sales and use taxes, occupancy taxes or other similar taxes.
“Term” means the entire term of this Agreement, which will expire only upon repayment in full of the Debt and full performance of each and every obligation to be performed by Borrower pursuant to the Loan Documents.
“Tranche 1” shall have the meaning set forth in Section 2.1.
“Tranche 2” shall have the meaning set forth in Section 2.1.
“Tranche 3” shall have the meaning set forth in Section 2.1.
“Transfer” means any sale, conveyance, transfer, lease, assignment, lien, hypothecation, encumbrance or pledge, or the entry into any agreement to sell, convey, transfer, lease, assign, lien, hypothecate, encumber or pledge whether by law or otherwise, of, on, in or affecting (a) all or part of the Property (including any legal or beneficial direct or indirect interest therein), (b) any direct or indirect interest in Borrower (including any profit interest), or (c) any direct or indirect interest in Borrower Representative.
“Transfer Conditions” means, after giving effect to the Transfer in question, (a) the Transfer will not cause Borrower to cease to be a Special Purpose Bankruptcy Remote Entity or to breach the OFAC Laws, (b) the Transfer will not result in (y) the transferee (together with its Affiliates) increasing its direct or indirect interest in Borrower or in Borrower Representative to an amount that exceeds 49 percent or (z) a Change in Control, (c) SPE Owner’s Member GP will continue to own at least 51 percent of all equity interests (direct or indirect) in Borrower, and (d) no Person will acquire, either directly or indirectly, 30 percent or more of the direct or indirect equity interests in Borrower or Borrower Representative (that did not already own 30 percent or more of the direct or indirect equity interests in Borrower or Borrower Representative prior to such acquisition).
“TRS Lessee’s Member” means Lodging Fund REIT III TRS, Inc., a Delaware corporation.
“UCC” means the Uniform Commercial Code as in effect in the State or the state in which any of the Accounts are located, as the case may be.
“Uniform System of Accounts for Hotels” means the accounting standards printed in the then most recently revised edition of A Uniform System of Accounts for Hotels, as adopted by the Hotel Association of New York City, Inc. and the American Hotel and Motel Association, as amended or changed from time to time by the Hotel Association of New York City, Inc. and the American Hotel and Motel Association (or other appropriate board or committee of both Associations), except that any accounting principle or practice required or permitted to be changed by the Hotel Association of New York City, Inc. and the American Hotel and Motel Association (or other appropriate board or committee of both Associations) in order to continue as an accounting standard or practice may be so changed only so long as such required or permitted change will not have the effect of permitting Borrower’s and Guarantor’s compliance with any financial covenants or performance tests contained in this Agreement when without such change, such parties would not so comply.
“Welfare Plan” means an employee welfare benefit plan, as defined in Section 3(1) of ERISA.
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excluding taxes imposed on Lender’s income, and franchise taxes imposed on Lender by the law or regulation of any Governmental Authority (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to in this Section 2.2(c) as “Applicable Taxes”). If Borrower is required by law to deduct any Applicable Taxes from or in respect of any sum payable hereunder to Lender, the following will apply: (i) the sum payable will be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.2(c)), Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower will make such deductions and (iii) Borrower will pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. Payments pursuant to this Section 2.2(c) will be made within ten days after the date Lender makes written demand therefor.
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prior written notice thereof. Borrower may not partially prepay the Principal.
(a) Borrower will give Lender its written notice requesting such extension (an “Extension Notice”) not less than 60 days prior to original or then-current Stated Maturity Date for Tranche 1, as applicable (i.e., the then-current Maturity Date for Tranche 1 without giving effect to the requested extension);
(b)No Event of Default exists at the time such request is made and on the then-current Stated Maturity Date for Tranche 1 (i.e., the then-current Stated Maturity Date for Tranche 1 without giving effect to the requested extension), and no more than two Events of Default have occurred before the time that such request is made (including an Event of Default that is continuing at the time that the request is made);
(c)Borrower delivers to Lender an Officer’s Certificate confirming the accuracy of the information contained in clause (b) above; and
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(d)Borrower delivers to Lender an extension fee in the amount equal to one percent (1.0%) of the full amount due under the Tranche 1 Loan.
Additionally, Borrower may request that Lender extend the August 2, 2023 Stated Maturity Date for Tranche 2 to August 2, 2024. Upon receipt of any such request to so extend the Stated Maturity Date for Tranche 2, Lender will promptly confirm to Borrower in writing that the Stated Maturity Date for Tranche 2 only will be so extended upon the satisfaction each of the following conditions:
(e) Borrower will give Lender its Extension Notice not less than 60 days prior to original or then-current Stated Maturity Date for Tranche 2, as applicable (i.e., the then-current Maturity Date for Tranche 2 without giving effect to the requested extension);
(f)No Event of Default exists at the time such request is made and on the then-current Stated Maturity Date for Tranche 2 (i.e., the then-current Stated Maturity Date for Tranche 2 without giving effect to the requested extension), and no more than two Events of Default have occurred before the time that such request is made (including an Event of Default that is continuing at the time that the request is made); and
(g)Borrower delivers to Lender an Officer’s Certificate confirming the accuracy of the information contained in clause (f) above.
With respect to any request by Borrower to extend the Stated Maturity Date pursuant to this Section 2.6, if Borrower is unable to satisfy all of the foregoing conditions within the applicable time frames for each such condition, Lender will have no obligation to extend the Stated Maturity Date hereunder. As this Extension Option results in Lender receiving additional interest, and Borrower having additional time to repay the principal and paying additional interest, Borrower and Lender each acknowledge there is sufficient consideration for the Extension Option. For avoidance of doubt, there shall be no extensions of the Stated Maturity Date for Tranche 3.
(a)Taxes and Insurance. Upon a Transfer or assumption of the Loan contemplated by Section 5.15 below (including without limitation, any assumption of the Loan contemplated by that certain Contribution Agreement dated February 1, 2022, by and between Contributor and SPE Owner’s Member, as amended by (i) that certain First Amendment to Contribution Agreement dated as of March 24, 2022, (ii) that certain Second Amendment to Contribution Agreement dated as of April 29, 2022, and (iii) that certain Third Amendment to Contribution Agreement dated as of May 10, 2022, the interest of SPE Owner’s Member having been assigned to SPE Owner and TRS Lessee by that certain Assignment of Contribution Agreement dated as of February 1, 2022 [as amended and assigned, the “Contribution Agreement”]) or upon the Contribution Agreement being terminated by either party thereto, Borrower will pay to Lender $N/A (the “Tax and Insurance Escrow Initial Deposit”). Additionally, Borrower will pay to Lender on each Payment Date (a) one-twelfth of the Taxes that Lender estimates will be payable during the next 12 months in order to accumulate with Lender sufficient funds to pay all such Taxes at least 30 days prior to their respective delinquency dates and (b) one-twelfth of the Insurance Premiums that Lender estimates will be payable for the renewal of the coverage afforded by the Policies upon the expiration thereof in order to accumulate with Lender sufficient funds to pay all such Insurance Premiums at least 30
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days prior to the expiration of the Policies (the “Tax and Insurance Escrow Monthly Deposit”, which, together with the Tax and Insurance Escrow Initial Deposit, are hereinafter called the “Tax and Insurance Escrow Funds”). If no Event of Default has occurred and is continuing then Lender will (x) apply the Tax and Insurance Escrow Funds to payments of Taxes and Insurance Premiums required to be made by Borrower pursuant to Section 5.2 and Section 7.1, provided that Borrower has promptly supplied Lender with notices of all Taxes and Insurance Premiums due. In making any payment relating to Taxes and Insurance Premiums, Lender may do so according to any bill, statement or estimate procured from the appropriate public office (with respect to Taxes) or insurer or agent (with respect to Insurance Premiums), without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If Lender determines in its reasonable judgment that the current balance of Tax and Insurance Escrow Funds will be insufficient to pay (or in excess of) the Taxes or Insurance Premiums not otherwise relating to Policies maintained through Manager’s (or its Affiliates’) insurance programs next coming due, Lender may increase (or decrease) the amount of the Tax and Insurance Escrow Monthly Deposit required to be made by Borrower. If Borrower fails to fund the Tax and Insurance Escrow Initial Deposit when and as contemplated herein, Lender may advance the sums necessary to do so (without waiving the obligation of Borrower to do so, or the Event of Default arising from its failure to do so) and add such amount to the amount of the Loan.
(b)Interest Reserve. Additionally, upon a Transfer or assumption of the Loan contemplated by Section 5.15 below (including without limitation, any assumption of the Loan contemplated by the Contribution Agreement) or upon the Contribution Agreement being terminated by either party thereto, Borrower will fund and establish with Lender a reserve in the aggregate amount of approximately $N/A (the “Interest Reserve Fund”). For so long as no Event of Default has occurred hereunder or under any of the other Loan Documents, Lender shall on each Payment Date (or such other dates as it shall determine) advance from the Interest Reserve Fund to itself the amount of the monthly debt service payment and other accrued interest then due and payable under the Notes, and interest on any amounts advanced from the Interest Reserve Fund shall not accrue until the date of such advance. Once there are no funds remaining in the Interest Reserve Fund or upon an Event of Default, Lender shall have no further obligation for funding of accrued and unpaid interest, or amounts payable and unpaid, whereupon Borrower shall be and remain responsible for the continuation of all such monthly debt service payments from funds other than proceeds of the Loan. If Borrower fails to fund the Interest Reserve Fund when and as contemplated herein, Lender may advance the sums necessary to do so (without waiving the obligation of Borrower to do so, or the Event of Default arising from its failure to do so) and add such amount to the amount of the Loan.
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pledge, assign or grant any security interest in any Account, or permit any Lien to attach thereto, or any levy to be made thereon, or any UCC-l Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto. This Agreement is, among other things, intended by the parties to be a security agreement for purposes of the UCC. Except as otherwise provided in this Agreement, upon the occurrence and during the continuance of an Event of Default, Lender may apply any sums in any Account in any order and in any manner as Lender will elect in Lender’s discretion without seeking the appointment of a receiver and without adversely affecting the rights of Lender to foreclose the Lien of the Security Instrument or exercise its other rights under the Loan Documents. Accounts will not constitute trust funds and may be commingled with other monies held by Lender. Upon repayment in full of the Debt, all remaining funds in the Subaccounts, if any, will be promptly disbursed to Borrower.
(a) Lender will be responsible for the performance only of such duties with respect to the Account Collateral as are specifically set forth in this Article 3 or elsewhere in the Loan Documents, and no other duty will be implied from any provision hereof. Lender will not be under any obligation or duty to perform any act with respect to the Account Collateral which would cause it to incur any out-of-pocket expense or liability or to institute or defend any suit in respect hereof, or to advance any of its own monies. Borrower will indemnify and hold Lender, its employees and officers harmless from and against any loss, cost or damage (including, without limitation, reasonable attorneys’ fees and disbursements) incurred by Lender in connection with the transactions contemplated hereby with respect to the Account Collateral
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except as such may be caused by the negligence, gross negligence or willful misconduct of Lender, its employees, officers, agents, Affiliates or bailees.
(b)Lender will be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper, document or signature believed by it in good faith to be genuine, and, in so acting, it may be assumed that any person purporting to give any of the foregoing in connection with the provisions hereof has been duly authorized to do so. Lender may consult with counsel, and the opinion of such counsel will be full and complete authorization and protection in respect of any action taken or suffered by it hereunder and in good faith in accordance therewith.
Borrower represents and warrants to Lender as of the Effective Date that:
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by Borrower of the Loan Documents has been obtained and is in full force and effect.
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Property, or any contemplated improvements to the Property that may result in such special or other assessments.
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the Property and all other restrictions, covenants and conditions affecting the Property.
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premises, have commenced the payment of rent under the Leases, and there are no offsets, claims or defenses to the enforcement thereof, (iii) all rents due and payable under the Leases have been paid and no portion thereof has been paid for any period more than 30 days in advance, (iv) the rent payable under each Lease is the amount of fixed rent set forth in the Rent Roll, and there is no claim or basis for a claim by the tenant thereunder for an adjustment to the rent, (v) no tenant has made any claim against the landlord under any Lease which remains outstanding, to the best of Borrower’s knowledge, there are no defaults on the part of the landlord under any Lease, and no event has occurred which, with the giving of notice or passage of time, or both, would constitute such a default, (vi) to Borrower’s best knowledge, there is no present material default by the tenant under any Lease, (vii) all security deposits under Leases are as set forth on the Rent Roll, (viii) Borrower is the sole owner of the entire lessor’s interest in each Lease, (ix) each Lease is the valid, binding and enforceable obligation of the Borrower and, to the best of Borrower’s knowledge, the applicable tenant thereunder, (x) no Person has any possessory interest in, or right to occupy, the Property except under the terms of the Lease, and (xi) to the best of Borrower’s knowledge, each Lease is subordinate to the Loan Documents, either pursuant to its terms or pursuant to a subordination and attornment agreement. None of the Leases contains any option to purchase or right of first refusal to purchase the Property or any part thereof. Neither the Leases nor the Rents have been assigned or pledged except to Lender, and no other Person has any interest therein except the tenants thereunder.
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performed by SPE Owner and TRS Lessee under the Operating Lease has been performed as required and has been accepted by TRS Lessee, and any payments, free rent, partial rent, rebate of rent or other payments, credits, allowances or abatements required to be given by SPE Owner to TRS Lessee has already been received by TRS Lessee. There has been no prior sale, transfer, assignment, hypothecation or pledge of the Operating Lease or of the rent thereunder which is outstanding. TRS Lessee has not assigned the applicable Operating Lease or sublet all or any portion of the premises demised thereby other than pursuant to a Hotel Transaction or Lease. TRS Lessee has no right or option pursuant to the Operating Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premises are a part.
All of the representations and warranties in this Article 4 and elsewhere in the Loan Documents (1) will survive for so long as any portion of the Debt remains owing to Lender and (2) will be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf, provided, however, that the representations, warranties and covenants set forth in Section 4.20 will survive in perpetuity.
Borrower hereby covenants and agrees with Lender that:
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Lender may pay over any such security or part thereof held by Lender to the claimant entitled thereto at any time when, in the judgment of Lender, the entitlement of such claimant is established.
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within 30 days after Lender’s request of Borrower to terminate the Management Agreement or any other termination or earlier expiration of the Management Agreement will constitute an immediate Event of Default.
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Loan by the purchaser of the Property, Lender may grant or deny any such consent hereunder in its sole and absolute discretion. Any such assumption of the Loan will be conditioned upon, among other things,
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Notwithstanding anything to the contrary contained in this Section, the parties shall work together, in good faith, to achieve the purposes of the Contribution Agreement, whereupon Guarantor shall be released from all liability associated with the Guaranty.
The obligations and liabilities of Borrower under this Section 5.16 will survive the Term and the exercise by Lender of any of its rights or remedies under the Loan Documents, including the acquisition of the Property by foreclosure or a conveyance in lieu of foreclosure.
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or receipt of any Rents or other sum therefrom, (b) any accident, injury to or death of any persons or loss of or damage to property occurring on or about the Property thereto, (c) any design, construction, operation, repair, maintenance, use, non-use or condition of the Property, including claims or penalties arising from violation of any Legal Requirement or Insurance Requirement, as well as any claim based on any patent or latent defect, whether or not discoverable by Lender, and any claim the insurance as to which is inadequate, (d) any Event of Default under this Agreement or any of the other Loan Documents, (e) any performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, (f) any negligence or tortious act or omission on the part of Borrower or any of its agents, contractors, servants, employees, sublessees, licensees or invitees, or (g) any contest of Taxes referred to in Section 5.2 hereof, or of the Legal Requirements pursuant to this Agreement. Any amounts the Indemnified Parties are legally entitled to receive under this Section which are not paid within 30 days after written demand therefor by the Indemnified Parties or Lender, setting forth in reasonable detail the amount of such demand and the basis therefor, will bear interest from the date of demand at the Interest Rate, and will, together with such interest, be part of the Debt and secured by the Security Instrument. In case any action, suit or proceeding is brought against the Indemnified Parties by reason of any such occurrence, Borrower will at Borrower’s expense resist and defend such action, suit or proceeding or will cause the same to be resisted and defended by counsel at Borrower’s expense for the insurer of the liability or by counsel designated by Borrower (unless disapproved by Lender promptly after Lender has been notified of such counsel), provided, however, that nothing herein will compromise the right of Lender (or any Indemnified Party) to appoint its own counsel at Borrower’s expense for its defense with respect to any action which in the reasonable opinion of counsel for such Indemnified Party presents a conflict or potential conflict between Lender and Borrower that would make such separate representation advisable, provided, further, that if Lender will have appointed separate counsel pursuant to the foregoing, Borrower will not be responsible for the expense of additional separate counsel of any other Indemnified Party unless in the reasonable opinion of Lender a conflict or potential conflict exists between such Indemnified Party and Lender. So long as Borrower is resisting and defending such action, suit or proceeding as provided above in a prudent and commercially reasonable manner, Lender and the Indemnified Parties will not be entitled to settle such action, suit or proceeding without Borrower’s consent which will not be unreasonably withheld or delayed, and claim the benefit of this Section with respect to such action, suit or proceeding and Lender agrees that it will not settle any such action, suit or proceeding without the consent of Borrower, provided, however, that if Borrower is not diligently defending such action, suit or proceeding in a prudent and commercially reasonable manner as provided above, and Lender has provided Borrower with 30 days’ prior written notice, or shorter period if mandated by the requirements of applicable law, and opportunity to correct such determination, Lender may settle such action, suit or proceeding and claim the benefit of this Section 5.17 with respect to settlement of such action, suit or proceeding. Any Indemnified Party will give Borrower prompt notice after such Indemnified Party obtains actual knowledge of any potential claim by such Indemnified Party for indemnification hereunder, provided, however, the failure to do so will not affect Borrower’s indemnification obligations hereunder. The obligations and liabilities of Borrower under this Section 5.17 will survive the Term and the exercise by Lender of any of its rights or remedies under
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the Loan Documents, including the acquisition of the Property by foreclosure or a conveyance in lieu of foreclosure.
At all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to the Loan Documents, (i) none of the funds or assets of Borrower, Borrower Representative or Guarantor, whether or not used to repay the Loan, will constitute property of, or will be beneficially owned directly or, to Borrower’s best knowledge, indirectly, by any person, entity or government subject to sanctions or trade restrictions under United States law (“Embargoed Person”) that are identified on (A) the “List of Specially Designated Nationals and Blocked Persons” maintained by the Office of Foreign Assets Control (“OFAC”), U.S. Department of the Treasury’s FINCEN list, and/or to Borrower’s best knowledge, as of the date thereof, based upon reasonable inquiry by Borrower, on any other similar list maintained by OFAC or FINCEN pursuant to any authorizing statute (collectively, the “OFAC Laws”) including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in Borrower, Borrower Representative or any Guarantor, as applicable (whether directly or indirectly), is prohibited by law, or the Loan made by Lender would be in violation of law, or (B) Executive Order 13224 (September 23, 2001) issued by the President of the United States (“Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism”), any related enabling legislation or any other similar Executive Orders, and (ii) no Embargoed Person will have any direct interest or, to Borrower’s best knowledge, indirect interest, of any nature whatsoever in Borrower, Borrower Representative or any Guarantor, as applicable, with the result that the investment in Borrower, Borrower Representative or any Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law.
At all times throughout the Term, none of any of the Borrower, Borrower Representative or Guarantor, nor any Person controlling, controlled by or under common control with any of Borrower, Borrower Representative or Guarantor, nor any Person having a beneficial interest in, or for whom any of the Borrower, Borrower Representative or Guarantor is acting as agent or nominee in connection with the investment, is (a) a country, territory, person or entity named on an OFAC or FINCEN list, or is a Person that resides in or has a place of business in a country or territory named on such lists, (b) a Person resident in, or organized or chartered under the laws of a jurisdiction identified as non-cooperative by the Financial Action Task Force, or (c) a Person whose funds originate from or will be routed through , an account maintained at a foreign shell bank or “offshore bank.”.
None of the Borrower, Borrower Representative or Guarantor, nor any Person controlling, controlled by or under common control with Borrower, Borrower Representative or Guarantor is a “senior political figure” or an “immediate family” member or “close associate” (as all such terms are defined below) of a senior foreign political figure within the meaning of the USA PATRIOT Act (i.e., the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, H.R. 3162, Public Law 107-56, as may be amended). For the purposes of this subsection (c), (i) “senior foreign political figure” means a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party or a senior executive of a foreign government-owned corporation, and such term also includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior political figure, (ii) “immediate family” of a senior foreign political figure includes the figure’s parents, siblings, spouse, children and in-laws, and (iii) “close associate” of a senior foreign political figure means a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.
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change the use of the Property or Improvements, or any portion thereof or take any steps whatsoever to convert the Property or Improvements, or any portion thereof, to a condominium or cooperative form of management or ownership,
without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Property, regardless of the depth thereof or the method of mining or extraction thereof,
initiate or support any limiting change in the permitted uses of the Property and Improvements (or to the extent applicable, zoning reclassification of the Property and Improvements) or any portion thereof, seek any variance under existing land-use restrictions, laws, rules or regulations (or, to the extent applicable, zoning ordinances) applicable to the Property and Improvements or any portion thereof, or use or permit the use of the Property and Improvements in a manner that would result in the use of the Property and Improvements becoming a nonconforming use under applicable land-use restrictions or zoning ordinances or that would violate the terms of any Lease, Legal Requirement or Permitted Encumbrance,
consent to any modification, amendment or supplement to any of the terms of any Permitted Encumbrance in a manner adverse to the interests of Lender,
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execute or file any subdivision plat affecting the Property and Improvements (or any portion thereof), or institute, or permit the institution of, proceedings to alter any tax lot comprising the Property and Improvements,
permit or consent to the Property’s (or any portion thereof) being used by the public or any Person in such manner as might make possible a claim of adverse usage or possession or of any implied dedication or easement, or
without the prior written consent of Lender, enter into any Material Agreement.
Borrower will cause the hotel located on the Property to be operated pursuant to the Franchise Agreement.
Borrower will (i) promptly perform and/or observe all of the covenants and agreements required to be performed and observed by it under the Franchise Agreement and do all things necessary to preserve and to keep unimpaired its material rights thereunder, (ii) promptly notify Lender of any default under the Franchise Agreement of which it is aware, (iii) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditures plan, notice, report and estimate received by it under the Franchise Agreement, and (iv) promptly enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by the Franchisor under the Franchise Agreement.
If Borrower will enter into any new or amended Franchise Agreement, Lender will receive within 30 days following the execution of such Franchise Agreement a Subordination Agreement from the Franchisor which is in form and substance reasonably acceptable to Lender and, without limiting the foregoing, pursuant to which Franchisor will agree (i) that Lender will have the right, but not the obligation, to cure any defaults under the Franchise Agreement, (ii) to give Lender written notice of, and a reasonable time to cure, any default of Borrower under the Franchise Agreement, (iii) not to assert against Lender any defaults which by their nature are personal to Borrower and not curable by Lender, (iv) to allow Lender, at Lender’s option, to either terminate the Franchisor upon the occurrence of an Event of Default or to require Franchisor to attorn to enter into a new Franchise Agreement with Lender on substantially the same terms as the existing Franchise Agreement, (v) that, if Lender or its Affiliate will acquire title to the Property, Lender or its Affiliate will have an option to succeed to the interest of Borrower under the Franchise Agreement without payment of any fees to Franchisor, (vi) that the Franchise Agreement will remain in effect during any foreclosure proceedings by Lender provided Lender cures all monetary defaults under the Franchise Agreement, (vii) not to modify, cancel, surrender or otherwise terminate the Franchise Agreement during the Term without the consent of Lender, and (viii) that if Lender or its Affiliate succeeds to Borrower’s interest under the Franchise Agreement, Lender may assign its rights therein to any entity which acquires the Property from Lender or its Affiliate (subject to Franchisor’s reasonable approval).
Borrower will not, without Lender’s prior written consent (i) surrender, terminate or cancel the Franchise Agreement, (ii) reduce or consent to the reduction of the term of the Franchise Agreement, (iii) increase or consent to the increase of the amount of any charges under the Franchise Agreement, or (iv) otherwise modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under, the Franchise Agreement.
Without in any way limiting the covenants set forth in the Loan Documents, Borrower will: (i) cause the hotel located on the Property to be operated, repaired and maintained as a well-maintained hotel, providing amenities, services and facilities substantially equivalent to hotels of similar average room rate and targeted market segment from time to time operating in the same or comparable geographic area of the Property, taking into consideration the age and location of the hotel located on the Property and (ii) maintain
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Inventory in amounts sufficient to meet the hotel industry standard for hotels comparable to the hotel located on the Property and at levels sufficient for the operation of the hotel located on the Property at full occupancy levels.
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address is not specified), or a new address identified in a Notice from the recipient to the sending party at least ten days before the date of the sending party’s Notice.
To Lender:
Legendary A-1 Bonds, LLC
c/o Legendary Capital
Attn: General Counsel
1635 43rd Street South, Suite 205
Fargo, North Dakota 58103
Email: ***@***
With a copy to:
Foley & Lardner LLP
Attn: Clifton M. Dugas, II
2021 McKinney Ave., Suite 1600
Dallas, Texas 75201
Email: ***@***
To Borrower:
LF3 RIFC, LLC
LF3 RIFC TRS, LLC
Attn: Ryan Rued
1635 43rd Street South, Suite 205
Fargo, North Dakota 58103
Email: ***@***
With a copy to:
durellaw PLC
Attn: John H. Faris
644 Lovett SE, Suite B
Grand Rapids, MI 49506
Email: ***@***
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Lender (x) within ten days, a certificate addressed to Lender, its successors and assigns reaffirming all representations and warranties of Borrower set forth in the Loan Documents as of the date requested by Lender or, to the extent of any changes to any such representations and warranties, so stating such changes, and (y) within 30 days, tenant estoppel certificates addressed to Lender, its successors and assigns from each tenant at the Property in form and substance reasonably satisfactory to Lender.
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Condemnation, Borrower, regardless of whether an Award is available, will promptly proceed to restore, repair, replace or rebuild the Property in accordance with Legal Requirements to the extent practicable to be of at least equal value and of substantially the same character (and to have the same utility) as prior to such Condemnation.
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Borrower will deposit with Lender in advance) all costs of such Restoration in excess of the net amount of the Proceeds or the Award made available pursuant to the terms hereof, and (y) Lender will have received evidence reasonably satisfactory to it that during the period of the Restoration, the Rents will be at least equal to the sum of the operating expenses and Debt Service, as reasonably determined by Lender.
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Lender to resort to any portion of the Property for the satisfaction of any of the Debt in preference or priority to any other portion, and Lender may seek satisfaction out of the entire Property or any part thereof, in its discretion.
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incorporated into the Loan Document to which it is attached, (d) unless reference is made to another document, a reference to a subdivision or attachment refers to such subdivision of or attachment to the Loan Document containing the reference, (e) a capitalized term that refers to another document or a Legal Requirement refers to such document or a Legal Requirement as renewed, extended, supplemented, amended, or modified at any time, (f) a word indicating a particular gender includes all genders and a word indicating the singular include the plural and vice versa, unless the context otherwise requires, (g) the rule of ejusdem generis will not be applied to limit the generality of any term when followed by specific examples, and the words “include”, “including”, and similar terms will be construed as if followed by “without limitation to”, (h) consent of or notice to any Person means prior written consent and prior written notice, respectively, (i)“year” means a calendar year, unless otherwise specified, and (j) ”party” means a party to such Loan Document.
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this waiver and the agreement in which it is contained may be filed as a consent to a trial by the court.
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of all offsets, counterclaims or defenses which Borrower may otherwise have against any assignor of such documents, and no such offset, counterclaim or defense will be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents, and any such right to interpose or assert any such offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.
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any of the other Loan Documents. In furtherance thereof, each Borrower acknowledges and agrees as follows:
For the purpose of implementing the joint borrower provisions of the Loan Documents, each Borrower hereby irrevocably appoints each other Borrower as its agent and attorney-in-fact for all purposes of the Loan Documents, including the giving and receiving of notices and other communications.
To induce Lender to make the Loan, and in consideration thereof, each Borrower hereby agrees to indemnify Lender against, and hold Lender harmless from, any and all liabilities, expenses, losses, damages and/or claims of damage or injury asserted against Lender by any Borrower or by any other Person arising from or incurred by reason of (i) reliance by Lender on any requests or instructions from any Borrower, or (ii) any other action taken by Lender in good faith with respect to this Agreement or the other Loan Documents.
Each Borrower acknowledges that the liens and security interests created or granted herein and by the other Loan Documents will secure the Obligations of all Borrowers under the Loan Documents and, in full recognition of that fact, each Borrower consents and agrees that Lender may, at any time and from time to time, without notice or demand, and without affecting the enforceability or security hereof or of any other Loan Document:
| (i) | agree with any Borrower to supplement, modify, amend, extend, renew, accelerate, or otherwise change the time for payment or the terms of the Obligations or any part thereof, including any increase or decrease of the rate(s) of interest thereon, |
| (ii) | agree with any Borrower to supplement, modify, amend or waive, or enter into or give any agreement, approval or consent with respect to, the Obligations or any part thereof or any of the Loan Documents or any additional security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder, |
| (iii) | accept new or additional instruments, documents or agreements in exchange for or relative to any of the Loan Documents or the Obligations or any part thereof, |
| (iv) | accept partial payments on the Obligations, |
| (v) | receive and hold additional security or guaranties for the Obligations or any part thereof, |
| (vi) | release, reconvey, terminate, waive, abandon, subordinate, exchange, substitute, transfer and enforce any security for or guaranties of the Obligations, and apply any security and direct the order or manner of sale thereof as Lender, in its sole and absolute discretion, may determine, |
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Upon the occurrence of and during the continuance of any Event of Default, Lender may enforce this Agreement and the other Loan Documents independently as to each Borrower and independently of any other remedy or security Lender at any time may have or hold in connection with the Obligations, and in collecting on the Loan it will not be necessary for Lender to marshal assets in favor of any Borrower or any other Person or to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce this Agreement and the other Loan Documents. Each Borrower expressly waives any right to require Lender, in connection with Lender’s efforts to obtain repayment of the Loan and other Obligations, to marshal assets in favor of any Borrower or any other Person or to proceed against any other Person or any collateral provided by any other Person, and agrees that Lender may proceed against any Persons and/or collateral in such order as it will determine in its sole and absolute discretion in connection with Lender’s efforts to obtain repayment of the Loan and other Obligations. Lender may file a separate action or actions against each Borrower to enforce the Obligations, whether action is brought or prosecuted with respect to any other security or against any other Person, or whether any other Person is joined in any such action or actions. Each Borrower agrees that Lender, each Borrower and/or any other Person may deal with each other in connection with the Obligations or otherwise, or alter any contracts or agreements now or hereafter existing among any of them, in any manner whatsoever, all without in any way altering or affecting the security of this Agreement or the other Loan Documents. The rights of Lender hereunder and under the other Loan Documents will be reinstated and revived, and the enforceability of this Agreement and the other Loan Documents will continue, with respect to any amount at any time paid on account of the Obligations, which thereafter will be required to be restored or returned by Lender as a result of the bankruptcy, insolvency or reorganization of any Borrower or any other Person, or otherwise, all as though such amount had not been paid. The enforceability of this Agreement and the other Loan Documents at all times will remain effective even though any or all Obligations, or any other security or guaranty therefor, may be or hereafter may become invalid or otherwise unenforceable as against any Borrower or any other Person and whether or not any Borrower or any other Person will have any personal liability with respect thereto. Each Borrower expressly waives any and all defenses to the enforcement of its Obligations under the Loan Documents now or hereafter arising or asserted by reason of (i) any disability or other defense of any Borrower or any other Person with respect to the Obligations, (ii) the unenforceability or invalidity of any security or guaranty for the Obligations or the lack of perfection or continuing perfection or failure of priority of any security for the Obligations, (iii) the cessation for any cause whatsoever of the liability of any Borrower or any other Person (other than by reason of the full and final payment and performance of all Obligations), (iv) any failure of Lender to marshal assets in favor of any of the Borrowers or any other Person, (v) any failure of Lender to give notice of sale or other disposition of any Collateral or Pledged Collateral for the Obligations to Borrower or to any other Person or any defect in any notice that may be given in connection with any such sale or disposition, (vi) any failure of Lender to comply in any non-material respect with applicable laws in connection with the sale or other disposition of any collateral or other security for any Obligation, (vii) any act or omission of Lender or others that directly or indirectly results in or aids the discharge or release of any Borrower or of any other Person or of any of the Obligations or any other security or guaranty therefor by operation of law or otherwise, (viii) any law that provides that the obligation of a surety or guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a surety’s or guarantor’s obligation in proportion to
Ex 10.219
the principal obligation, (ix) any failure of Lender to file or enforce a claim in any bankruptcy or similar proceeding with respect to any Person, (x) the election by Lender, in any bankruptcy or similar proceeding of any Person, of the application or non-application of Section 1111(b)(2) of the Bankruptcy Code, (xi) any extension of credit or the grant of any lien under Section 364 of the Bankruptcy Code except to the extent otherwise provided in this Agreement, (xii) any use of cash collateral under Section 363 of the Bankruptcy Code, (xiii) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy or similar proceeding of any Person, (xiv) the avoidance of any lien or security interest in favor of Lender securing the Obligations for any reason, or (xv) any bankruptcy or similar proceeding commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or any of the Obligations (or any interest thereon) in or as a result of any such proceeding.
Borrowers represent and warrant to Lender that they have established adequate means of obtaining from each other, on a continuing basis, financial and other information pertaining to their respective businesses, operations and condition (financial and otherwise) and their respective properties, and each now is and hereafter will be completely familiar with the businesses, operations and condition (financial and otherwise) of the other and their respective properties. Each Borrower hereby expressly waives and relinquishes any duty on the part of Lender to disclose to such Borrower any matter, fact or thing related to the businesses, operations or condition (financial or otherwise) of the other Borrowers or the other Borrowers’ properties, whether now known or hereafter known by Lender during the life of this Agreement. With respect to any of the Obligations, Lender need not inquire into the powers of any Borrower or the officers, employees or other Persons acting or purporting to act on such Borrower’s behalf.
EACH BORROWER WARRANTS AND AGREES THAT EACH OF THE WAIVERS AND CONSENTS SET FORTH HEREIN IS MADE WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND CONSEQUENCES, WITH THE UNDERSTANDING THAT EVENTS GIVING RISE TO ANY DEFENSE WAIVED MAY DIMINISH, DESTROY OR OTHERWISE ADVERSELY AFFECT RIGHTS THAT EACH OTHERWISE MAY HAVE AGAINST THE OTHER, AGAINST LENDER OR OTHERS, OR AGAINST ANY COLLATERAL. IF ANY OF THE WAIVERS OR CONSENTS HEREIN IS DETERMINED TO BE CONTRARY TO ANY APPLICABLE LAW OR PUBLIC POLICY, SUCH WAIVERS AND CONSENTS WILL BE EFFECTIVE TO THE MAXIMUM EXTENT PERMITTED BY LAW.
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agree that any lawsuit, action, or proceeding that is brought (whether in contract, tort, or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated thereby, or the acts, conduct or omissions of administrative agent and/or lenders in the negotiation, administration, or enforcement of any of the Loan Documents will be brought in a State or federal court of competent jurisdiction located in Larimer County, Colorado. Each of the parties hereto hereby irrevocably and unconditionally (a) submits to the exclusive jurisdiction of such courts, (b) waives any objection it may now or hereafter have as to the venue of any such lawsuit, action, or proceeding brought in any such court, and (c) further waives any claim that it may now or hereafter have that any such court is an inconvenient forum. Each of the parties hereto agree that service of process upon it may be made by certified or registered mail, return receipt requested at the address for notices contained on the signature page of this Agreement.
Section 9.21 Maximum Interest Rate. It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply with the applicable Colorado law governing the maximum rate of interest payable on the indebtedness evidenced by the Notes and the Loan Agreement (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Colorado law). If the applicable law is ever judicially interpreted so as to render usurious any amount (i) contracted for, charged, taken, reserved or received pursuant to the Notes, the Loan Agreement, any of the other Loan Documents or any other communication or writing by or between Borrower and Lender related to the transaction or transactions that are the subject matter of the Loan Documents, (ii) contracted for, charged, taken, reserved or received by reason of Lender’s exercise of the option to accelerate the maturity of the Notes, or (iii) Borrower will have paid or Lender will have received by reason of any voluntary prepayment by Borrower of the Notes, then it is Borrower’s and Lender’s express intent that all amounts charged in excess of the Maximum Lawful Rate (as hereinafter defined) shall be automatically canceled, ab initio, and all amounts in excess of the Maximum Lawful Rate theretofore collected by Lender shall be credited on the principal balance of the Notes (or, if the Notes has been or would thereby be paid in full, refunded to Borrower), and the provisions of the Notes, the Loan Agreement, and other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity for the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however, if the Notes have been paid in full before the end of the stated term of the Notes, then Borrower and Lender agree that Lender shall, with reasonable promptness after Lender discovers or is advised by Borrower that interest was received in an amount in
Ex 10.219
excess of the Maximum Lawful Rate, either refund such excess interest to Borrower and/or credit such excess interest against the Notes then owing by Borrower to Lender. Borrower hereby agrees that as a condition precedent to any claim seeking usury penalties against Lender, Borrower will provide written notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation, and Lender shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against the Notes and then owing by Borrower to Lender. All sums contracted for, charged, taken, reserved or received by Lender for the use, forbearance or detention of any debt evidenced by the Notes shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of the Notes (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of the Notes does not exceed the Maximum Lawful Rate from time to time in effect and applicable to the Notes for so long as debt is outstanding. As used hereunder the term “Maximum Lawful Rate” shall mean the maximum lawful rate of interest which may be contracted for, charged, taken, received or reserved by Lender in accordance with the applicable laws of the State of Colorado (or applicable United States federal law to the extent that such law permits Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Colorado law), taking into account all Charges made in connection with the transaction evidenced by the Notes and the other Loan Documents. As used hereunder, the term “Charges” shall mean all fees, charges and/or any other things of value, if any, contracted for, charged, taken, received or reserved by Lender in connection with the transactions relating to the Notes and the other Loan Documents, which are treated as interest under applicable law.
[NO FURTHER TEXT ON THIS PAGE]
Ex 10.219
Executed to be effective as of the Effective Date.
Borrower:
LF3 RIFC, LLC,
a Delaware limited liability company
By: Lodging Fund REIT III OP, LP,
a Delaware limited partnership, its sole member
By: Lodging Fund REIT III, Inc.,
a Maryland corporation, its general partner
By: /s/ Samuel C. Montgomery
Name: Samuel C. Montgomery
Title: Chief Financial Officer
LF3 RIFC TRS, LLC,
a Delaware limited liability company
By: Lodging Fund REIT III TRS, Inc.,
a Delaware corporation, its sole member
By: /s/ Samuel C. Montgomery
Name: Samuel C. Montgomery
Title: Chief Financial Officer
Lender:
Legendary A-1 Bonds, LLC,
a Delaware limited liability company
By: /s/ Norman H. Leslie
Name: Norman H. Leslie
Title: Manager
By: /s/ Corey R. Maple
Name: Corey R. Maple
Title: Manager
Ex 10.219
Schedule 1A
Form of Tranche 1 Promissory Note
For value received, LF3 RIFC Lakewood, LLC, a Delaware limited liability company and LF3 RIFC TRS, LLC, a Delaware limited liability company (collectively, “Maker”), promises to pay to the order of Legendary A-1 Bonds, a Delaware limited liability company at its principal place of business at 1635 43rd Street S, Suite 205, Fargo, ND 58103 (together with its successors and assigns “Payee”), or at such place as the holder hereof may from time to time designate in writing, the principal sum of Ten Million Two Hundred Ninety-Eight Thousand Five Hundred Thirty-Five and 00/100 Dollars ($10,298,535.00), in lawful money of the United States of America, with interest on the unpaid principal balance from time to time outstanding to be computed in the manner, at the times and, subject to the provisions of Section 2.2(a) of the Loan Agreement dated of even date herewith between Payee, as lender, and Maker, as borrower (the “Loan Agreement”), at the Interest Rate. Capitalized terms used but not defined herein will have the respective meanings given such terms in the Loan Agreement.
Ex 10.219
Ex 10.219
[SIGNATURE PAGE FOLLOWS]
Ex 10.219
Maker:
LF3 RIFC, LLC,
a Delaware limited liability company
By:Lodging Fund REIT III OP, LP,
a Delaware limited partnership, its sole member
a Maryland corporation, its general partner
By:
Name: Samuel C. Montgomery
Title: Chief Financial Officer
LF3 RIFC TRS, LLC,
a Delaware limited liability company
By:Lodging Fund REIT III TRS, Inc.,
a Delaware corporation, its sole member
By:
Name: Samuel C. Montgomer
Title: Chief Financial Officer
Ex 10.219
Schedule 1B
Form of Tranche 2 Promissory Note
For value received, LF3 RIFC Lakewood, LLC, a Delaware limited liability company and LF3 RIFC TRS, LLC, a Delaware limited liability company (collectively, “Maker”), promises to pay to the order of Legendary A-1 Bonds, a Delaware limited liability company at its principal place of business at 1635 43rd Street S, Suite 205, Fargo, ND 58103 (together with its successors and assigns “Payee”), or at such place as the holder hereof may from time to time designate in writing, the principal sum of Seven Hundred Thousand and 00/100 Dollars ($700,000.00), in lawful money of the United States of America, with interest on the unpaid principal balance from time to time outstanding to be computed in the manner, at the times and, subject to the provisions of Section 2.2(a) of the Loan Agreement dated of even date herewith between Payee, as lender, and Maker, as borrower (the “Loan Agreement”), at the Interest Rate. Capitalized terms used but not defined herein will have the respective meanings given such terms in the Loan Agreement.
Ex 10.219
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[SIGNATURE PAGE FOLLOWS]
Ex 10.219
Maker:
LF3 RIFC, LLC,
a Delaware limited liability company
By:Lodging Fund REIT III OP, LP,
a Delaware limited partnership, its sole member
a Maryland corporation, its general partner
By:
Name: Samuel C. Montgomery
Title: Chief Financial Officer
LF3 RIFC TRS, LLC,
a Delaware limited liability company
By:Lodging Fund REIT III TRS, Inc.,
a Delaware corporation, its sole member
By:
Name: Samuel C. Montgomery
Title: Chief Financial Officer
Ex 10.219
Schedule 1C
Form of Tranche 3 Promissory Note
For value received, LF3 RIFC Lakewood, LLC, a Delaware limited liability company and LF3 RIFC TRS, LLC, a Delaware limited liability company (collectively, “Maker”), promises to pay to the order of Legendary A-1 Bonds, a Delaware limited liability company at its principal place of business at 1635 43rd Street S, Suite 205, Fargo, ND 58103 (together with its successors and assigns “Payee”), or at such place as the holder hereof may from time to time designate in writing, the principal sum of Five Hundred One Thousand Four Hundred Sixty-Five and 00/100 Dollars ($501,465.00), in lawful money of the United States of America, with interest on the unpaid principal balance from time to time outstanding to be computed in the manner, at the times and, subject to the provisions of Section 2.2(a) of the Loan Agreement dated of even date herewith between Payee, as lender, and Maker, as borrower (the “Loan Agreement”), at the Interest Rate. Capitalized terms used but not defined herein will have the respective meanings given such terms in the Loan Agreement.
Ex 10.219
Ex 10.219
[SIGNATURE PAGE FOLLOWS]
Ex 10.219
Maker:
LF3 RIFC, LLC,
a Delaware limited liability company
By:Lodging Fund REIT III OP, LP,
a Delaware limited partnership, its sole member
a Maryland corporation, its general partner
By:
Name: Samuel C. Montgomery
Title: Chief Financial Officer
LF3 RIFC TRS, LLC,
a Delaware limited liability company
By:Lodging Fund REIT III TRS, Inc.,
a Delaware corporation, its sole member
By:
Name: Samuel C. Montgomery
Title: Chief Financial Officer
Ex 10.219
Schedule 2
Required Repairs
Ex 10.219
Schedule 3
Organization of Borrower
** Comprised of various investors, all US residents or companies, none of which control LF3 RIFC, LLC or own, directly or indirectly, 20% or more of LF3 RIFC, LLC
Ex 10.219
Schedule 4
Definition of Special Purpose Bankruptcy Remote Entity
A “Special Purpose Bankruptcy Remote Entity” means (x) a limited liability company that is a Single Member Bankruptcy Remote LLC or (y) a corporation, limited partnership or limited liability company which at all times since its formation and at all times thereafter
(i)was and will be organized solely for the purpose of (A) owning the Property, (B) operating, leasing and financing the Property or (C) acting as a general partner of the limited partnership that owns the Property or member of the limited liability company that owns the Property;
(ii)has not engaged and will not engage in any business unrelated to (A) the ownership of the Property, (B) the operation, leasing and financing of the Property, (C) acting as general partner of the limited partnership that owns the Property or (D) acting as a member of the limited liability company that owns the Property, as applicable;
(iii)has not had and will not have any assets other than those related to the Property or its partnership or member interest in the limited partnership or limited liability company that owns the Property, as applicable;
(iv)has not engaged, sought or consented to and will not engage in, seek or consent to any dissolution, winding up, liquidation, consolidation, merger, asset sale (except as expressly permitted by this Agreement), transfer of partnership or membership interests or the like, or amendment of its limited partnership agreement, articles of incorporation, articles of organization, certificate of formation or operating agreement (as applicable);
(v)if such entity is a limited partnership, has and will have, as its only general partners, Special Purpose Bankruptcy Remote Entities that are corporations or limited liability companies;
(vi)if such entity is a corporation, has and will have at least one Independent Director, and has not caused or allowed and will not cause or allow the board of directors of such entity to take any action requiring the unanimous affirmative vote of 100 percent of the members of its board of directors unless all of the directors and all Independent Directors will have participated in such vote;
(vii)intentionally omitted;
(viii)if such entity is a limited liability company, has and will have articles of organization, a certificate of formation and/or an operating agreement, as applicable, providing that (A) such entity will dissolve only upon the bankruptcy of the managing member, (B) the vote of a majority-in-interest of the remaining members is sufficient to continue the life of the limited liability company in the event of such bankruptcy of the managing member and (C) if the vote of a majority-in-interest of the remaining members to continue the life of the limited liability company following the bankruptcy of the managing member is not obtained, the limited liability company may not liquidate the Property without the consent of the Lender for as long as the Loan is outstanding;
(ix)has not, and without the unanimous consent of all of its partners, directors or members (including all Independent Directors and/or Independent Managers), as applicable, will not, with respect to itself or to any other entity in which it has a direct or indirect legal or beneficial ownership interest, take any Bankruptcy Action;
(x)has remained and will remain solvent and has maintained and will maintain adequate capital in light of its contemplated business operations;
Ex 10.219
(xi)has not failed and will not fail to correct any known misunderstanding regarding the separate identity of such entity;
(xii)has maintained and will maintain its accounts, books and records separate from any other Person and will file its own tax returns;
(xiii)has maintained and will maintain its books, records, resolutions and agreements as official records;
(xiv)has not commingled and will not commingle its funds or assets with those of any other Person;
(xv)has held and will hold its assets in its own name;
(xvi)has conducted and will conduct its business in its name only, and has not and will not use any trade name,
(xvii)has maintained and will maintain its financial statements, accounting records and other entity documents separate from any other Person;
(xviii)has paid and will pay its own liabilities, including the salaries of its own employees, out of its own funds and assets;
(xix)has observed and will observe all partnership, corporate or limited liability company formalities, as applicable;
(xx)has maintained and will maintain an arm’s-length relationship with its Affiliates;
(xxi) (a)if such entity owns the Property, has and will have no indebtedness other than the Permitted Indebtedness, or
(b)if such entity operates, leases and/or finances the Property, has and will have no indebtedness other than leasehold obligations to the owner of the Property, which are not evidenced by a promissory note and are paid when due, but in no event no more than 30 days of the date incurred,
(c)if such entity acts as the general partner of a limited partnership which owns the Property, has and will have no indebtedness other than unsecured trade payables in the ordinary course of business relating to acting as general partner of the limited partnership which owns the Property which (1) do not exceed, at any time, $10,000 and (2) are not evidenced by a promissory note and are paid when due, but in no event no more than 30 days of the date incurred, or
(d)if such entity acts as a managing member of a limited liability company which owns the Property, has and will have no indebtedness other than unsecured trade payables in the ordinary course of business relating to acting as a member of the limited liability company which owns the Property which (1) do not exceed, at any time, $10,000 and (2) are paid within 30 days of the date incurred;
(xxii)has not and will not assume or guarantee or become obligated for the debts of any other Person or hold out its credit as being available to satisfy the obligations of any other Person except for the Loan;
(xxiii)has not and will not acquire obligations or securities of its partners, members or shareholders;
(xxiv)has allocated and will allocate fairly and reasonably shared expenses, including shared office space, and uses separate stationery, invoices and checks;
Ex 10.219
(xxv)except in connection with the Loan, has not pledged and will not pledge its assets for the benefit of any other Person;
(xxvi)has held itself out and identified itself and will hold itself out and identify itself as a separate and distinct entity under its own name and not as a division or part of any other Person;
(xxvii)has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(xxviii) has not made and will not make loans to any Person;
(xxix)has not identified and will not identify its partners, members or shareholders, or any Affiliate of any of them, as a division or part of it;
(xxx)has not entered into or been a party to, and will not enter into or be a party to, any transaction with its partners, members, shareholders or Affiliates except in the ordinary course of its business and on terms which are intrinsically fair and are no less favorable to it than would be obtained in a comparable arm’s-length transaction with an unrelated third party;
(xxxi)has and will have no obligation to indemnify its partners, officers, directors, members or Special Members, as the case may be, or has such an obligation that is fully subordinated to the Debt and will not constitute a claim against it if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation; and
(xxxii)will consider the interests of its creditors in connection with all corporate, partnership or limited liability company actions, as applicable.
“Independent Director” means in the case of a corporation, a natural person who has not been, and during the continuation of his or her service as Independent Director is not, directly or indirectly:
(i)an employee, manager, stockholder, director, member, partner, officer, attorney or counsel of the corporation or any of its Affiliates (other than his or her service as an Independent Director of the corporation),
(ii)a creditor, customer of, or supplier or other Person who derives any of its purchases or revenues from its activities with the corporation or any of its shareholders or Affiliates (other than his or her service as an Independent Director if such Person has been provided by a nationally-recognized company that provides professional independent managers),
(iii)a Person controlling or under common control with any such employee, manager, stockholder, director, member, partner, officer, attorney, counsel, customer, supplier or other Person, or
(iv)any member of the immediate family (including a grandchild or sibling) of a person described in clauses (i), (ii) or (iii) immediately above. A natural person who otherwise satisfies the foregoing definition will not be disqualified from serving as an Independent Director of the corporation because such person is an independent director or independent manager of a “Special Purpose Bankruptcy Remote Entity” affiliated with the corporation that does not own a direct or indirect equity interest in the corporation or any entity that is a co-borrower, or the member or general partner of a co-borrower, with the corporation if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors.
“Independent Manager” means in the case of a limited liability company, (a) a member that is a Special Purpose Bankruptcy Remote Entity, (b) a Special Purpose Bankruptcy Remote Entity that is not a member
Ex 10.219
or (c) a natural person who has not been, and during the continuation of his or her service as Independent Manager is not, directly or indirectly:
(i)an employee, manager, stockholder, director, member, partner, officer, attorney or counsel of the limited liability company or any of its Affiliates (other than his or her service as an Independent Manager or Special Member of the limited liability company),
(ii)a creditor, customer of, or supplier or other Person who derives any of its purchases or revenues from its activities with the limited liability company or any of its members or Affiliates (other than his or her service as an Independent Manager if such Person has been provided by a nationally-recognized company that provides professional independent managers),
(iii)a Person controlling or under common control with any such employee, manager, stockholder, director, member, partner, officer, attorney, counsel, customer, supplier or other Person, or
(iv)any member of the immediate family (including grandchildren or siblings) of a person described in clauses (i), (ii) or (iii) immediately above. A natural person who otherwise satisfies the foregoing definition will not be disqualified from serving as an Independent Manager of the limited liability company because such person is an independent manager or independent director of a “Special Purpose Bankruptcy Remote Entity” affiliated with the limited liability company that does not own a direct or indirect equity interest in the limited liability company or any entity that is a co-borrower with the limited liability company if such individual is an independent manager provided by a nationally-recognized company that provides professional independent managers.
“Single Member Bankruptcy Remote LLC” means a limited liability company organized under the laws of the State of Delaware which at all times since its formation and at all times thereafter
(i)complies with the following clauses of the definition of Special Purpose Bankruptcy Remote Entity above: (i), (ii)(A), (B) or (C), (iii), (iv), (ix), (x), (xi) and (xiii) through (xxxii);
(ii)has maintained and will maintain its accounts, books and records separate from any other person;
(iii)has and will have an operating agreement which provides that the business and affairs of such limited liability company will be managed by or under the direction of
(A)a board of one (1) or more directors designated by the sole member of the Single Member Bankruptcy Remote LLC (the “Sole Member”), and at all times there will be at least two duly appointed Independent Directors on the board of directors, and the board of directors will not take any action requiring the unanimous affirmative vote of 100 percent of the members of its board of directors unless, at the time of such action there are at least two members of the board of directors who are Independent Directors, and all of the directors and all Independent Directors will have participated in such vote or
(B)Sole Member, provided that at all times there will be at least two Independent Managers designated by Sole Member and the operating agreement provides that Sole Member will not take any Bankruptcy Actions without the unanimous affirmative vote of 100 percent of the Independent Managers;
(iv)has and will have an operating agreement which provides that, as long as any portion of the Debt remains outstanding,
(A)upon the occurrence of any event that causes Sole Member to cease to be a member of such limited liability company (other than (x) upon an assignment by Sole Member of all of its limited liability company interest in such limited liability company and the admission of the transferee, if permitted pursuant to the organizational documents of such limited liability company and the Loan Documents, or (y) the
Ex 10.219
resignation of Sole Member and the admission of an additional member of such limited liability company, if permitted pursuant to the organizational documents of such limited liability company and the Loan Documents), one of the Independent Managers will, without any action of any Person and simultaneously with Sole Member ceasing to be a member of such limited liability company, automatically be admitted as the sole member of such limited liability company (the “Special Member”) and will preserve and continue the existence of such limited liability company without dissolution,
(B)no Special Member may resign or transfer its rights as Special Member unless (x) a successor Special Member has been admitted to such limited liability company as a Special Member, and (y) such successor Special Member has also accepted its appointment as an Independent Manager and
(C)except as expressly permitted pursuant to the terms of this Agreement, Sole Member may not resign and no additional member will be admitted to such limited liability company;
(v)has and will have an operating agreement which provides that, as long as any portion of the Debt remains outstanding,
(A)such limited liability company will be dissolved, and its affairs will be would up only upon the first to occur of the following: (x) the termination of the legal existence of the last remaining member of such limited liability company or the occurrence of any other event which terminates the continued membership of the last remaining member of such limited liability company in such limited liability company unless the business of such limited liability company is continued in a manner permitted by its operating agreement or the Delaware Limited Liability Company Act (the “Act”) or (y) the entry of a decree of judicial dissolution under Section 18-802 of the Act;
(B)upon the occurrence of any event that causes the last remaining member of such limited liability company to cease to be a member of such limited liability company or that causes Sole Member to cease to be a member of such limited liability company (other than (x) upon an assignment by Sole Member of all of its limited liability company interest in such limited liability company and the admission of the transferee, if permitted pursuant to the organizational documents of such limited liability company and the Loan Documents, or (y) the resignation of Sole Member and the admission of an additional member of such limited liability company, if permitted pursuant to the organizational documents of such limited liability company and the Loan Documents), to the fullest extent permitted by law, the personal representative of such member will be authorized to, and will, within 90 days after the occurrence of the event that terminated the continued membership of such member in such limited liability company, agree in writing to continue the existence of such limited liability company and to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of such limited liability company, effective as of the occurrence of the event that terminated the continued membership of such member in such limited liability company;
(C)the bankruptcy of Sole Member or a Special Member will not cause such member or Special Member, respectively, to cease to be a member of such limited liability company and upon the occurrence of such an event, the business of such limited liability company will continue without dissolution;
(D)in the event of dissolution of such limited liability company, such limited liability company will conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of such limited liability company in an orderly manner), and the assets of such limited liability company will be applied in the manner, and in the order of priority, set forth in Section 18-804 of the Act; and
(E)to the fullest extent permitted by law, each of Sole Member and the Special Members will irrevocably waive any right or power that they might have to cause such limited liability company or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of
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such limited liability company, to compel any sale of all or any portion of the assets of such limited liability company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of such limited liability company.
“Bankruptcy Action” means, with respect to any Person, if such Person
(i)makes an assignment for the benefit of creditors,
(ii)files a voluntary petition in bankruptcy,
(iii)is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings,
(iv)consents to, orchestrates or participates in the orchestration of, or files a petition or answer seeking for itself, any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation,
(v)files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any bankruptcy or insolvency proceeding,
(vi)seeks, consents to, orchestrates or participates in the orchestration of, or acquiesces in the appointment of a trustee, receiver, liquidator, sequestrator, custodian or any similar official of or for such Person or of all or any substantial part of its properties,
(vii)120 days after the commencement of any proceeding against such Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, if the proceeding has not been dismissed,
(viii)within 90 days after the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated or
(ix)takes any action in furtherance of any of the foregoing.
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Schedule 5
Service Contracts
