8-K
PROCACCIANTI HOTEL REIT, INC. (PRXA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):April 26, 2024
PROCACCIANTI HOTEL REIT, INC.
(Exact Name of Registrant as Specified in ItsCharter)
| Maryland | 000-56272 | 81-3661609 |
|---|---|---|
| (State or other jurisdiction of<br><br> <br>incorporation or organization) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>Identification No.) |
1140 Reservoir Avenue
Cranston, RhodeIsland
02920-6320
(Address of principalexecutive offices)
(401) 946-4600
(Registrant’s telephone number, includingarea code)
N/A
(Former name or former address, if changed sincelast report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| N/A | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ¨ |
|---|---|
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
Item 1.01 Entry into a Material Definitive Agreement.
Loan Refinancing
As previously disclosed, Procaccianti Hotel REIT, Inc. (the “Company”), through Procaccianti Convertible Fund, LLC, a Delaware limited liability company that is an affiliate of both the Company’s sponsor and advisor (the “Fund”), acquired the Staybridge Suites St. Petersburg Downtown located in St. Petersburg, FL (the “St. Petersburg Hotel”) on June 29, 2017, for a contract purchase price of $20,500,000 and the Springhill Suites Wilmington Mayfaire located in Wilmington, NC (the “Wilmington Hotel”) on May 24, 2017, for a contract purchase price of $18,000,000. The Company financed the St. Petersburg Hotel and Wilmington Hotel acquisitions through equity raised in its offerings and aggregate mortgage debt of $24,593,000.
On April 26, 2024, (i) PHR STPFL, LLC, a Delaware limited company and wholly-owned subsidiary of the Fund (“PHR STPFL”), as borrower, and Liberty Bank, as the lender, entered into the Loan Agreement dated as of April 25, 2024 (the “St. Petersburg Hotel Loan”), and (ii) PHR WNC, LLC, a Delaware limited company and wholly-owned subsidiary of the Fund (“PHR WNC”), as borrower, and Liberty Bank, as the lender, entered into the Loan Agreement dated April 26, 2024 (the “Wilmington Hotel Loan”, and together with the St. Petersburg Hotel Loan, the “Refinancing Loans”).
In connection with the Refinancing Loans, the Company borrowed an aggregate amount of $23,670,000 and issued promissory notes (the “Refinancing Notes”) to Liberty Bank in the same amount. The loan proceeds were primarily used to pay off in full the existing first mortgages on the St. Petersburg Hotel and the Wilmington Hotel and to pay for closing costs and such other costs reasonably approved by Liberty Bank prior to closing.
The Refinancing Notes bear interest rate at floating rate based on the one-month term Secured Overnight Financing Rate (“SOFR”) plus two hundred fifty (250) basis points. Interest only on so much as is advanced and outstanding shall be payable monthly for a period of two (2) years commencing on the first day of the first month subsequent to the later of (i) the date of the Refinancing Loans or (ii) the date Liberty Bank funds the Refinancing Loans (the “Closing Date”) and continuing on the first day of each month thereafter (each such date, a “Payment Date”) for the subsequent twenty-three (23) months (the “Interest Only Period”). The above notwithstanding, if the Closing Date does not occur on the first day of a calendar month, the Borrowers will pay in advance on the Closing Date interest for the actual number of days that will elapse from the Closing Date through the first day of the following calendar month and the first Payment Date will then be the first day of the subsequent calendar month. After the Interest Only Period, principal will be amortized over a three hundred (300) month amortization schedule at the interest rate set forth above with consecutive monthly payments of fixed principal plus interest in accordance with said schedule commencing on the twenty-fifth (25th) Payment Date and continuing on the first day of each month thereafter until paid in full. The above notwithstanding, all principal and accrued interest thereon is due and payable in full five (5) years from the date of the Refinancing Notes (the “Maturity Date”).
During the Interest Only Period, interest will be calculated on the basis of the actual number of days elapsed over a year of 360 days. After the Interest Only Period, interest will be calculated on the basis of a three hundred sixty (360) day year with twelve (12) thirty- day months. The Refinancing Notes provide for a late charge of five (5.0%) percent of the principal and interest portion of any regular monthly payment received more than ten (10) days after the due date of said payment (but excluding, in all cases, any payment or amounts due at the Maturity Date or acceleration of the Refinancing Notes). The Borrowers may prepay the Refinancing Notes in whole or in part, subject however to the following: If a prepayment occurs prior to the first anniversary of the Refinancing Notes, there will be due and payable to Liberty Bank a prepayment premium in the amount of three percent (3%) of the amount prepaid. If a prepayment of the Refinancing Notes occurs on or after the first anniversary of the Refinancing Notes but prior to the second anniversary of the Refinancing Notes, there will be due and payable to Liberty Bank a prepayment premium in the amount of two percent (2%) of the amount prepaid. If a prepayment of the Refinancing Notes occurs on or after the second anniversary of the Refinancing Notes but prior to the third anniversary of the Refinancing Notes, there will be due and payable to Liberty Bank a prepayment premium in the amount of one percent (1%) of the amount prepaid. On or after the third anniversary of the Refinancing Notes, the Refinancing Notes may be prepaid in whole or in part without penalty or premium. Notwithstanding anything contained herein, no such prepayment penalty shall be due and owing in connection with any prepayment from proceeds received as a result of damage to or destruction of, or an eminent domain award with respect to the St. Petersburg Hotel and the Wilmington Hotel.
The Refinancing Loans are secured by a record first priority deed of trust mortgage on each of the St. Petersburg Hotel and the Wilmington Hotel and an assignment of all leases, rents and revenues derived from the St. Petersburg Hotel and the Wilmington Hotel, a first priority security interest in all assets of the Borrowers, a first priority pledge, assignment and security interest in all operating contracts and permits, whether in the name of the Borrowers or the Borrowers’ wholly-owned operating companies that are lessees of the St. Petersburg Hotel and the Wilmington Hotel and the operators of the St. Petersburg Hotel and the Wilmington Hotel, a guaranty by the Company, cross-default and cross-collateralization between each Refinancing Loan, and a release right on the sale of the St. Petersburg Hotel or the Wilmington Hotel, subject to each properties appraisal value at the time of any such sale. The Refinancing Loans are each guaranteed by the Company (the “Refinancing Corporate Guaranties”).
The Refinancing Loans and the Refinancing Notes contain customary financial and other covenants and events of default for loans of their type.
The foregoing summary of the Refinancing Loans, the Refinancing Notes and the Refinancing Corporate Guaranties does not purport to be complete and is qualified in their entirety by reference to the full text of the agreements attached as exhibits to this Current Report on Form 8-K, which are incorporated herein by reference.
Item 2.03 Creationof a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
To the extent required by Item 2.03 of Form 8-K, the information set forth under Item 1.01 of this Current Report is hereby incorporated by reference into this Item 2.03.
Item 8.01 Other Events.
Payment of Distributions
On April 30, 2024, the board of directors (the “Board”) of the Company (i) authorized the payment of distributions out of legally available funds with respect to each share of Class K common stock (“K Share”), Class K-I common stock (“K-I Share”) and Class K-T common stock (“K-T Share”) outstanding as of March 31, 2024 (the “Common Stock Distributions”) to the holders of record of K Shares, K-I Shares and K-T Shares and (ii) on behalf of the Company as the general partner of Procaccianti Hotel REIT, L.P., the Company’s operating partnership (the “Operating Partnership”), authorized distributions out of legally available funds (the “Class K OP Unit Distributions”) with respect to each unit of Class K limited partnership interest in the Operating Partnership (the “Class K OP Units”) held by individuals with direct or indirect interests in the seller of the Hilton Garden Inn hotel property (the “Property”) who are direct or indirect owners of Procaccianti Companies, Inc., the sponsor of the Company, and Procaccianti Hotel Advisors, LLC, the external advisor to the Company (the “Affiliate Sellers”).
Common Stock Distributions
With respect to the K Shares, K-I Shares and K-T Shares outstanding as of and during the quarter ended March 31, 2024, the cumulative amount of distributions that had accrued on a daily basis with respect to each K Share, K-I Share and K-T Share outstanding since December 31, 2023, was $680,542, $238,603, and $521, respectively (the “K Share Accrual,” the “K-I Share Accrual” and the “K-T Share Accrual,” respectively), or $0.0019125683 per K Share per day, $0.0019125683 per K-I Share per day, and $0.0019125683 per K-T Share per day, which reflects an accrual rate of seven percent per annum for each share class under the Company’s charter. The Board authorized the payment of distributions in an aggregate amount equal to the K Share Accrual, K-I Share Accrual and K-T Share Accrual.
Class K OP Unit Distributions
With respect to the Class K OP Units held by the Affiliate Sellers of the Property that were outstanding as of and during the quarter ended March 31, 2024, the cumulative amount of distributions that had accrued on a daily basis with respect to each Class K OP Unit since December 31, 2023, was $22,299 (the “Class K OP Unit Accrual”), or $0.0019125683 per Class K OP Unit per day, which reflects an accrual rate of seven percent per annum. The Board authorized the payment of distributions in an aggregate amount equal to the Class K OP Unit Accrual.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| PROCACCIANTI HOTEL REIT, INC. | ||
|---|---|---|
| Date: May 1, 2024 | By: | /s/ Gregory<br> Vickowski |
| Gregory Vickowski | ||
| Chief Financial Officer |
Exhibit 10.1
LOAN AGREEMENT
BETWEEN
LIBERTY BANK
AND
PHR STPFL, LLC
THIS LOAN AGREEMENT (hereinafter referred to as the "Agreement") made and entered into as of the 26^th^ day of April, 2024, by and between LIBERTY BANK, a mutual bank organized and existing under the laws of the State of Connecticut, having its principal place of business at 245 Long Hill Road, Middletown, Connecticut 06457 (hereinafter referred to as the "Bank") and PHR STPFL, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Bank has reviewed the Borrower' proposals for a credit facility (the "Loan"), the purposes of which is to refinance the existing first mortgage on the Borrower’s property at 940 5^th^ Avenue South, St. Petersburg, Florida upon which is located a 119 room Staybridge Suites hotel facility (the "Hotel"); and
WHEREAS, the Bank has approved the loan request and is willing to make the loan on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the respective representations and agreements hereinafter contained, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I: DEFINITIONS
Unless otherwise defined or specified herein, all accounting terms shall be construed and all accounting determinations shall be made in accordance with GAAP. In addition to terms that are defined elsewhere in this Agreement, the following terms shall be defined as follows:
1.1 Affiliatemeans any person or entity (1) which directly or indirectly through one or more intermediaries through one or more intermediaries controls, or is controlled by, or is under common control with another entity or person; (2) which directly or indirectly beneficially owns or holds twenty percent (20%) or more of any class of voting stock of the other entity or person or (3) twenty percent (20%) or more of the voting stock of which is directly or indirectly beneficially owned or held by the other entity or person. The term "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract, or otherwise.
1.2 Agreement means this Loan Agreement.
1.3 Anti-TerrorismLaws means any statute, treaty, law (including common law), ordinance, regulation, rule, order, opinion, release, injunction, writ, decree or award of any Government Authority relating to terrorism or money laundering, including Executive Order No. 13224 (on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced and as may be in effect from time to time) and the USA Patriot Act.
1.4 BorrowerAffiliate means PHR WNC, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920.
1.5 Building,Zoning and Public Safety Laws means in all material respects, all applicable zoning, land use, energy use, building, public, health and safety codes, laws, regulations and ordinances applicable to the Borrower, the Collateral and/or the use and occupancy thereof.
1.6BusinessDay means any day other than a Saturday, Sunday, or other day on which commercial banks in Connecticut are authorized or required to close under the laws of the State of Connecticut, on which the Bank is open and conducting its customary banking transactions. In the event that a relevant date hereunder would otherwise fall on a day that is not a Business Day, such date will be the date that is the first following day that is a Business Day.
1.7 ClosingDate means the later to occur of (i) the date of this Agreement or (ii) the date the Bank actually funds the Loan.
1.8Collateral means the (i) Borrower’s right, title and interest to the Mortgaged Premises, Leases, Rents and Revenues, Hotel Documents, Operating Contracts and Permits, Operating Lease, Personal Property, and related assets and other security, insurance policies or other interests granted to the Bank to secure the Loan and (ii) the Borrower’s right, title and interest, by assignment, of the Operating Company’s interests in the Leases, Rents and Revenues, Hotel Documents, Operating Contracts and Permits, Operating Lease, Personal Property, and related assets and other security.
1.9 CollateralDocuments means all documents evidencing the Collateral and all other instruments and documents securing the Loan.
1.10 CommitmentLetter means that certain letter dated ________, 2024 of the Bank to the Borrower, by which the Bank committed to provide certain credit facilities to the Borrower on terms and conditions set forth therein.
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1.11 DefaultCondition means the existence of any uncured Event of Default (as defined herein) or any fact or circumstance which with the passage of time, giving of notice, or both, would constitute an Event of Default.
1.12 DefaultRate means a rate of interest which is five (5.0) percentage points per annum above the interest rate otherwise in effect with respect to the Loan.
1.13 EBITDA shall mean earnings before interest, taxes, depreciation, amortization and non-cash charges.
1.14 EnvironmentalLaws means all applicable federal, state and local statutes, codes, laws, regulations, ordinances, orders and decrees pertaining to air pollution, water pollution, human health waste, transportation or disposal of Hazardous Materials, (including asbestos and asbestos-containing materials, lead paint, flammable materials, explosives, radioactive substances, polychlorinated biphenyls (“PCB’s”), urea formaldehyde foam insulation (“UFFI”), other carcinogens, oil and other petroleum products, other pollutants or contaminants that are detrimental to the environment, and any other hazardous or toxic substances and materials, wastes, or other environmental matters and substances which are defined, determined, or identified as such under applicable present or future federal, state, or local laws, rules, codes, or regulations or any judicial or administrative interpretation thereof, including but not limited to, the Comprehensive Environmental Response Compensation and Liability Act of 1980, ("CERCLA") as amended 42 U.S.C. Sections 9601, et seq., as amended, including, without limitation, by the Superfund Amendments and Reauthorization Act of 1986, ("SARA"); the Hazardous Materials Transportation Act as amended, 49 U.S.C. Section 1801, et seq., the Toxic Substances Control Act, the Resource Conservation and Recovery Act, as amended by SARA; the Clean Water Act; and any comparable or similar laws of the State of Florida including but not limited to the Florida Environmental Protection Act is codified at Fla. Stat. Ann. § 403.801 et seq. as amended from time to time, the Florida Resource Recovery and Management Act, Section 403.702, et seq., the Pollutant Discharge Prevention and Control Act, Sections 376.011-376.21 and in the regulations adopted and publications promulgated pursuant thereto or as defined thereby.
1.15 EnvironmentalReports means a report from an environmental engineer satisfactory to the Bank evidencing the absence of any Hazardous Materials at the Mortgaged Premises.
1.16 ERISA means the Employment Retirement Income Security Act of 1974, as amended from time to time and the regulations promulgated thereunder.
1.17 Eventsof Default shall have the meaning given such term in Article VIII of this Agreement.
1.18 FHLBB means the Federal Home Loan Bank of Boston.
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1.19 GAAP means generally accepted accounting principles in the United States of America, as from time to time in effect; provided, however, that for purposes of compliance with Article VI of this Agreement and the related definitions, GAAP means such principles as in effect on the date of the preparation and delivery of the financial statements described in Article 6.1 and consistently followed, without giving effect to any subsequent changes other than changes consented to in writing by the Bank.
1.20 GlobalDebt Service Coverage Ratio – Annual Operations for Wilmington and St. Petersburg ("GDSCR") shall mean EBITDA plus 4% FF&E reserve for both the Wilmington Premises and the St. Petersburg Premises divided by the annual debt service for both the Wilmington Premises and the St. Petersburg Premises.
1.21 GovernmentAuthorities means any federal, state, county or municipal entity or political subdivision or department or agency thereof having jurisdiction over any aspect of the Mortgaged Premise or the Hotel.
1.22 Guarantor means Procaccianti Hotel REIT, Inc., a Maryland corporation with an address at c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920.
1.23HazardousMaterials means any flammable explosives, radioactive materials, hazardous wastes, hazardous or toxic substances, or related or similar materials, asbestos or any material containing asbestos, or any other substance or material as defined by any Environmental Laws and in the regulations adopted and publications promulgated pursuant thereto or as defined thereby.
1.24 Hotelmeans the 119-room Staybridge Suites hotel facility located upon the Mortgaged Premises together with all improvements and amenities located thereon or used in connection therewith.
1.25 HotelDocuments means the (i) Hotel Franchise Agreement, (ii) the Management Agreement (iii) all Operating Contracts and Permits and (iv) the Occupancy Agreements.
1.26 HotelFranchise Agreement means that certain Staybridge Suites Hotel License Agreement dated June 29, 2017 by an between Holiday Hospitality Franchising, LLC and the Borrower and amended to replace Borrower with the Operating Company by Addendum to License Agreement dated March 29, 2018 and all ancillary documents and agreements related thereto, any license or other franchise agreement or license with a hotel franchisor and/or hotel system provider.
1.27 Improvements means the Hotel along with all permanent improvements and betterments presently existing, and to be rehabilitated, renovated and constructed on and made and added to the Mortgaged Premises, as well as improvements reasonably required in order to keep said Mortgaged Premises and the Hotel in good order and repair.
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1.28 Leases shall mean all leases, subleases, agreements (oral or written) or other documents evidencing grants of possessory interests with respect to, or the right to use and occupy, the Mortgaged Premises, including but not limited to the Operating Lease.
1.29Loan mean the credit facility provided by the Lender to the Borrower hereunder as described in this Agreement and the Loan Documents.
1.30 LoanDocuments means this Agreement, the Note, the Mortgage, the Pledge and Security Agreement, other assignments and documents evidencing the Collateral and all other documents executed in connection herewith and therewith.
1.31 ManagementAgreement. Any management contract between the Operating Company and any manager of the Hotel related to the management and operation of the Hotel, including but not limited to that certain Management Agreement dated June 29, 2017 by and between the Operating Company and PHR St. Petersburg Hotel Manager, LLC.
1.32 Mortgage means that certain Amended, Restated and Consolidated Mortgage, Security Agreement and Assignment of Leases, Rents and Revenues executed by Borrower in favor of the Bank and delivered in connection herewith as the same may be amended, modified, extended, renewed or restated.
1.33 MortgagedPremises means the real estate located at 940 5^th^ Avenue South, St. Petersburg, Florida and all Improvements thereon (also sometimes referred to as the “Florida Premises”).
1.34 Note means the commercial promissory note executed and delivered by the Borrower in accordance with Article III which evidence the Loan.
1.35 Obligations means Borrower’s obligations to the Bank or any Affiliate of the Bank for (a) payment of all principal, interest and other amounts and performance of every obligation and agreement of Borrower pursuant to the terms of the Note and Loan Documents; (b) performance of all of its obligations under the Loan Documents; and (c) all other amounts, in each case, liquidated or unliquidated, owing any time, of each and every kind, nature and description, arising under the Loan Documents or otherwise, and whether secured or unsecured, direct or indirect (that is, whether the same are due directly by Borrower to the Bank or any Affiliate thereof; or are due indirectly by Borrower to the Bank, or Affiliate thereof as endorser, guarantor or other surety, or as borrower of obligations due third persons which have been endorsed or assigned to Bank or any Affiliate thereof, or otherwise), absolute or contingent, due or to become due, now existing or hereafter arising or contracted. Any reference herein to indebtedness of the Borrower to the Bank shall include indebtedness to any Affiliate of the Bank and shall be considered part of the Obligations.
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1.36 OccupancyAgreements means all leases, subleases, licenses, franchises, concessions or grants of other possessory interests, tenancies, hotel occupancy agreements and any other agreements affecting the use, possession or occupancy of the Premises and the Hotel or any part thereof and all agreements (oral or written) or other documents evidencing, including agreements for hotel stays, guest room occupancy, use of conference rooms, restaurants, bars, banquet rooms or other public facilities and other occupancy agreements affecting the use, possession or occupancy of the Hotel, whether now or hereafter existing or entered into (including, without limitation, any use or occupancy arrangements created pursuant to Section 365(d) of the Bankruptcy Code or otherwise in connection with the commencement or continuance of any bankruptcy, reorganization, arrangement, insolvency, dissolution, receivership or similar proceedings, or any assignment for the benefit of creditors, in respect of any tenant or occupant of any portion of the Property) and all amendments, modifications, supplements, extensions or renewals thereof, whether now or hereafter existing and all amendments, modifications, supplements, extensions or renewals thereof.
1.37 OperatingCompany means PHR STPFL OPCO SUB, LLC a Delaware limited liability company with an address at in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920.
1.38 OperatingContracts and Permits means all Hotel Documents as well as all other contracts and subcontracts, service agreements, Permits and other documents and agreements, including, without limitation, maintenance and service contracts, utility agreements and other necessary vendor contracts entered into by Borrower in connection with the operation of the Hotel.
1.39 OperatingLease means that certain Hotel Lease dated March 29, 2018 by and between the Borrower and the Operating Company whereby the Borrower leased the Premises to the Operating Company.
1.40 OwnerAgreement means that certain Owner Agreement dated March 29, 2018 by and between the Franchisor, the Operating Company and the Borrower.
1.41 PermittedEncumbrances means (i) any and all encumbrances that have been approved by the Bank in writing prior to closing, (ii) the matters set forth in the title insurance policy required to be delivered to the Bank pursuant to this Agreement, (iii) liens for taxes, assessments, governmental charges, or mechanics' or other like liens, in each case which are not yet due and payable, and (iv) customary leases and purchase money financing arrangements for customary equipment and supplies used in connection with Hotel operations.
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1.42 Permits means any and all permits, approvals, licenses and other permissions required by any Government Authorities to enable and/or authorize the construction of the Improvements and completion, use and operation of the Project.
1.43 Person means any individual, partnership, corporation, trust, limited liability company or other entity.
1.44 PersonalProperty means all of Borrower' interest in and to all equipment, machinery, fixtures, inventory, goods, accessions, construction materials, building and other supplies, furnishings, televisions, objects of art, refrigerators, computers and computer equipment, housing keeping and other equipment, accounts, choses in action, contract rights, documents, instruments, chattel paper, reports, studies, professional or technical work product, shop drawings, surveys, soil studies, permits, licenses, approvals, warranties and general intangibles, located at, arising from, relating to, or used in connection with the Mortgaged Premises; all proceeds (including, without limitation, insurance and condemnation proceeds), as well as all interest earned thereon, paid for any damage done to the Mortgaged Premises or for any portion thereof appropriated or otherwise taken by any governmental authority, agency, or entity; all of Borrower' right, title and interest in and to any and all Leases and all Rents and Revenues, guarantees and other proceeds and benefits of such leases and other agreements, as well as any sales contracts (including any deposit funds paid thereunder), in each case relating to or arising from the Mortgaged Premises; all trade names, trademarks, telephone numbers, websites, domain names, social media accounts, goodwill, general intangibles and other similar property as well as all records and books of account, in each case relating to Borrower' ownership or operation of the Project; all of Borrower' right, title and interest in any insurance, tax, water, sewer or other escrows deposited with the Bank; any operating debt service, replacement, or other reserves relating to the Project and deposited with the Bank; any other escrows or reserves established for the Project; and any cash collateral deposited by the Borrower with the Bank.
1.45RelatedAgreements means the various agreements and documents as requested by the Bank, delivered or caused to be delivered by the Borrower to the Bank in connection with the Loan.
1.46 Rentsand Revenues means all Hotel revenues, including guest room revenues, food, beverage and amenity revenues, restaurant, conference room and banquet revenues, resort or other fees for amenities, any other rental revenue, receipts, earnings, accounts, accounts receivable, or other revenues, income, reimbursements, and payments with respect to the aforesaid Premises, including, without limitation, fixed, additional and percentage receipts, and all operating expense reimbursements, reimbursements for increases in taxes, sums paid by guests or tenants to Borrower to reimburse Borrower for amounts originally paid or to be paid by Borrower or any of Borrower’s Affiliates or Subsidiaries for which such guests or tenants were liable, tax and operating expense pass-throughs for which a guest or tenants is solely liable, parking, maintenance, common area, tax, insurance, utility and service charges and contributions, proceeds of sale of electricity, gas, heating, air-conditioning and other utilities and services, deficiency payments and liquidated damages, and other benefits now or hereafter derived from any portion of the Premises or otherwise due and payable or to become due and payable as a result of any ownership, use, possession, occupancy or operation thereof and/or services rendered, goods provided and business conducted in connection therewith (including any payments received pursuant to Section 502(b) of the Bankruptcy Code or otherwise in arrangement, insolvency, dissolution, receivership or similar proceedings, or any assignment for the benefit of creditors, in respect of any guest, tenant or other occupants of any portion of the Premises and all claims as a creditor in connection with any of the foregoing) and all cash or security deposits (subject to the prior right of the parties making such deposits), advance rentals, and all deposits or payments of a similar nature relating thereto, now or hereafter, including during any period of redemption, derived from the Premises or any portion thereof and all proceeds from the cancellation, surrender, sale or other disposition of any Leases.
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1.47 WilmingtonLoan means that certain loan from the Bank to the Borrower Affiliate of even date herewith in the amount of $10,850,000.00 secured by a first mortgage on the Wilmington Property.
1.48 WilmingtonPremises means the real estate located at 1014 Ashes Drive, Wilmington, NC upon which is located a 120 room SpringHill Suites by Marriot Wilmington Mayfaire hotel facility.
1.49 SubordinatedDebt means all indebtedness of the Borrower to any of its members, managers, affiliates and subsidiaries, which is required by the Bank to be subordinated to the Loans and the Collateral.
1.503 Subsidiary(ies) means with respect to any Borrower at any time, (i) any corporation more than fifty percent (50%) of whose voting stock is legally and beneficially owned by the Borrower or owned by a corporation more than fifty percent (50%) of whose voting stock is legally and beneficially owned by the Borrower; (ii) any trust of which a majority of the beneficial interest is at such time owned directly or indirectly, beneficially or of record, by the Borrower or one or more Subsidiaries of the Borrower; and (iii) any partnership, joint venture, limited liability company or other entity of which ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at such time owned directly or indirectly, beneficially or of record, by the Borrower or one or more Subsidiaries of the Borrower.
1.51 TitlePolicy means that certain ALTA Mortgagee Policy of Title Insurance required to be provided at Closing by the Borrower at its expense insuring the lien of the Mortgage, subject only to exceptions, if any, satisfactory to the Bank, in the face amount of the Loan issued by a nationally recognized, responsible title insurance company acceptable to the Bank. All endorsements to such policies required by the Bank or Bank counsel shall be provided with the respective Title Policy, including a comprehensive endorsement, land same as survey endorsement, contiguity endorsement, access and entry endorsement, tax parcel endorsement, waiver of arbitration endorsement and such other endorsements and or affirmative insurance as the Bank may reasonably require.
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ARTICLE II: REPRESENTATIONS AND WARRANTIES
2.1 Representationsand warranties. The Borrower makes the following representations and warranties as an inducement to the Bank to enter into this Agreement:
| A. | Organization and Authority. The Borrower (i) is, and will continue to be a limited liability<br>company, duly organized and validly existing in good standing under the laws of the State of Delaware; (ii) is qualified and in good<br>standing to do business in all jurisdictions in which it owns, leases or operates a business or property or the nature of the business<br>conducted by it makes such qualification necessary; (iii) has the power to execute and deliver the Loan Documents and to borrow,<br>repay and otherwise perform its obligations hereunder, and (iv) has all requisite permits, authorizations and licenses, without material<br>restrictions or limitations, to own, operate and lease its properties and to conduct the business in which it is presently engaged, all<br>of which are in full force and effect. |
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| B. | Suits, Proceedings. There are no suits or proceedings pending or to the knowledge of the Borrower<br>threatened against or affecting the Borrower or its property nor any proceedings involving the Borrower by or before Governmental Authorities<br>which bring into question the validity or enforceability of the Loan Documents and which, if determined adversely to the Borrower, would<br>have a materially adverse effect on the Borrower’s financial conditions or businesses or the ability of the Borrower to enter into<br>and carry out the terms and provisions of this Agreement. |
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| C. | Conflicts, Records. The execution, delivery, and performance of the Loan Documents will not conflict<br>with or result in any breach or contravention of, or the creation of any lien under, any indenture, agreement, lease, instrument or undertaking,<br>to which the Borrower may be a party or by which it may be bound. The Borrower will keep true and accurate records and books of account<br>with complete and accurate entries being made in accordance with applicable law and in accordance with GAAP. The consummation of the transactions<br>herein contemplated, the execution of all Loan Documents and the performance or observance of all of the Borrower’s obligations<br>hereunder all have been or will have been duly authorized and will not conflict with or result in a breach of any of the terms, conditions<br>or provisions of the Certificate of Organization and any applicable operating agreement of the Borrower. |
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| --- | | D. | Notice of Defaults. The Borrower shall promptly, upon becoming aware of the existence of any condition,<br>or event which constitutes an Event of Default hereunder, or any condition or event which upon notice or lapse of time or both will constitute<br>an Event of Default hereunder, or any threatened or pending litigation or administrative proceedings which could reasonably be expected<br>to have a material adverse effect on the financial condition of the Borrower, give written notice of the same to the Bank specifying the<br>nature thereof and the action proposed to be taken with respect thereto. | | --- | --- | | E. | Compliance with Laws. To the best of Borrower's actual knowledge, the proposed use and operation<br>of the Mortgaged Premises will, in all respects, comply with (i) Environmental Laws, (ii) all applicable public health and safety<br>codes, laws, regulations and ordinances (the "Public Safety Laws") and (iii) all applicable zoning, land use, energy use<br>and building codes, laws, regulations and ordnances (the “Building and Zoning Laws”). Except as disclosed to Bank and as set<br>forth in the Environmental Reports furnished to Bank, Borrower has no actual knowledge of any notices from Governmental Authorities of<br>any violations of any Environmental Laws, Building and Zoning Laws, Public Safety Laws or any other laws, ordinances, codes, requirements<br>or orders of any government instrumentality having jurisdiction over the Mortgaged Premises. The Borrower represents and warrants that<br>it knows of no condition existing upon the Mortgaged Premises which would subject the Mortgaged Premises to a lien pursuant to the Environmental<br>Laws. The Borrower agrees to indemnify and hold the Bank harmless from any and all liability, costs or damages actually suffered by the<br>Bank which are attributable to the Mortgaged Premises arising out of a claimed violation of the provisions of said Building and Zoning<br>Laws, the Environmental Laws or the Public Safety Laws. | | --- | --- | | F. | Hazardous Materials. To the best of Borrower's knowledge, neither the Borrower nor any entity which<br>is owned or controlled by the Borrower ever: | | --- | --- | | (i) | owned,<br>occupied or operated a site or vessel upon which any Hazardous Materials were or are disposed of, transported or stored (except<br>if such storage was or is in compliance with all laws, ordinances and regulations pertaining thereto; | | --- | --- | | (ii) | directly or indirectly transported or arranged for transport<br>of any Hazardous Materials (except if such transportation was or is in compliance with all<br>laws, ordinances and regulations pertaining thereto); | | --- | --- | | (iii) | has been, is or to the actual<br>present knowledge of the Borrower, will be involved in any other operations (except operations<br>to be conducted in compliance with all laws, ordinances and regulations pertaining thereto),<br>which operations could lead to the imposition of liability under any law on the Borrower; | | --- | --- |
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| --- | | (iv) | caused, suffered or knowingly<br>permitted to occur any condition which may cause a release or discharge of any Hazardous Materials at, upon, under<br>or within the Mortgaged Premises in violation of applicable laws, ordinances and regulations pertaining<br>thereto ; | | --- | --- | | (v) | received written notification from any governmental agency of:<br>any potential, known or threat of release of any Hazardous Materials on or from any site owned, occupied or operated either by the Borrower<br>or any entity for whose conduct the Borrower is responsible or whose liability may result in a lien on the Mortgaged Premises; or written<br>notification from any governmental agency of the incurring of any expense or loss by such governmental agency, or by any other person<br>or entity, in connection with the assessment, containment, or removal of any release, or threat of release, of any Hazardous Materials<br>from any such site. | | --- | --- | | G. | Enforcement Actions. The Borrower upon actual knowledge shall with commercially reasonable promptness<br>notify the Bank in writing of the following with respect to the Mortgaged Premises: (a) any enforcement, clean-up, removal or other<br>action instituted or threatened by any Government Authorities pursuant to any Environmental Laws, Public Safety Laws or Building and Zoning<br>Laws with respect to the Collateral and (b) any and all claims made or threatened by any third party against Borrower relating to<br>the existence of, or damage, loss or injury from any toxic substances or hazardous wastes or any other conditions constituting actual<br>or potential violations of such laws, rules, ordinances or regulations with respect to the Collateral and (c) any enforcement or<br>compliance action instituted or threatened or claim made or threatened by any Government Authorities relating to the employment of labor<br>or employee benefits with respect to operations at the Collateral as to uninsured claims in excess of $100,000. | | --- | --- | | H. | Maintenance of Business. The Borrower shall continue to conduct its business as presently conducted,<br>maintain its legal existence and maintain its properties in good repair, working order and operating condition. | | --- | --- | | I. | Financial. Any and all financial statements heretofore delivered to the Bank by the Borrower are<br>true and correct in all respects, have been prepared in accordance with GAAP, and fairly present the financial conditions of the subjects<br>thereof as of the respective dates thereof, and that no materially adverse change has occurred in the financial conditions reflected therein<br>since the respective dates thereof. | | --- | --- |
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| --- | | J. | Title to Mortgaged Premises. The Mortgaged Premises comprises all of the interests in real property<br>used, proposed or required for the full operation of the Hotel and the Borrower has good, marketable and insurable title thereto, free<br>and clear of all defects, liens and encumbrances except the Permitted Encumbrances. | | --- | --- | | K. | ERISA. The Borrower has not established any Plans under the Employee Retirement Income Security<br>Act of 1974 ("ERISA"). | | --- | --- | | L. | Furnished Information. To the best of Borrower’s knowledge, no information, exhibit or report<br>furnished by the Borrower to the Bank in connection with the application for the Loan or the negotiation of this Agreement, contained<br>any material misstatement of fact or omitted to state material fact or any fact necessary to make the statement contained therein not<br>materially misleading. | | --- | --- | | M. | Tax Filings. The Borrower has and will continue to file all federal, state and local tax returns<br>and other reports required by law to be filed, if any, and which are material to the conduct of the Borrower’s business, and have<br>paid, or cause to have been paid, and will continue to pay, or cause to be paid, all taxes, assessments and other charges of Government<br>Authorities when due and payable and will reserve funds or make adequate provision for the payment of such taxes (which reserves shall<br>include any such reserves held by Bank), assessments or other charges accruing but not yet payable. The Borrower has no knowledge of any<br>deficiency or additional assessment in connection with any taxes, assessments or charges not provided for on the Borrower’s books. | | --- | --- | | N. | Corporate/Fictitious Name. The Borrower has not used, during the five (5) year period preceding<br>the date of this Agreement, and does not intend to use any other corporate or fictitious name, except ____________________________. | | --- | --- | | O. | Compliance with Lease. The Borrower is in compliance with and will continue to comply with all<br>of its material obligations under the Operating Lease. | | --- | --- | | P. | Owner Agreement. The Borrower is in compliance with and will continue to comply with all of<br>its material obligations under the Owner Agreement. Borrower agrees to promptly provide to the Bank copies of any and all notice received<br>by the Borrower pursuant to the Owner Agreement | | --- | --- | | Q | Government Approvals. To the extent necessary, to the Borrower’s knowledge, the Borrower<br>and the Operating Company have obtained the approval of all Government Authorities having jurisdiction over the Mortgaged Premises and<br>all material permits or licenses necessary and required by the Building and Zoning Laws to allow for the operation of the Hotel in accordance<br>with its past practice and to Borrower’s knowledge, all such permits and licenses are in full force and effect, without violation<br>of any term, provision or conditions thereof and the fees there for have been paid in full. | | --- | --- |
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| --- | | R. | Compliance with Operating Contracts and Permits. The Borrower shall comply with (and shall cause<br>the Operating Company to comply with), all of its respective obligations under the Operating Contracts and Permits. | | --- | --- |
III: THE LOAN
3.1 Rateand Term. Subject to the provisions herein contained, the Bank will grant the Borrower a loan in the principal amount of TWELVE MILLION EIGHT HUNDRED TWENTY THOUSAND and 00/100 ($12,820,000.00) as evidenced by the Note which shall be repaid in lawful money of the United States with interest thereon at a variable rate for each Term SOFR Interest Period (as defined herein) equal to the sum of the one-month Term SOFR (as defined herein) plus two hundred twenty-fifty (250) basis points. Interest only on so much as is advanced and outstanding shall be payable monthly for a period of two (2) years commencing on the first day of the first month subsequent to the Closing Date and continuing on the first day of each month thereafter (each such date a “Payment Date”) for the subsequent twenty-three (23) months (the “Interest Only Period”). The above notwithstanding, if the Closing Date does not occur on the first day of a calendar month, the Borrower will pay in advance on the Closing Date interest for the actual number of days that will elapse from the Closing Date through the first day of the following calendar month and the first Payment Date will then be the first day of the subsequent calendar month. After the Interest Only Period, principal shall be amortized over a three hundred (300) month amortization schedule at the interest rate set forth above with consecutive monthly payments of fixed principal plus interest in accordance with said schedule commencing on the twenty-fifth (25th) Payment Date and continuing on the first day of each month thereafter until paid in full. The above notwithstanding, all principal and accrued interest thereon shall be due and payable in full five (5) years from the date of the Note (the “Maturity Date”). Payments shall be made subject to the Following Business Day Convention, hereafter defined.
3.2 AdditionalDefinitions. The following additional definitions shall be applicable to this Note:
Business Day means any weekday that is a U.S. Government Securities Business Day and is not a legal holiday in New York and or a day on which banking institutions in New York are authorized or required by law or regulation to be closed. For the purposes hereof, “U.S. Government Securities Business Day” means any weekday, except any weekday on which any of the Securities Industry and Financial Markets Association, the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business because such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.
Following Business Day Convention means the convention for adjusting any relevant date that would otherwise fall on a day that is not a Business Day, so that the date will be the date that is the first following day that is a Business Day.
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Reset Date shall mean the first day of the month commencing on June 1, 2024 and shall be the date as of which the calculation of Term SOFR Rate plus two hundred fifty (250) basis points shall be reset and put into effect as the interest rate for that succeeding Term SOFR Interest Period.
SOFR means the secured overnight financing rate published by the Term SOFR Administrator on the Term SOFR Administrator’s Website.
SOFR Administrator’s Website means the website of the Term SOFR Administrator currently at https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
SOFR Reserve Percentage shall mean, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
Term SOFR Administrator means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Bank in its reasonable discretion).
Term SOFR means, with respect to any amount to which the Term SOFR applies, for any applicable Term SOFR Interest Period, the interest rate per annum determined by dividing (the resulting quotient rounded upwards, at the Bank’s discretion, to the nearest 1/100th of 1%) (A) the Term SOFR Reference Rate for a tenor comparable to such Term SOFR Interest Period, as published by the Term SOFR Administrator on the day that is two (2) Business Days prior to the first day of such Term SOFR Interest Period (the “Term SOFR Determination Date”), by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. The Term SOFR shall be adjusted automatically without notice to the Borrower on and as of (i) the Reset Date, and (ii) the effective date of any change in the SOFR Reserve Percentage.
Term SOFR Interest Period shall mean, with respect to any amount to which Term SOFR applies as set forth herein, the period of thirty (30) days (subject to the availability thereof) commencing on the date of the Note and on each successive Reset Date thereafter; provided that:
| (i) | if a Term SOFR Interest Period would end on a day that is not a Business Day, it shall end on the next<br>succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Term SOFR Interest Period shall<br>end on the next preceding Business Day; |
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| --- | | (ii) | a Term SOFR Interest Period may not end on a day after the Maturity Date; and | | --- | --- | | (iii) | any Term SOFR Interest Period that begins on the last Business Day of a calendar month (or on a day for<br>which there is no numerically corresponding day in the last calendar month of such Term SOFR Interest Period) shall end on the last Business<br>Day of the next calendar month. | | --- | --- |
Term SOFR Reference Rate shall mean the forward-looking term rate based on SOFR.
3.3 MiscellaneousRate and Prepayment Provisions. During the Interest Only Period, interest will be calculated on the basis of the actual number of days elapsed over a year of three hundred sixty (360) days. After the Interest Only Period, interest will be calculated on the basis of a three hundred sixty (360) day year with twelve (12) thirty-day months. There shall be a late charge in the amount of five (5.00%) percent of any regular monthly installment payment (but excluding, in all cases, any payment or amounts due at Maturity or acceleration of the Note) received more than ten (10) days after its due date. The Borrower may prepay the Note in whole or in part, subject however to the following: If a prepayment occurs prior to the first anniversary of the Note, there will be due and payable to the Bank a prepayment premium in the amount of three percent (3%) of the amount prepaid. If a prepayment of the Note occurs on or after the first anniversary of this Note but prior to the second anniversary of the Note, there will be due and payable to the Bank a prepayment premium in the amount of two percent (2%) of the amount prepaid. If a prepayment of the Note occurs on or after the second anniversary of the Note but prior to the third anniversary of the Note, there will be due and payable to the Bank a prepayment premium in the amount of one percent (1%) of the amount prepaid. On or after the third anniversary of the Note, the Note may be prepaid in whole or in part without penalty or premium. Notwithstanding anything contained herein, no such prepayment penalty shall be due and owing in connection with any prepayment pursuant to Sections 5.2 of the Loan Agreement or Articles V and VI of the Mortgage. Any principal prepayment, whether by acceleration or otherwise, shall be applied against principal payments in the inverse order of their maturity.
3.4 DefaultRate. Upon the occurrence of any Event of Default hereunder or upon maturity hereof (by acceleration or otherwise), the entire outstanding principal balance of the Note, at the option of the Bank, shall bear interest, from the date of occurrence of such Event of Default or maturity until payment, at the default rate of five (5.0%) percent per annum in excess of the interest rate otherwise in effect at the time of such Event of Default or maturity hereunder (the "Default Rate").
3.5 Disbursement. At closing the proceeds of the Loan will be disbursed to pay off the existing first mortgage, to pay commitment and other fees due to the Bank and other approved closing costs in accordance with a closing statement/disbursement statement to be executed at closing. Any balance of loan proceeds will be paid to the Borrower. The closing disbursement will be subject to Bank’s receipt of the duly executed Note, Loan Agreement, the recorded Mortgage and all other documentation, certifications and opinions as required by the Bank and Bank counsel and set forth in the Bank’s Closing Agenda, prepared and delivered by the Bank to the Borrower.
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3.6 Applicationof Payments. Until an Event of Default has occurred, all payments made by the Borrower shall be applied first to late charges, fees, expenses and other amounts due to the Bank (excluding principal and interest), if any, under the Note and under the other Loan Documents, then to interest which is due and payable under the Note and the remainder, if any, to principal outstanding under the Note. After the occurrence, and during the continuance, of an Event of Default, beyond applicable notice and cure periods such payments shall be applied first to late charges, costs of collection and enforcement and other similar amounts, if any due under the Note or under the other Loan Documents, then to any obligations of the Borrower to the Bank as Bank in any order and combination that Bank may determine in its sole discretion.
ARTICLE IV: SECURITY
4.1 Mortgage. The Loan shall be secured by a record first priority first deed of trust mortgage on the Mortgaged Premises. The title to this property shall be examined by counsel acceptable to the Bank and shall be free and clear of all material liens and encumbrances other than Permitted Encumbrances.
4.2 SecurityInterest. The Bank shall also be granted (i) a first priority security interest in all assets of the Borrower including a security interest in all of the Borrower’s right, title and interest in and to the Collateral along with any additions, substitutions, accessions to or proceeds of any of the above and (ii) an assignment of the Borrower’s first priority security interest in the Collateral owned by the Operating Company along with any additions, substitutions, accessions to or proceeds of any of the above Said security interests shall also include any after acquired property of the types set forth herein.
4.3 Assignmentof Leases, Rents and Revenues. The Loan shall be secured by an assignment of all Leases, Rents and Revenues.
4.4 Assignmentof Operating Contracts and Permits. The Bank will also be granted a first priority pledge, assignment and security interest in all Operating Contracts and Permits. No material modifications, amendments or material changes to the Operating Contracts and Permits shall be made without the prior written approval of the Bank. Any required consents to the assignment of the Operating Contracts and Permits shall be delivered to the Bank, along with the assignments, on or prior to Closing Date. To the extent there is an alcoholic beverage liquor license issued or to be used in connection with the Hotel, the same shall be pledged to the Bank, with such pledge being approved by all applicable Governmental Authorities.
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4.5 Guaranty. The Bank will require a limited recourse carve-out guaranty to be executed and delivered by the Guarantor.
4.6 **CrossDefault and Cross Collateralization.**The Loan shall be cross-defaulted and cross-collateralized with the Wilmington Loan made by the Bank to the Borrower Affiliate.
4.7 PartialRelease. If the Borrower desires to sell one of the Hotel properties (the “Property to be Sold”) prior to loan maturity, an updated appraisal will be ordered by the Bank, at Borrower’s expense, for the remaining property (the “Remaining Property”). The release of the Property to be Sold shall be subject to the updated appraised value of the Remaining Property as evidenced by the updated appraisal (the “Updated Appraised Valued”) being sufficient to result in a loan to value ratio at the time of sale, based upon the ratio of the then current principal balance of the Remaining Property loan (the “Then Current Balance”) and the Updated Appraised Value (said LTV referred to as the “Updated LTV”), being no higher than the loan to value ratio established by using the original appraised value of the Remaining Property set forth in the original appraisal received by the Bank at the time of the closing of the Loan (the “Original Appraised Value”) and the Then Current Balance (said LTV referred to as the “Base LTV”). If the Updated LTV exceeds the Base LTV, the Bank will only release the Property to be Sold if the Borrower pays down the Then Current Balance to a level that reduces the Updated LTV to the Base LTV. Upon satisfaction of the conditions herein, the Bank shall release the Property to be Sold from any collateral held under the Loan Documents and this Agreement shall then terminate and be without further force and effect and the Bank shall record a release of any mortgage or deed of trust and a termination of this Agreement.
ARTICLE V: INSURANCE AND CONDEMNATION PROCEEDS
5.1 Insurance. So long as this Agreement shall remain in effect or any of Borrower’s obligations remain unsatisfied or any amount of the loan account or the Note shall remain outstanding, Borrower shall keep (or cause the applicable Tenant to keep) in full force and effect the following types of insurance coverage:
| A. | Casualty. Fire and extended coverage property insurance including such other insurable hazards<br>as the Bank may require, such as vandalism, malicious mischief, or damage by snow and ice, collapse, law and ordinance, cost of demolition,<br>removal of debris and increased cost of construction, coverage to be in an amount not less than 100% of the full replacement value of<br>the Collateral without co-insurance and any improvements used in connection therewith or incorporated therein shall be maintained. Such<br>insurance shall cover all improvements, furniture, fixtures and equipment necessary for operation of the Hotel, including coverage for<br>loss by burglary, theft or mysterious disappearance. |
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| --- | | B. | General Liability. Commercial general liability insurance, including explosion and collapsed<br>coverage covering personal injury and property damage with such limits for personal injury and for property damage as the Bank shall,<br>from time to time, determine to be reasonable and necessary for a person of comparable financial net worth engaged in the same or similar<br>business as Borrower in the same jurisdiction, but in no event with a combined limit less than $1,000,000.00 per occurrence and $2,000,000.00<br>in the aggregate. | | --- | --- | | C. | Flood. If any building is or shall be located in a special flood hazard area as designated by<br>the Department of Housing and Urban Development, a flood insurance policy with respect to such building as required by the Flood Protection<br>Act of 1973. | | --- | --- | | D. | **Business interruption.**Business interruption<br>insurance shall be maintained in amounts of not less than twelve (12) months gross revenues income from the Mortgaged Premises. | | --- | --- | | E. | Other. Such other insurance as the Bank shall reasonably request from time to time, in such<br>amounts and in such form as shall be satisfactory to the Bank in the reasonable exercise of its discretion, including but not limited<br>to: | | --- | --- |
(i) Earthquake, collapse due to faulty construction or design error, collapse due to weight of ice, sleet or snow;
(ii) Loss due to boiler and sprinkler damage;
(iii) Contingent liability from operation of any building loss pertaining to zoning and building code non-conforming property; and
(iv) If alcoholic beverages are permitted and/or served on the Mortgaged Premises, full liquor liability insurance coverage in amounts and with companies satisfactory to the Bank.
| F. | General Insurance Requirements.All insurance under this Section (i) shall be written<br>by an insurance carrier licensed or otherwise authorized to transact business in the State of Florida and in the location of the Collateral<br>having no less than a general policyholders' rating "A" in Best's Key Rating Guide, (ii) shall be for the benefit of and,<br>except for liability policies, payable in case of loss to the Bank, its successors and assigns, as mortgagee and lender loss payable and<br>to the Borrower, as its interest may appear, (iii) in the case of liability policies, shall name the Bank as an "Additional<br>Insured" and (iv) shall contain a provision that it shall not be canceled or modified without at least thirty (30) days' prior<br>written notice to the Bank (10 days for non-payment); and the Borrower will deliver to the Bank, at any time upon its request, all insurance<br>policies or memoranda thereof and will deliver to the Bank new policies or memoranda thereof for any insurance about to expire at least<br>twenty (20) days' prior to such expiration. Notwithstanding anything contained herein to the contrary, if the terms and provisions of<br>the Lease obligate the Operating Company to procure or maintain any or all of the insurance coverages described herein, the Borrower shall<br>not also be obligated to maintain such insurance coverage for so long as the Operating Company procures and maintains the coverages on<br>the same terms therein described. |
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| --- | | G**.** | **Temporary Binder.**The Borrower<br>shall provide at or prior to the Closing Date Required Certificates the following certificates: Liability (Accord 25); Property &<br>Business Interruption (Accord 28); and a Temporary Binder (Accord 75).The Temporary Binder is required due to the disclaimer language<br>contained in the Accord 28. As the Mortgagee cannot be added to the policy until after Closing, the Temporary Binder is required to show<br>that that the Bank is insured in the interim. A copy of the Declarations Page & Schedule of Values from the actual policy, showing<br>that the Bank has been added to the policy, is required within 45 days of the Closing Date. | | --- | --- |
5.2 Damage/Destruction. In the event of damage to or destruction of all or any part of the Collateral, or taking of all or any part of the Mortgaged Premises by eminent domain, the parties hereto shall cooperate in order to recover the proceeds of insurance or the awards of damages with the Borrower to have primary responsibility for such recovery, subject to the approval of the Bank, which approval shall not be unreasonably withheld. Any proceeds of insurance or eminent domain award shall be paid to the Bank to the extent of all outstanding amounts due the Bank under this Loan Agreement and the Note and be applied as set forth in the Mortgage.
ARTICLE VI: FINANCIAL REPORTING AND PERFORMANCE COVENANTS
6.1 FinancialReporting. The Borrower shall keep books of account in accordance with GAAP and shall furnish the Bank with the following:
| A. | Audited financial statements of the Borrower and the Guarantor within one hundred twenty (120) days after<br>the close of each fiscal year. |
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| B. | Copies of the Borrower’s annual income tax returns within one hundred twenty (120) days after the<br>close of each fiscal year. if any party files an extension of time to file its income tax return, a copy of the extension shall be delivered<br>to the Bank within fifteen (15) days of filing. If on extension, the Borrower shall provide an internally-prepared profit and loss statement<br>on or before April 30 of that year. Thereafter, a copy of the tax return shall be delivered to the Bank within fifteen (15) days<br>of filing, but in no event later than five (5) days after the last possible filing date. |
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| --- | | C. | Borrower will provide the Bank with (i) all quality assurance and other reports conducted and prepared<br>by the Franchisor within 30 days of receipt by the Operating Company or the Borrower and (ii) all STR Reports on a quarterly basis<br>within 30 days of each calendar quarter end. | | --- | --- | | E. | Such additional customary and reasonable financial statements and other supporting information from time to time reasonably requested<br>by the Bank which the Borrower or Guarantors, as the case may be, shall deliver to the Bank within a reasonable time of its request. | | --- | --- |
6.2 FinancialPerformance. The Borrower will maintain the following financial covenants:
| A. | During the term of the Loan, the Borrower shall maintain a minimum Global Debt Service Coverage Ratio<br> – Annual Operations for Wilmington and St. Petersburg (“GDSCR”) of 1.25 to 1.0, to be computed and tested annually commencing<br>as of December 31, 2024 and based on the audited financial statements required to be submitted. If the Borrower fails to meet the<br>GDSCR covenant, it will have a period of thirty (30) days to cure same by providing the Bank with cash collateral into a Debt Service<br>Reserve account at the Bank in an amount equal to the shortfall in annual global net operating income and the net operating income necessary<br>to achieve the required GDSCR for such annual period. The cash collateral shall remain on deposit with the Bank until the required DSCR<br>has been met at the time of the next annual test, at which time any cash collateral remaining in the account will be returned to the Borrower. |
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| B. | The Borrower will maintain the Bank as its primary depository bank for the Hotel and will open and maintain<br>at the Bank a Mortgaged Premises operating account, and capital expenditure or other reserve, escrow and real estate tax accounts associated<br>with the Mortgaged Premises and the Hotel. |
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| C. | The Guarantor shall maintain a minimum Net Worth (defined as total assets minus total liabilities, both<br>as determined in accordance with GAAP) of $25,000,000 and evidence minimum liquidity of $750,000 at all times, as evidenced by the annual<br>the annual 10-K financial statements of the Guarantor. |
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| D. | The Borrower shall escrow for real estate taxes by depositing in an escrow account at the Bank one-twelfth<br>(1/12) of the estimated annual real estate taxes on each Payment Date. |
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| E. | The Borrower shall escrow an amount equal to 4% of gross income in a FF&E reserve account at the Bank<br>on each Payment Date. The 4% reserve shall be calculated based on the actual gross income generated at the Hotel over the previous calendar<br>year. The Bank shall allow Borrower to transfer such amounts required by Borrower from time to time to Borrower’s operating account,<br>provided that the Borrower provides reasonable evidence to Bank for FF & E improvement costs to the Hotel, if requested by Bank<br>in writing. |
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| --- | | F. | The Borrower will not incur any additional debt or permit any junior liens on the Collateral, except as<br>set forth herein without prior written approval of the Bank. | | --- | --- | | G. | Until the Loan shall have been paid in full, the Borrower shall not, without the Bank’s written<br>consent ,which consent will not be unreasonably withheld directly or indirectly, lend funds to, or make payments on account of, or transfer<br>any collateral for any part of, any loan or indebtedness ("Affiliated Creditor Debt") to its members, managers, officers, Subsidiaries<br>or Affiliates, (hereinafter collectively referred to as the "Affiliated Creditors"), and neither the Borrower nor Affiliated<br>Creditors shall otherwise take or permit any action prejudicial to or inconsistent with the Bank's priority position over the Affiliated<br>Creditors created by this Agreement. Scheduled payments of principal and interest pre-approved by the Bank may be made as long as no Event<br>of Default under Loan Documents has occurred but shall be subordinate in all respects to the Loan. Should any payment on account of or<br>any Collateral for any part of Affiliated Creditor Debt be received by the Affiliated Creditors except as allowed herein, such payment<br>or collateral shall be delivered forthwith to the Bank by the recipient for application to the Loan. Until so delivered, any such payment<br>or collateral shall be held by the recipient in trust for the Bank and shall not be commingled with other funds or property of the recipient. | | --- | --- |
ARTICLE VII: NEGATIVE COVENANTS
7.1 NegativeCovenants. The Borrower covenants and agrees that until payment is made in full of the Note and the performance of all of Borrower’s obligations hereunder are complete, the Borrower shall not unless the Bank otherwise consents in writing:
| A. | Incur or permit to exist any lien (in the case of a pre-judgment lien, a lien not dismissed, bonded or<br>discharged within ninety (90) days of Borrower’s receipt of notice of the same), mortgage, security interest, pledge, charge or<br>other encumbrance, against any of its property or assets, whether now owned or hereafter acquired, except for Permitted Encumbrances.<br>All Subordinated Debt, whether now existing or hereafter arising, shall be expressly subordinated to the Bank debt on terms reasonably<br>acceptable to the Bank. Scheduled interest payments on the debt evidencing the Permitted Encumbrances and Subordinated Debt shall be allowed<br>as long as no Event of Default has occurred. |
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| --- | | B. | Create or incur any indebtedness for borrowed money, become liable, either actually or contingently, in<br>respect of letters of credit or banker's acceptance or issue or sell any obligations of the Borrower, excluding, however, from the operation<br>of this covenant, the Note and all other Bank Obligations and ordinary trade payables incurred in the ordinary course of the Borrower’s<br>business. | | --- | --- | | C. | Except for the Lease and the Occupancy Agreements, sell, lease, pledge, transfer or otherwise dispose<br>of all or any of its assets (other than for value in the ordinary course of the Borrower’s business or other than assets that are<br>replaced with assets of approximately the same value) whether now owned or hereafter acquired except for liens or encumbrances required<br>or permitted hereby or by any Loan Document. | | --- | --- | | D. | Assume, guarantee, endorse or otherwise become liable upon the obligations of any person, firm or corporation<br>except by the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business. | | --- | --- | | E. | Merge or consolidate with or into any other entity; and, for the purposes of this Section, the acquisition<br>by the Borrower of all or substantially all of the assets, together with the assumption of all or substantially all of the obligations<br>and liabilities, of any other entity shall be deemed to be a consolidation of such other entity with the Borrower, without the prior consent<br>of the Bank. | | --- | --- | | F. | Purchase or otherwise acquire any shares of stock or obligations of, or make loans or advances to, (other<br>than deposits or payments to trade creditors in the ordinary course of the Borrower's business), without the prior consent of the Bank<br>which shall not be unreasonably withheld, invest in any individual, firm, entity or corporation, other than investments in direct obligations<br>of the United States of America or certificates of deposit (or similar investments) issued by the Bank. | | --- | --- | | G. | Enter into, or be a party to, any transaction with any Subsidiary or any Affiliate (including, without<br>limitation, transaction involving the purchase, sale or exchange of property, the rendering of services or the sale of stock) except in<br>the ordinary course of business pursuant to the reasonable requirements of the Borrower and upon fair and reasonable terms no less favorable<br>to the Borrower than Borrower would obtain in a comparable arm's-length transaction with a person other than a subsidiary or an affiliate. | | --- | --- |
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| --- | | H. | Make any change in the ownership of the Borrower resulting in fifty (50%) percent or more of the voting<br>membership interest in the Borrower becoming vested in any party or parties who is not an affiliate or subsidiary of the Guarantor without<br>the prior written approval of the Bank, which shall not be unreasonably withheld, conditioned or delayed. | | --- | --- | | I. | Change its name or conduct its business under any trade name or style other than as herein set forth or<br>change its place of business or the present location of the Collateral or a material portion of its assets or records relating thereto<br>from the addresses set forth herein, without the prior written consent of the Bank. | | --- | --- | | J. | Allow any business or activity to be conducted on the Mortgaged Premises that uses, manufactures, treats,<br>stores or disposes of any Hazardous Materials other than reasonably necessary cleaning supplies which are not otherwise prohibited. | | --- | --- |
ARTICLE VIII: EVENTS OF DEFAULT AND REMEDIES
8.1 Eventsof Default. The following events shall be “Events of Default” under this Agreement and the terms “Events of Default” or “Default” shall mean whenever they are used in this Agreement any one or more of the following events which continue beyond applicable notice, grace and cure periods:
| A. | Failure by the Borrower to make any loan payment of interest and/or principal or any other payment required<br>to be paid hereunder or under the Note or other Loan Documents within ten (10) days of its due date. |
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| B. | Intentional material inaccuracy or intentional incompleteness of any representation or warranty made by<br>or on behalf of the Borrower in connection with this transaction. |
| --- | --- |
| C. | The Borrower or Guarantor shall be involved in: |
| --- | --- |
| (i) | Commencement<br>of a voluntary case under Title 11 of the United States Code or the entry of an Order for Relief in any voluntary case commenced<br>under said Title 11; |
| --- | --- |
| (ii) | Admitting<br>or failing to deny the material allegations of a petition filed against it, commencing an<br>involuntary case under said Title 11, or if such petition or proceeding under said involuntary<br>petition is not dismissed within forty-five (45) days from the date on which it has been filed or instituted; |
| --- | --- |
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| --- | | (iii) | Seeking relief as a debtor under any applicable law of any jurisdiction relating to the liquidation or<br>reorganization of debtors, or to the modification or alteration of the rights of creditors, or by consenting to or acquiescing in such<br>relief; | | --- | --- | | (iv) | Making an assignment for the benefit of or entering into a composition with creditors, or appointing or<br>consenting to the appointment of a receiver or other custodian for all or a substantial part of its property, by the entry of an Order<br>of any Court of competent jurisdiction, including the Bankruptcy Court, finding it to be bankrupt or insolvent, or ordering or approving<br>its liquidation, reorganization or any modification or alteration of the rights of its creditors, or assuming custody of or appointing<br>a receiver or other custodian for all or a substantial part of its property. | | --- | --- | | D. | The acceleration of the maturity of any indebtedness of the Borrower for borrowed money in excess of $250,000<br>(whether or not evidenced by a note, bond, debenture or similar obligation and whether or not subordinated to the indebtedness hereunder<br>and the failure of the Borrower to pay the same in full) and which remains unpaid or uncured following the expiration of any grace or<br>cure period.. | | --- | --- | | E. | If all or any part of the legal or equitable ownership of all or any part of the Mortgaged Premises or<br>other Collateral shall be transferred or shall become vested in any person or persons other than the Borrower or an affiliate or subsidiary<br>of the Guarantor, or if the Mortgaged Premises or other Collateral, or any part thereof, is sold, conveyed, alienated, transferred or<br>otherwise voluntarily encumbered other than as expressly permitted by the Loan Documents. | | --- | --- | | F. | If insurance coverage is no longer provided to the Bank and said insurance is not reinstated or acquired<br>within seven (7) days after written notice of such failure has been given to the Borrower by Bank or the applicable insurance company. | | --- | --- | | G. | Any judgment, warrant, warrant of attachment, garnishment, or any similar process is entered or filed<br>against the Borrower or against any of the Borrower’s properties or assets in an amount greater than $250,000, and is not vacated,<br>bonded or stayed within sixty (60) days after the expiration of all applicable appeal periods. | | --- | --- | | H. | The occurrence and continuance of an Event of Default under the terms of the Loan Documents beyond any<br>applicable notice and cure periods. | | --- | --- |
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| --- | | I. | An Event of Default under any other Obligations of the Borrower to the Bank not cured within ten (10) days<br>after written notice of such Event of Default has been given to Borrower by Bank. | | --- | --- | | J. | Discontinuation, revocation or termination of the guaranty of the Guarantor. | | --- | --- | | K. | An event of default under, or a termination of, any of the Hotel Documents not cured within ten (10) days<br>after written notice of such event has been given to Borrower by Bank or any party to the applicable Hotel Documents. | | --- | --- | | L. | An event of default by the Borrower under the Lease not cured within ten (10) days after written<br>notice of such default has been given to the Borrower by the Bank or any party to the Lease. | | --- | --- | | M. | The transfer of the controlling interest in the Borrower without the prior written consent of the Bank.<br>For purposes hereof, a transfer of fifty (50%) percent or more of the voting membership interest in the Borrower to a party other than<br>an affiliate or subsidiary of the Guarantor shall constitute a transfer of the controlling interest. | | --- | --- | | N. | The Borrower shall dissolve or liquidate or be dissolved or liquidated or cease to legally exist, or merge<br>or consolidate or be merged or consolidated with or into any other business entity. | | --- | --- | | O. | An Event of Default under the Wilmington Loan continuing beyond applicable notice and cure periods. | | --- | --- | | P. | Failure by the Borrower to observe or perform any other covenant, condition, or agreement, on its part<br>to be observed or performed in this Agreement or any of the Loan Documents, for a period of thirty (30) days after written notice of such<br>failure has been given to the Borrower, provided however, if such failure is of a nature that it cannot in the exercise of reasonable<br>diligence be cured within said thirty (30) days, the Borrower shall have such additional time as is reasonably necessary (not to exceed<br>an additional 60 days) to cure said failure provided that the Borrower has commenced such cure within said thirty (30) days and thereafter<br>diligently prosecutes the same to completion. | | --- | --- |
8.2 Remedies. Whenever any uncured Event of Default under this Agreement shall have happened, the Bank may:
| A. | By notice in writing to the Borrower, declare all loan payments of principal, accrued interest, and other<br>amounts payable hereunder and pursuant to the Note to be immediately due and payable whereupon the same shall become immediately due and<br>payable without presentation, demand, protest, or other notice of dishonor of any kind, all of which are hereby expressly waived. |
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| --- | | B. | Adjust the interest rate to the Default Rate. | | --- | --- | | C. | In the Bank's sole and absolute discretion, but subject to the provisions of applicable law: (i) enter<br>upon the Mortgaged Premises and employ watchmen to protect the Mortgaged Premises, all at the risk, cost and expense of the Borrower,<br>and consent to, and authorization for, such entry being hereby irrevocably given by the Borrower; (ii) assume any contracts made<br>by the Borrower in any way relating to the Mortgaged Premises and take over and use all or any part of the labor, materials, supplies<br>and equipment contracted for by the Borrower, whether or not previously incorporated into the Mortgaged Premises; (iii) pay, settle<br>or compromise all bills or claims which may become liens against the Collateral, and (iv) take or refrain from taking such action<br>hereunder as the Bank in its commercially reasonable discretion may from time to time determine. The Borrower shall be liable to the Bank<br>for all sums reasonably paid or incurred pursuant to the provisions of this Section or otherwise, and all reasonable payments made<br>or liabilities incurred by the Bank hereunder of any kind whatsoever shall be paid by the Borrower to the Bank upon demand with interest<br>at the rate as provided in the Note from the date of payment by the Bank to the date of payment to the Bank and shall be secured by the<br>Collateral to the extent permitted by applicable laws. For the purpose of exercising the rights granted hereunder, the Borrower hereby<br>irrevocably constitutes and appoints the Bank its true and lawful attorney in fact to execute, acknowledge and deliver any instruments<br>and to do and perform any acts in the name and on behalf of the Borrower. | | --- | --- | | D. | Bring suit on the Loan Documents and/or foreclose the Mortgage or any of the Collateral Documents granted<br>in favor of the Bank in any manner available under applicable law or otherwise. Enforce the provisions of this Agreement by legal proceedings<br>for the specific performance of any covenant or agreement contained herein, or for the enforcement of any other appropriate, legal or<br>equitable remedy, and may recover damages caused by any breach by the Borrower of the provisions of this Agreement, including court costs,<br>reasonable attorney’s fees, and other reasonable costs and expenses incurred in enforcing the obligations of this Agreement or the<br>Loan Documents referred to above. | | --- | --- | | E. | To the extent Borrower could legally do so, use all trademarks, service marks, trade names, trade styles,<br>logos, goodwill, trade secrets, franchises, licenses and patents which the Borrower now has or may hereafter acquire with respect to the<br>Mortgaged Premises. | | --- | --- |
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| --- | | F. | Exercise any other remedies provided by this Agreement, the Note, the Mortgage and any other document<br>contemplated therein, or provided by applicable law or in equity, all of which shall be cumulative and may be exercised singularly or<br>concurrently. | | --- | --- |
8.3 Reimbursement. The Borrower shall reimburse the Bank for any actual and reasonable out of pocket cost incurred by the Bank, including reasonable attorneys’ fees in connection with the collection and enforcement of the provisions of this Agreement and the Loan Documents.
8.4 Set-Off. Any and all deposits or other sums at any time credited by or due from the Bank to and all securities or other property in possession of the Bank belonging to the Borrower are and shall be subject to a security interest in favor of the Bank to secure payment of the Note and performance of the obligations pursuant to this Agreement and the payment and performance of any and all other liabilities and obligations, direct or indirect, absolute or contingent, due or to become due, or that may hereafter be contracted of the Borrower. Upon any of the events specified hereof, the Bank may sell or dispose of any or all of said securities or other property and may exercise any and all of the rights accorded the Bank by the Uniform Commercial Code in effect in the State of Florida. The provisions of this paragraph are cumulative to and not exclusive of any other rights that the Bank has with respect to such deposits, sums, securities, or other property under other agreements or applicable principles of law.
8.5 DelayNot Waiver. No delay or omission of the Bank in exercising any right or remedy hereunder shall constitute a waiver of any such right or remedy. A waiver on one occasion shall not operate as a bar to or waiver of any right or remedy on any future occasions.
ARTICLE IX: WAIVERS
9.1 GeneralWaivers. Borrower hereby waives presentment, notice of dishonor, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to this Agreement, the Note and Loan Documents and any Collateral now or hereafter securing the same, Borrower assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of any collateral now or hereafter securing the Note and Loan Documents, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromising or adjusting thereof, all in such manner and at such time or times as the Bank may deem advisable. The Bank shall have no duty as to the collection or protection of any Collateral now or hereafter securing the Note and Loan Documents or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining thereto beyond the safe custody thereof. The Bank may exercise its rights with respect to any Collateral without resorting or regard to other Collateral now or hereafter securing the Note and Loan Documents or sources of reimbursement for liability. The Bank shall not be deemed to have waived any of its rights upon or under any document or agreement relating to the Obligations of the Borrower or any Collateral now or hereafter securing any such Obligations unless such waiver is in writing and signed by the Bank. No delay or omission on the part of the Bank in exercising any right shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to or waiver of any right on any future occasion. The Bank may revoke any permission or waiver previously granted to Borrower, such revocation shall be effective when given in writing. All rights and remedies of the Bank with respect to this Agreement, the Note, the Loan Documents or any Collateral now or hereafter securing the same, whether evidenced hereby or by any other instrument or document, shall be cumulative and may be exercised singularly or concurrently.
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9.2 JuryTrial Waiver. THE BANK AND THE BORROWER ACKNOWLEDGE THAT EACH HAS BEEN REPRESENTED BY COUNSEL AND THAT THIS DOCUMENT WAS AVAILABLE FOR REVIEW AND NEGOTIATION PRIOR TO ITS EXECUTION. THE BORROWER HEREBY AGREES THAT ALL OF BANK'S RIGHTS WERE THE RESULT OF NEGOTIATIONS BETWEEN THE BANK AND THE BORROWER AND WERE INDUCED IN A MATERIAL RESPECT BY THE BENEFITS GRANTED TO THE BORROWER HEREUNDER. IN THIS CONTEXT, THE BORROWER AND THE BANK AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN TORT, AT LAW OR IN EQUITY, AS TO ANY AND ALL MATTERS AND ISSUES WHICH MAY ARISE HEREFROM OR FROM ANY OTHER DOCUMENT, LETTER OR AGREEMENT EXECUTED IN CONJUNCTION HEREWITH, WHETHER DIRECTLY OR INDIRECTLY, INCLUDING WITHOUT LIMITATION, COUNTERCLAIMS, IF ANY. NO OFFICER OF THE BANK HAS AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION FOLLOWING THE EXECUTION OF THIS AGREEMENT.
ARTIVLE X: ADDITIONAL PROVISIONS
10.1 Pre-ClosingSubmittals. The Borrower shall provide to the Bank, prior to the closing hereof, the following:
| A. | Taxes. Reasonable evidence that all past and current taxes or payments in lieu thereof, and assessments<br>applicable to the Mortgaged Premises or the Collateral or payable by the Borrower have been paid in full. |
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| B. | Authority. Evidence of the Borrower’s authority to enter into, and current compliance with,<br>all the terms of the Loan Documents. |
| --- | --- |
| C. | Opinions. The opinion letter of the Borrower’s counsel dated as of the date of closing as<br>to due authorization, execution and enforceability of all loan documents and as to such other matters required by the Bank and its counsel.<br>Said opinion shall also certify that to the best of said counsel's knowledge, there are no actions, suits or other proceedings pending<br>or threatened against or otherwise affecting the Borrower and such other reasonable and customary opinions required of Borrower’s<br>counsel by the Bank’s counsel. |
| --- | --- |
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| --- | | D. | Title Policy. There must be delivered to the Bank an ALTA Mortgagee Policy of Title Insurance in<br>the face amount of the Loan issued by a nationally recognized, responsible title insurance company acceptable to the Bank (the “Title<br>Insurance Company”) with standard exceptions deleted and subject only to other exceptions, if any, satisfactory to the Bank. All<br>endorsements to such policy required by the Bank or Bank counsel shall be provided with the policy, including comprehensive, land same<br>as survey, contiguity, access and entry, zoning, single tax parcel, waiver of arbitration, variable rate, authentication, location and<br>other required endorsements. | | --- | --- | | E. | Zoning. Either an opinion letter of Borrower’s counsel or letter from the municipal zoning<br>official as to compliance of the Mortgaged Premises and the Improvements thereon with all applicable Building and Zoning Laws or a Zoning-Completed<br>Structure Title Insurance endorsement. | | --- | --- | | F. | Appraisal. An appraisal ordered by and addressed to the Bank evidencing an “as is”<br>appraised value of both the Mortgaged Premises and the Wilmington Premises resulting in a combined loan to value ratio of no greater than<br>65%, which appraisal shall be paid for by the Borrower. | | --- | --- | | G. | PCR. An engineering property condition report by a firm and in a form reasonably acceptable<br>to the Bank, at Borrower’s expense. | | --- | --- | | H. | Environmental Reports. An Environmental Report satisfactory to the Bank, at Borrower’s expense. | | --- | --- | | I. | Lien Search Reports. A report satisfactory to the Bank as to the existence and status of any outstanding<br>UCC-1 financing statements, Federal and State tax liens, litigation, unsatisfied judgments or bankruptcy filings involving the Borrower<br>or the Guarantor. | | --- | --- | | J. | Insurance Certificates. Updated insurance certificates as required herein. | | --- | --- |
10.2 **Documentsof Title.**All documents of title to Collateral shall be subject to approval by the Bank’s legal counsel.
10.3 Maintenanceof Collateral. The Borrower shall maintain or cause to be maintained all Collateral in good repair and working order, ordinary wear and tear excepted.
10.4 ConditionsExclusive. All conditions of the obligation of the Bank to make advances hereunder are imposed exclusively for the benefit of the Bank and its assigns and no other person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that the Bank will refuse to make advances in the absence of strict compliance with any or all thereof and no person shall, under any circumstances, be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by the Bank at any time if, in its sole but commercially reasonable discretion, it deems it advisable to do so; provided, however, that a waiver on one occasion shall not constitute a waiver of the Bank’s rights at any other time hereunder.
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10.5 LegalFees and Expenses. Any and all customary and reasonable out of pocket legal fees of outside counsel incurred by the Bank in connection with this loan, including reasonable attorneys’ fees/costs for the title examination, review of documents, preparation of documents, recording expenses and any other expenses normally incident to a commercial loan transaction shall be paid by the Borrower. In addition, the Borrower will be responsible for the payment of all reasonable costs and expenses of collection, including attorneys’ fees/costs incurred or paid by the Bank in enforcing this Loan Agreement, the Note, the Mortgage or any other Loan Document contemplated herein or therein.
10.6 Prohibitionof Assignment. This Agreement shall not be assigned or transferred by the Borrower without the prior written consent of the Bank.
10.7 Participation. The Bank reserves the right to participate this loan in whole or in part, provided there is no additional cost to the Borrower.
10.8 Notice. Any notice under this Agreement shall be in writing and shall be deemed delivered if (i) mailed certified mail, return receipt requested or (ii) by nationally recognized overnight delivery service, if to the Bank, to the offices of the Bank at 245 Long Hill Road, Middletown, Connecticut 06457 to the attention of CRE Department; if to the Borrower or the Guarantors in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920. Any such notice shall be conclusively deemed to have been received three days after the day it was sent in accordance with subsection (i) or the next Business Day after the day it was sent in accordance with subsection (ii) above or such later date as the nationally recognized overnight delivery service confirms delivery, or on the date delivered by hand.
10.9 Invalidity. In the event that any provision of this Agreement or any of the Loan Documents shall be held to be invalid in any circumstance, such invalidity shall not affect any other provision or circumstance in each remaining term and provision of this Agreement and Loan Documents, and each shall be valid and shall be enforceable to the extent permitted by law.
10.10 BindingEffect. This Agreement shall inure to the benefit of and shall be binding upon the Bank, the Borrower, and their respective successors, assigns, and legal representatives; subject, however, to the specific provisions hereof.
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10.11 Amendment. This Agreement may be amended only by written Agreement executed by the Bank and the Borrower.
10.12 GoverningLaw. This Agreement and all other documents contemplated hereby shall be governed and construed in accordance with the laws of the State of Florida. The Borrower agrees that the execution of this Agreement and the Loan Documents and performance of the Borrower's obligations hereunder and thereunder shall be deemed to have both a Connecticut and Florida situs and Borrower shall be subject to the personal jurisdiction of the Courts of the State of Connecticut, the State of Florida and the Federal Courts located therein with respect to any action the Bank or its successors or assigns may commence hereunder or thereunder. Accordingly, the Borrower hereby specifically and irrevocably consents to the jurisdiction of the Courts of the State of Connecticut, the State of Florida and the Federal Courts located therein with respect to all matters concerning this Agreement, the Loan Documents, the Note or the enforcement of any of the foregoing, except to the extent of any conflicting provisions of the laws of the state where the Mortgaged Premises or any other Collateral is located which govern the enforcement of any of the foregoing, in which case, the laws of such state shall control. The Borrower, in connection with any proceeding commenced as aforesaid, hereby consents to service of process being made upon them by mail or otherwise at the address set forth in Section 10.8 hereof.
10.13 **Captions.**The captions or headings in this Agreement are for convenience only and in no way define, limit, or describe the scope or the intent of any provisions of this Agreement.
10.14 Post-ClosingCompliance. The Borrower shall, at any time and from time to time, execute and deliver such further instruments or take such further action as may be reasonably requested by the Bank in each case further and more perfectly to carry out the provisions of this Agreement; provided, however, nothing contained herein shall require the Borrower to sign or enter into any document or instrument or take any action which increases the obligations or liabilities of Borrower or Guarantor. In addition, the Borrower shall allow the Bank, by or through any of its officers, agents, attorneys, or accountants designated by it, for the purpose of ascertaining whether or not each and every provision hereof and of any related agreement, instrument or document is being performed and for the purpose of examining the assets of the Borrower and the records relating thereto, to enter the offices of the Borrower to examine or inspect books and records or extracts therefrom relating to the Mortgaged Premises and to make copies thereof and to discuss the affairs, finances and accounts thereof with the Borrower and its accountants, all at such reasonable times and as often as the Bank may reasonably request, upon providing Borrower advanced written notice of not less than forty-eight (48) hours.
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10.15 PatriotAct. In order to comply with the USA Patriot Act and Federal Regulation, Liberty Bank is required to notify you of the following important information when you open a new account:
TO HELP THE GOVERNMENT FIGHT THE FUNDING OF TERRORISM AND MONEY LAUNDERING ACTIVITIES, FEDERAL LAW REQUIRES ALL FINANCIAL INSTITUTIONS TO OBTAIN, VERIFY AND RECORD INFORMATION THAT IDENTIFIES EACH PERSON WHO OPENS AN ACCOUNT. WHAT THIS MEANS TO YOU: WHEN YOU OPEN AN ACCOUNT, WE WILL ASK FOR YOUR NAME, ADDRESS, (POSTAL OFFICE BOXES ARE UNACCEPTABLE), DATE OF BIRTH, TAXPAYER IDENTIFICATION NUMBER AND OTHER INFORMATION THAT WILL ALLOW US TO IDENTIFY YOU. WE MAY ALSO ASK TO SEE YOUR DRIVER’S LICENSE OR OTHER IDENTIFYING DOCUMENTS ON BEHALF OF A BUSINESS ENTITY, DOCUMENTS RELATING TO THE BUSINESS MAY ALSO BE REQUESTED. WE MAY ALSO USE NON-DOCUMENTARY METHODS TO VERIFY YOUR IDENTITY.
10.16 BeneficialOwnership Regulation. Effective May 11, 2018, Bank Secrecy Act regulation issued by the Financial Crime Enforcement Network (FinCEN) requires all legal entities to certify beneficial owner(s) and a control person by completing a Certification of Beneficial Ownership and Control Person form with every new account opened or as requested by the financial institutions.
10.17 PermittedTransfers. Notwithstanding anything contained herein or in any of the Loan Documents to the contrary, in all events, the trading, transfer, sale, pledge, assignment or conveyance of any shares in the Guarantor is allowed without any notice to or consent by the Bank provided the applicable liquidity and net worth covenants remain in compliance. In the event of any conflict between this Section 10.17 and any provisions of any other Loan Document, this Section 10.17 shall prevail and be binding on the parties.
[Remainder of page intentionally left blank. Signatures on following pages]
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EXECUTED as a sealed instrument as of the date and year first above written.
| PHR STPFL, LLC, | |||
|---|---|---|---|
| /s/ Ryan Stark | By: | /s/ James A. Procaccianti | |
| Witness | Name: James A. Procaccianti | ||
| Title: Manager | |||
| STATE OF FLORIDA | ) | ||
| ) | |||
| COUNTY OF PALM BEACH | ) |
On this the 24th day of April, 2024, before me, the undersigned officer, personally appeared James A. Procaccianti, known to me (or satisfactorily proven) to be the Manager of PHR STPFL, LLC a Delaware limited liability company and acknowledged that he executed the foregoing instrument for the purposes therein contained as his free act and deed and the free act and deed of said limited liability company.
In Witness Whereof I hereunto set my hand.
| /s/<br>Lynn Critides Horne |
|---|
| Notary Public/My Commission Expires:<br> 4/30/27 |
My Commission Expires: 4/30/27
[Signatures continue on following page]
Loan Agreement - Signature Page
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EXECUTED as a sealed instrument as of the date and year first above written.
| LIBERTY BANK | ||
|---|---|---|
| /s/ Rebecca Giles | By: | /s/ Joe Premont |
| Witness | Name: Joe Premont | |
| Title: First Vice President Commercial Real<br> Estate |
Loan Agreement - Signature Page
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Exhibit 10.2
LOAN AGREEMENT
BETWEEN
LIBERTY BANK
AND
PHR WNC, LLC
THIS LOAN AGREEMENT (hereinafter referred to as the "Agreement") made and entered into as of the 26th day of April, 2024, by and between LIBERTY BANK, a mutual bank organized and existing under the laws of the State of Connecticut, having its principal place of business at 245 Long Hill Road, Middletown, Connecticut 06457 (hereinafter referred to as the "Bank") and PHR WNC, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Bank has reviewed the Borrower' proposals for a credit facility (the "Loan"), the purposes of which is to refinance the existing first mortgage on the Borrower’s property at 1014 Ashes Drive, Wilmington, North Carolina upon which is located a 120 room SpringHill Suites by Marriot Wilmington Mayfaire hotel facility (the "Hotel"); and
WHEREAS, the Bank has approved the loan request and is willing to make the loan on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the respective representations and agreements hereinafter contained, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I: DEFINITIONS
Unless otherwise defined or specified herein, all accounting terms shall be construed and all accounting determinations shall be made in accordance with GAAP. In addition to terms that are defined elsewhere in this Agreement, the following terms shall be defined as follows:
1.1 Affiliatemeans any person or entity (1) which directly or indirectly through one or more intermediaries through one or more intermediaries controls, or is controlled by, or is under common control with another entity or person; (2) which directly or indirectly beneficially owns or holds twenty percent (20%) or more of any class of voting stock of the other entity or person or (3) twenty percent (20%) or more of the voting stock of which is directly or indirectly beneficially owned or held by the other entity or person. The term "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract, or otherwise.
1.2 Agreement means this Loan Agreement.
1.3 Anti-TerrorismLaws means any statute, treaty, law (including common law), ordinance, regulation, rule, order, opinion, release, injunction, writ, decree or award of any Government Authority relating to terrorism or money laundering, including Executive Order No. 13224 (on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced and as may be in effect from time to time) and the USA Patriot Act.
1.4 BorrowerAffiliate means PHR STPFL, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920.
1.5 Building,Zoning and Public Safety Laws means in all material respects, all applicable zoning, land use, energy use, building, public, health and safety codes, laws, regulations and ordinances applicable to the Borrower, the Collateral and/or the use and occupancy thereof.
1.6BusinessDay means any day other than a Saturday, Sunday, or other day on which commercial banks in Connecticut are authorized or required to close under the laws of the State of Connecticut, on which the Bank is open and conducting its customary banking transactions. In the event that a relevant date hereunder would otherwise fall on a day that is not a Business Day, such date will be the date that is the first following day that is a Business Day.
1.7 ClosingDate means the later to occur of (i) the date of this Agreement or (ii) the date the Bank actually funds the Loan.
1.8Collateral means the (i) Borrower’s right, title and interest to the Mortgaged Premises, Leases, Rents and Revenues, Hotel Documents, Operating Contracts and Permits, Operating Lease, Personal Property, and related assets and other security, insurance policies or other interests granted to the Bank to secure the Loan and (ii) the Borrower’s right, title and interest, by assignment, of the Operating Company’s interests in the Leases, Rents and Revenues, Hotel Documents, Operating Contracts and Permits, Operating Lease, Personal Property, and related assets and other security.
1.9 CollateralDocuments means all documents evidencing the Collateral and all other instruments and documents securing the Loan.
1.10 CommitmentLetter means that certain letter dated ________, 2024 of the Bank to the Borrower, by which the Bank committed to provide certain credit facilities to the Borrower on terms and conditions set forth therein.
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1.11 DefaultCondition means the existence of any uncured Event of Default (as defined herein) or any fact or circumstance which with the passage of time, giving of notice, or both, would constitute an Event of Default.
1.12 DefaultRate means a rate of interest which is five (5.0) percentage points per annum above the interest rate otherwise in effect with respect to the Loan.
1.13 EBITDA shall mean earnings before interest, taxes, depreciation, amortization and non-cash charges.
1.14 EnvironmentalLaws means all applicable federal, state and local statutes, codes, laws, regulations, ordinances, orders and decrees pertaining to air pollution, water pollution, human health waste, transportation or disposal of Hazardous Materials, (including asbestos and asbestos-containing materials, lead paint, flammable materials, explosives, radioactive substances, polychlorinated biphenyls (“PCB’s”), urea formaldehyde foam insulation (“UFFI”), other carcinogens, oil and other petroleum products, other pollutants or contaminants that are detrimental to the environment, and any other hazardous or toxic substances and materials, wastes, or other environmental matters and substances which are defined, determined, or identified as such under applicable present or future federal, state, or local laws, rules, codes, or regulations or any judicial or administrative interpretation thereof, including but not limited to, the Comprehensive Environmental Response Compensation and Liability Act of 1980, ("CERCLA") as amended 42 U.S.C. Sections 9601, et seq., as amended, including, without limitation, by the Superfund Amendments and Reauthorization Act of 1986, ("SARA"); the Hazardous Materials Transportation Act as amended, 49 U.S.C. Section 1801, et seq., the Toxic Substances Control Act, the Resource Conservation and Recovery Act, as amended by SARA; the Clean Water Act; and any comparable or similar laws of the State of North Carolina including but not limited to the North Carolina Environmental Policy Act of 1971, N.C.G.S Sections 113A-1, et seq., the North Carolina Oil Pollution and Hazardous Substances Control Act of 1978, N.C.G.S Sections 143-215.75, et seq., and in the regulations adopted and publications promulgated pursuant thereto or as defined thereby.
1.15 EnvironmentalReports means a report from an environmental engineer satisfactory to the Bank evidencing the absence of any Hazardous Materials at the Mortgaged Premises.
1.16 ERISA means the Employment Retirement Income Security Act of 1974, as amended from time to time and the regulations promulgated thereunder.
1.17 Eventsof Default shall have the meaning given such term in Article VIII of this Agreement.
1.18 FHLBB means the Federal Home Loan Bank of Boston.
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1.19 GAAP means generally accepted accounting principles in the United States of America, as from time to time in effect; provided, however, that for purposes of compliance with Article VI of this Agreement and the related definitions, GAAP means such principles as in effect on the date of the preparation and delivery of the financial statements described in Article 6.1 and consistently followed, without giving effect to any subsequent changes other than changes consented to in writing by the Bank.
1.20 GlobalDebt Service Coverage Ratio – Annual Operations for Wilmington and St. Petersburg ("GDSCR") shall mean EBITDA plus 4% FF&E reserve for both the Wilmington Premises and the St. Petersburg Premises divided by the annual debt service for both the Wilmington Premises and the St. Petersburg Premises.
1.21 GovernmentAuthorities means any federal, state, county or municipal entity or political subdivision or department or agency thereof having jurisdiction over any aspect of the Mortgaged Premise or the Hotel.
1.22 Guarantor means Procaccianti Hotel REIT, Inc., a Maryland corporation with an address at c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920.
1.23HazardousMaterials means any flammable explosives, radioactive materials, hazardous wastes, hazardous or toxic substances, or related or similar materials, asbestos or any material containing asbestos, or any other substance or material as defined by any Environmental Laws and in the regulations adopted and publications promulgated pursuant thereto or as defined thereby.
1.24 Hotelmeans the 120-room SpringHill Suites by Marriott hotel facility located upon the Mortgaged Premises together with all improvements and amenities located thereon or used in connection therewith.
1.25 HotelDocuments means the (i) Hotel Franchise Agreement, (ii) the Management Agreement (iii) all Operating Contracts and Permits and (iv) the Occupancy Agreements.
1.26 HotelFranchise Agreement means that certain SpringHill Suites by Marriott Relicensing Franchise Agreement dated May 24, 2017 by an between Marriott International, Inc. and the Borrower and all ancillary documents and agreements related thereto, which Agreement was assigned to the Operating Company pursuant to that certain Assignment and Assumption of Franchise Documents dated March 29, 2018 Franchise Agreement dated any license or other franchise agreement or license with a hotel franchisor and/or hotel system provider.
1.27 Improvements means the Hotel along with all permanent improvements and betterments presently existing, and to be rehabilitated, renovated and constructed on and made and added to the Mortgaged Premises, as well as improvements reasonably required in order to keep said Mortgaged Premises and the Hotel in good order and repair.
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1.28 Leases shall mean all leases, subleases, agreements (oral or written) or other documents evidencing grants of possessory interests with respect to, or the right to use and occupy, the Mortgaged Premises, including but not limited to the Operating Lease, excluding any customary group or event business agreements and transient occupancy arrangements with Hotel guests.
1.29Loan mean the credit facility provided by the Lender to the Borrower hereunder as described in this Agreement and the Loan Documents.
1.30 LoanDocuments means this Agreement, the Note, the Mortgage, the Pledge and Security Agreement, other assignments and documents evidencing the Collateral and all other documents executed in connection herewith and therewith.
1.31 ManagementAgreement. Any management contract between the Operating Company and any manager of the Hotel related to the management and operation of the Hotel, including but not limited to that certain Management Agreement dated March 29, 2018 by and between the Operating Company and PHR Wilmington Hotel Manager, LLC.
1.32 Mortgage means that certain Deed of Trust, Security Agreement and Assignment of Leases, Rents and Revenues executed by Borrower in favor of the Bank and delivered in connection herewith as the same may be amended, modified, extended, renewed or restated.
1.33 MortgagedPremises means the real estate located at 1014 Ashes Drive, Wilmington, North Carolina and all Improvements thereon (also sometimes referred to as the “Wilmington Premises”).
1.34 Note means the commercial promissory note executed and delivered by the Borrower in accordance with Article III which evidence the Loan.
1.35 Obligations means Borrower’s obligations to the Bank or any Affiliate of the Bank for (a) payment of all principal, interest and other amounts and performance of every obligation and agreement of Borrower pursuant to the terms of the Note and Loan Documents; (b) performance of all of its obligations under the Loan Documents; and (c) all other amounts, in each case, liquidated or unliquidated, owing any time, of each and every kind, nature and description, arising under the Loan Documents or otherwise, and whether secured or unsecured, direct or indirect (that is, whether the same are due directly by Borrower to the Bank or any Affiliate thereof; or are due indirectly by Borrower to the Bank, or Affiliate thereof as endorser, guarantor or other surety, or as borrower of obligations due third persons which have been endorsed or assigned to Bank or any Affiliate thereof, or otherwise), absolute or contingent, due or to become due, now existing or hereafter arising or contracted. Any reference herein to indebtedness of the Borrower to the Bank shall include indebtedness to any Affiliate of the Bank and shall be considered part of the Obligations.
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1.36 OccupancyAgreements means all leases, subleases, licenses, franchises, concessions or grants of other possessory interests, tenancies, hotel occupancy agreements and any other agreements affecting the use, possession or occupancy of the Premises and the Hotel or any part thereof and all agreements (oral or written) or other documents evidencing, including agreements for hotel stays, guest room occupancy, use of conference rooms, restaurants, bars, banquet rooms or other public facilities and other occupancy agreements affecting the use, possession or occupancy of the Hotel, whether now or hereafter existing or entered into (including, without limitation, any use or occupancy arrangements created pursuant to Section 365(d) of the Bankruptcy Code or otherwise in connection with the commencement or continuance of any bankruptcy, reorganization, arrangement, insolvency, dissolution, receivership or similar proceedings, or any assignment for the benefit of creditors, in respect of any tenant or occupant of any portion of the Property) and all amendments, modifications, supplements, extensions or renewals thereof, whether now or hereafter existing and all amendments, modifications, supplements, extensions or renewals thereof.
1.37 OperatingCompany means PHR WNC OPCO SUB, LLC a Delaware limited liability company with an address at in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920.
1.38 OperatingContracts and Permits means all Hotel Documents as well as all other contracts and subcontracts, service agreements, Permits and other documents and agreements, including, without limitation, maintenance and service contracts, utility agreements and other necessary vendor contracts entered into by Borrower in connection with the operation of the Hotel.
1.39 OperatingLease means that certain Hotel Lease dated March 29, 2018 by and between the Borrower and the Operating Company whereby the Borrower leased the Premises to the Operating Company.
1.40 OwnerAgreement means that certain Owner Agreement dated March 29, 2018 by and between the Franchisor, the Operating Company and the Borrower
1.41 PermittedEncumbrances means (i) any and all encumbrances that have been approved by the Bank in writing prior to closing, (ii) the matters set forth in the title insurance policy required to be delivered to the Bank pursuant to this Agreement, (iii) liens for taxes, assessments, governmental charges, or mechanics' or other like liens, in each case which are not yet due and payable, and (iv) customary leases and purchase money financing arrangements for customary equipment and supplies used in connection with Hotel operations.
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1.42 Permits means any and all permits, approvals, licenses and other permissions required by any Government Authorities to enable and/or authorize the construction of the Improvements and completion, use and operation of the Project.
1.43 Person means any individual, partnership, corporation, trust, limited liability company or other entity.
1.44 PersonalProperty means all of Borrower' interest in and to all equipment, machinery, fixtures, inventory, goods, accessions, construction materials, building and other supplies, furnishings, televisions, objects of art, refrigerators, computers and computer equipment, housing keeping and other equipment, accounts, choses in action, contract rights, documents, instruments, chattel paper, reports, studies, professional or technical work product, shop drawings, surveys, soil studies, permits, licenses, approvals, warranties and general intangibles, located at, arising from, relating to, or used in connection with the Mortgaged Premises; all proceeds (including, without limitation, insurance and condemnation proceeds), as well as all interest earned thereon, paid for any damage done to the Mortgaged Premises or for any portion thereof appropriated or otherwise taken by any governmental authority, agency, or entity; all of Borrower' right, title and interest in and to any and all Leases and all Rents and Revenues, guarantees and other proceeds and benefits of such leases and other agreements, as well as any sales contracts (including any deposit funds paid thereunder), in each case relating to or arising from the Mortgaged Premises; all trade names, trademarks, telephone numbers, websites, domain names, social media accounts, goodwill, general intangibles and other similar property as well as all records and books of account, in each case relating to Borrower' ownership or operation of the Project; all of Borrower' right, title and interest in any insurance, tax, water, sewer or other escrows deposited with the Bank; any operating debt service, replacement, or other reserves relating to the Project and deposited with the Bank; any other escrows or reserves established for the Project; and any cash collateral deposited by the Borrower with the Bank.
1.45RelatedAgreements means the various agreements and documents as requested by the Bank, delivered or caused to be delivered by the Borrower to the Bank in connection with the Loan.
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1.46 Rentsand Revenues means all Hotel revenues, including guest room revenues, food, beverage and amenity revenues, restaurant, conference room and banquet revenues, resort or other fees for amenities, any other rental revenue, receipts, earnings, accounts, accounts receivable, or other revenues, income, reimbursements, and payments with respect to the aforesaid Premises, including, without limitation, fixed, additional and percentage receipts, and all operating expense reimbursements, reimbursements for increases in taxes, sums paid by guests or tenants to Borrower to reimburse Borrower for amounts originally paid or to be paid by Borrower or any of Borrower’s Affiliates or Subsidiaries for which such guests or tenants were liable, tax and operating expense pass-throughs for which a guest or tenants is solely liable, parking, maintenance, common area, tax, insurance, utility and service charges and contributions, proceeds of sale of electricity, gas, heating, air-conditioning and other utilities and services, deficiency payments and liquidated damages, and other benefits now or hereafter derived from any portion of the Premises or otherwise due and payable or to become due and payable as a result of any ownership, use, possession, occupancy or operation thereof and/or services rendered, goods provided and business conducted in connection therewith (including any payments received pursuant to Section 502(b) of the Bankruptcy Code or otherwise in arrangement, insolvency, dissolution, receivership or similar proceedings, or any assignment for the benefit of creditors, in respect of any guest, tenant or other occupants of any portion of the Premises and all claims as a creditor in connection with any of the foregoing) and all cash or security deposits (subject to the prior right of the parties making such deposits), advance rentals, and all deposits or payments of a similar nature relating thereto, now or hereafter, including during any period of redemption, derived from the Premises or any portion thereof and all proceeds from the cancellation, surrender, sale or other disposition of any Leases.
1.47 St.Petersburg Loan means that certain loan from the Bank to the Borrower Affiliate of even date herewith in the amount of $12,820,000.00 secured by a first mortgage on the St. Petersburg Property.
1.48 St.Petersburg Premises means the real estate located at 940 5th Avenue, St. Petersburg FL upon which is located a Staybridge Suites St. Petersburg Downtown hotel facility.
1.49 SubordinatedDebt means all indebtedness of the Borrower to any of its members, managers, affiliates and subsidiaries, which is required by the Bank to be subordinated to the Loans and the Collateral.
1.503 Subsidiary(ies) means with respect to any Borrower at any time, (i) any corporation more than fifty percent (50%) of whose voting stock is legally and beneficially owned by the Borrower or owned by a corporation more than fifty percent (50%) of whose voting stock is legally and beneficially owned by the Borrower; (ii) any trust of which a majority of the beneficial interest is at such time owned directly or indirectly, beneficially or of record, by the Borrower or one or more Subsidiaries of the Borrower; and (iii) any partnership, joint venture, limited liability company or other entity of which ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at such time owned directly or indirectly, beneficially or of record, by the Borrower or one or more Subsidiaries of the Borrower.
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1.51 TitlePolicy means that certain ALTA Mortgagee Policy of Title Insurance required to be provided at Closing by the Borrower at its expense insuring the lien of the Mortgage, subject only to exceptions, if any, satisfactory to the Bank, in the face amount of the Loan issued by a nationally recognized, responsible title insurance company acceptable to the Bank. All endorsements to such policies required by the Bank or Bank counsel shall be provided with the respective Title Policy, including a comprehensive endorsement, land same as survey endorsement, contiguity endorsement, access and entry endorsement, tax parcel endorsement, waiver of arbitration endorsement and such other endorsements and or affirmative insurance as the Bank may reasonably require.
ARTICLE II: REPRESENTATIONS AND WARRANTIES
2.1 Representationsand warranties. The Borrower makes the following representations and warranties as an inducement to the Bank to enter into this Agreement:
| A. | Organization and Authority. The Borrower (i) is, and will continue to be a limited liability<br>company, duly organized and validly existing in good standing under the laws of the State of Delaware; (ii) is qualified and in good<br>standing to do business in all jurisdictions in which it owns, leases or operates a business or property or the nature of the business<br>conducted by it makes such qualification necessary; (iii) has the power to execute and deliver the Loan Documents and to borrow,<br>repay and otherwise perform its obligations hereunder, and (iv) has all requisite permits, authorizations and licenses, without material<br>restrictions or limitations, to own, operate and lease its properties and to conduct the business in which it is presently engaged, all<br>of which are in full force and effect. |
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| B. | Suits, Proceedings. There are no suits or proceedings pending or to the knowledge of the Borrower<br>threatened against or affecting the Borrower or its property nor any proceedings involving the Borrower by or before Governmental Authorities<br>which bring into question the validity or enforceability of the Loan Documents and which, if determined adversely to the Borrower, would<br>have a materially adverse effect on the Borrower’s financial conditions or businesses or the ability of the Borrower to enter into<br>and carry out the terms and provisions of this Agreement. |
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| C. | Conflicts, Records. The execution, delivery, and performance of the Loan Documents will not conflict<br>with or result in any breach or contravention of, or the creation of any lien under, any indenture, agreement, lease, instrument or undertaking,<br>to which the Borrower may be a party or by which it may be bound. The Borrower will keep true and accurate records and books of account<br>with complete and accurate entries being made in accordance with applicable law and in accordance with GAAP. The consummation of the transactions<br>herein contemplated, the execution of all Loan Documents and the performance or observance of all of the Borrower’s obligations<br>hereunder all have been or will have been duly authorized and will not conflict with or result in a breach of any of the terms, conditions<br>or provisions of the Certificate of Organization and any applicable operating agreement of the Borrower. |
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| --- | | D. | Notice of Defaults. The Borrower shall promptly, upon becoming aware of the existence of any condition,<br>or event which constitutes an Event of Default hereunder, or any condition or event which upon notice or lapse of time or both will constitute<br>an Event of Default hereunder, or any threatened or pending litigation or administrative proceedings which could reasonably be expected<br>to have a material adverse effect on the financial condition of the Borrower, give written notice of the same to the Bank specifying the<br>nature thereof and the action proposed to be taken with respect thereto. | | --- | --- | | E. | Compliance with Laws. To the best of Borrower's actual knowledge, the proposed use and operation<br>of the Mortgaged Premises will, in all respects, comply with (i) Environmental Laws, (ii) all applicable public health and safety<br>codes, laws, regulations and ordinances (the "Public Safety Laws") and (iii) all applicable zoning, land use, energy use<br>and building codes, laws, regulations and ordnances (the “Building and Zoning Laws”). Except as disclosed to Bank and as set<br>forth in the Environmental Reports furnished to Bank, Borrower has no actual knowledge of any notices from Governmental Authorities of<br>any violations of any Environmental Laws, Building and Zoning Laws, Public Safety Laws or any other laws, ordinances, codes, requirements<br>or orders of any government instrumentality having jurisdiction over the Mortgaged Premises. The Borrower represents and warrants that<br>it knows of no condition existing upon the Mortgaged Premises which would subject the Mortgaged Premises to a lien pursuant to the Environmental<br>Laws. The Borrower agrees to indemnify and hold the Bank harmless from any and all liability, costs or damages actually suffered by the<br>Bank which are attributable to the Mortgaged Premises arising out of a claimed violation of the provisions of said Building and Zoning<br>Laws, the Environmental Laws or the Public Safety Laws. | | --- | --- | | F. | Hazardous Materials. To the best of Borrower's knowledge, neither the Borrower nor any entity which<br>is owned or controlled by the Borrower ever: | | --- | --- | | (i) | owned, occupied or operated a<br>site or vessel upon which any Hazardous Materials were or are disposed of, transported or stored (except if such storage<br>was or is in compliance with all laws, ordinances and regulations pertaining thereto); | | --- | --- | | (ii) | directly or indirectly transported<br>or arranged for transport of any Hazardous Materials (except if such transportation was or is in compliance<br>with all laws, ordinances and regulations pertaining thereto); | | --- | --- |
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| --- | | (iii) | has been, is or to the actual<br>present knowledge of the Borrower, will be involved in any other operations (except operations to be conducted in compliance<br>with all laws, ordinances and regulations pertaining thereto), which operations could lead to the imposition of liability under<br>any law on the Borrower; | | --- | --- | | (iv) | caused, suffered or knowingly<br>permitted to occur any condition which may cause a release or discharge of any Hazardous Materials at, upon, under or within<br>the Mortgaged Premises in violation of applicable laws, ordinances and regulations pertaining thereto ; | | --- | --- | | (v) | received written notification from any governmental agency of: any potential, known or threat of release<br>of any Hazardous Materials on or from any site owned, occupied or operated either by the Borrower or any entity for whose conduct the<br>Borrower is responsible or whose liability may result in a lien on the Mortgaged Premises; or written notification from any governmental<br>agency of the incurring of any expense or loss by such governmental agency, or by any other person or entity, in connection with the assessment,<br>containment, or removal of any release, or threat of release, of any Hazardous Materials from any such site. | | --- | --- | | G. | Enforcement Actions. The Borrower upon actual knowledge shall with commercially reasonable promptness<br>notify the Bank in writing of the following with respect to the Mortgaged Premises: (a) any enforcement, clean-up, removal or other<br>action instituted or threatened by any Government Authorities pursuant to any Environmental Laws, Public Safety Laws or Building and Zoning<br>Laws with respect to the Collateral and (b) any and all claims made or threatened by any third party against Borrower relating to<br>the existence of, or damage, loss or injury from any toxic substances or hazardous wastes or any other conditions constituting actual<br>or potential violations of such laws, rules, ordinances or regulations with respect to the Collateral and (c) any enforcement or<br>compliance action instituted or threatened or claim made or threatened by any Government Authorities relating to the employment of labor<br>or employee benefits with respect to operations at the Collateral as to uninsured claims in excess of $100,000. | | --- | --- | | H. | Maintenance of Business. The Borrower shall continue to conduct its business as presently conducted,<br>maintain its legal existence and maintain its properties in good repair, working order and operating condition. | | --- | --- | | I. | Financial. Any and all financial statements heretofore delivered to the Bank by the Borrower are<br>true and correct in all respects, have been prepared in accordance with GAAP, and fairly present the financial conditions of the subjects<br>thereof as of the respective dates thereof, and that no materially adverse change has occurred in the financial conditions reflected therein<br>since the respective dates thereof. | | --- | --- |
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| --- | | J. | Title to Mortgaged Premises. The Mortgaged Premises comprises all of the interests in real property<br>used, proposed or required for the full operation of the Hotel and the Borrower has good, marketable and insurable title thereto, free<br>and clear of all defects, liens and encumbrances except the Permitted Encumbrances. | | --- | --- | | K. | ERISA. The Borrower has not established any Plans under the Employee Retirement Income Security<br>Act of 1974 ("ERISA"). | | --- | --- | | L. | Furnished Information. To the best of Borrower’s knowledge, no information, exhibit or report<br>furnished by the Borrower to the Bank in connection with the application for the Loan or the negotiation of this Agreement, contained<br>any material misstatement of fact or omitted to state material fact or any fact necessary to make the statement contained therein not<br>materially misleading. | | --- | --- | | M. | Tax Filings. The Borrower has and will continue to file all federal, state and local tax returns<br>and other reports required by law to be filed, if any, and which are material to the conduct of the Borrower’s business, and have<br>paid, or cause to have been paid, and will continue to pay, or cause to be paid, all taxes, assessments and other charges of Government<br>Authorities when due and payable and will reserve funds or make adequate provision for the payment of such taxes (which reserves shall<br>include any such reserves held by Bank), assessments or other charges accruing but not yet payable. The Borrower has no knowledge of any<br>deficiency or additional assessment in connection with any taxes, assessments or charges not provided for on the Borrower’s books. | | --- | --- | | N. | Corporate/Fictitious Name. The Borrower has not used, during the five (5) year period preceding<br>the date of this Agreement, and does not intend to use any other corporate or fictitious name, except ____________________________. | | --- | --- | | O. | Compliance with Lease. The Borrower is in compliance with and will continue to comply with all<br>of its material obligations under the Operating Lease. | | --- | --- | | P. | Owner Agreement. The Borrower is in compliance with and will continue to comply with all of<br>its material obligations under the Owner Agreement. Borrower agrees to promptly provide to the Bank copies of any and all notice received<br>by the Borrower pursuant to the Owner Agreement | | --- | --- | | Q | Government Approvals. To the extent necessary, to the Borrower’s knowledge, the Borrower<br>and the Operating Company have obtained the approval of all Government Authorities having jurisdiction over the Mortgaged Premises and<br>all material permits or licenses necessary and required by the Building and Zoning Laws to allow for the operation of the Hotel in accordance<br>with its past practice and to Borrower’s knowledge, all such permits and licenses are in full force and effect, without violation<br>of any term, provision or conditions thereof and the fees there for have been paid in full. | | --- | --- |
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| --- | | R. | Compliance with Operating Contracts and Permits. The Borrower shall comply with (and shall cause<br>the Operating Company to comply with), all of its respective obligations under the Operating Contracts and Permits. | | --- | --- |
III: THE LOAN
3.1 Rateand Term. Subject to the provisions herein contained, the Bank will grant the Borrower a loan in the principal amount of TEN MILLION EIGHT HUNDRED FIFTY THOUSAND and 00/100 ($10,850,000.00) DOLLARS as evidenced by the Note which shall be repaid in lawful money of the United States with interest thereon at a variable rate for each Term SOFR Interest Period (as defined herein) equal to the sum of the one-month Term SOFR (as defined herein) plus two hundred twenty-fifty (250) basis points. Interest only on so much as is advanced and outstanding shall be payable monthly for a period of two (2) years commencing on the first day of the first month subsequent to the Closing Date and continuing on the first day of each month thereafter (each such date a “Payment Date”) for the subsequent twenty-three (23) months (the “Interest Only Period”). The above notwithstanding, if the Closing Date does not occur on the first day of a calendar month, the Borrower will pay in advance on the Closing Date interest for the actual number of days that will elapse from the Closing Date through the first day of the following calendar month and the first Payment Date will then be the first day of the subsequent calendar month. After the Interest Only Period, principal shall be amortized over a three hundred (300) month amortization schedule at the interest rate set forth above with consecutive monthly payments of fixed principal plus interest in accordance with said schedule commencing on the twenty-fifth (25th) Payment Date and continuing on the first day of each month thereafter until paid in full. The above notwithstanding, all principal and accrued interest thereon shall be due and payable in full five (5) years from the date of the Note (the “Maturity Date”). Payments shall be made subject to the Following Business Day Convention, hereafter defined.
3.2 AdditionalDefinitions. The following additional definitions shall be applicable to this Note:
Business Day means any weekday that is a U.S. Government Securities Business Day and is not a legal holiday in New York and or a day on which banking institutions in New York are authorized or required by law or regulation to be closed. For the purposes hereof, “U.S. Government Securities Business Day” means any weekday, except any weekday on which any of the Securities Industry and Financial Markets Association, the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business because such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.
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Following Business Day Convention means the convention for adjusting any relevant date that would otherwise fall on a day that is not a Business Day, so that the date will be the date that is the first following day that is a Business Day.
Reset Date shall mean the first day of the month commencing on June 1, 2024 and shall be the date as of which the calculation of Term SOFR Rate plus two hundred fifty (250) basis points shall be reset and put into effect as the interest rate for that succeeding Term SOFR Interest Period.
SOFR means the secured overnight financing rate published by the Term SOFR Administrator on the Term SOFR Administrator’s Website.
SOFR Administrator’s Website means the website of the Term SOFR Administrator currently at https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
SOFR Reserve Percentage shall mean, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
Term SOFR Administrator means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Bank in its reasonable discretion).
Term SOFR means, with respect to any amount to which the Term SOFR applies, for any applicable Term SOFR Interest Period, the interest rate per annum determined by dividing (the resulting quotient rounded upwards, at the Bank’s discretion, to the nearest 1/100th of 1%) (A) the Term SOFR Reference Rate for a tenor comparable to such Term SOFR Interest Period, as published by the Term SOFR Administrator on the day that is two (2) Business Days prior to the first day of such Term SOFR Interest Period (the “Term SOFR Determination Date”), by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. The Term SOFR shall be adjusted automatically without notice to the Borrower on and as of (i) the Reset Date, and (ii) the effective date of any change in the SOFR Reserve Percentage.
Term SOFR Interest Period shall mean, with respect to any amount to which Term SOFR applies as set forth herein, the period of thirty (30) days (subject to the availability thereof) commencing on the date of the Note and on each successive Reset Date thereafter; provided that:
| (i) | if a Term SOFR Interest Period would end on a day that is not a Business Day, it shall end on the next<br>succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Term SOFR Interest Period shall<br>end on the next preceding Business Day; |
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| --- | | (ii) | a Term SOFR Interest Period may not end on a day after the Maturity Date; and | | --- | --- | | (iii) | any Term SOFR Interest Period that begins on the last Business Day of a calendar month (or on a day for<br>which there is no numerically corresponding day in the last calendar month of such Term SOFR Interest Period) shall end on the last Business<br>Day of the next calendar month. | | --- | --- |
Term SOFR Reference Rate shall mean the forward-looking term rate based on SOFR.
3.3 MiscellaneousRate and Prepayment Provisions. During the Interest Only Period, interest will be calculated on the basis of the actual number of days elapsed over a year of three hundred sixty (360) days. After the Interest Only Period, interest will be calculated on the basis of a three hundred sixty (360) day year with twelve (12) thirty-day months. There shall be a late charge in the amount of five (5.00%) percent of any regular monthly installment payment (but excluding, in all cases, any payment or amounts due at Maturity or acceleration of the Note) received more than ten (10) days after its due date. The Borrower may prepay the Note in whole or in part, subject however to the following: If a prepayment occurs prior to the first anniversary of the Note, there will be due and payable to the Bank a prepayment premium in the amount of three percent (3%) of the amount prepaid. If a prepayment of the Note occurs on or after the first anniversary of this Note but prior to the second anniversary of the Note, there will be due and payable to the Bank a prepayment premium in the amount of two percent (2%) of the amount prepaid. If a prepayment of the Note occurs on or after the second anniversary of the Note but prior to the third anniversary of the Note, there will be due and payable to the Bank a prepayment premium in the amount of one percent (1%) of the amount prepaid. On or after the third anniversary of the Note, the Note may be prepaid in whole or in part without penalty or premium. Notwithstanding anything contained herein, no such prepayment penalty shall be due and owing in connection with any prepayment pursuant to Sections 5.2 of the Loan Agreement or Articles V and VI of the Mortgage. Any principal prepayment, whether by acceleration or otherwise, shall be applied against principal payments in the inverse order of their maturity.
3.4 DefaultRate. Upon the occurrence of any Event of Default hereunder or upon maturity hereof (by acceleration or otherwise), the entire outstanding principal balance of the Note, at the option of the Bank, shall bear interest, from the date of occurrence of such Event of Default or maturity until payment, at the default rate of five (5.0%) percent per annum in excess of the interest rate otherwise in effect at the time of such Event of Default or maturity hereunder (the "Default Rate").
3.5 Disbursement. At closing the proceeds of the Loan will be disbursed to pay off the existing first mortgage, to pay commitment and other fees due to the Bank and other approved closing costs in accordance with a closing statement/disbursement statement to be executed at closing. Any balance of loan proceeds will be paid to the Borrower. The closing disbursement will be subject to Bank’s receipt of the duly executed Note, Loan Agreement, the recorded Mortgage and all other documentation, certifications and opinions as required by the Bank and Bank counsel and set forth in the Bank’s Closing Agenda, prepared and delivered by the Bank to the Borrower.
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3.6 Applicationof Payments. Until an Event of Default has occurred, all payments made by the Borrower shall be applied first to late charges, fees, expenses and other amounts due to the Bank (excluding principal and interest), if any, under the Note and under the other Loan Documents, then to interest which is due and payable under the Note and the remainder, if any, to principal outstanding under the Note. After the occurrence, and during the continuance, of an Event of Default, beyond applicable notice and cure periods such payments shall be applied first to late charges, costs of collection and enforcement and other similar amounts, if any due under the Note or under the other Loan Documents, then to any obligations of the Borrower to the Bank as Bank in any order and combination that Bank may determine in its sole discretion.
ARTICLE IV: SECURITY
4.1 Mortgage. The Loan shall be secured by a record first priority first deed of trust mortgage on the Mortgaged Premises. The title to this property shall be examined by counsel acceptable to the Bank and shall be free and clear of all material liens and encumbrances other than Permitted Encumbrances.
4.2 SecurityInterest. The Bank shall also be granted (i) a first priority security interest in all assets of the Borrower including a security interest in all of the Borrower’s right, title and interest in and to the Collateral along with any additions, substitutions, accessions to or proceeds of any of the above and (ii) an assignment of the Borrower’s first priority security interest in the Collateral owned by the Operating Company along with any additions, substitutions, accessions to or proceeds of any of the above Said security interests shall also include any after acquired property of the types set forth herein.
4.3 Assignmentof Leases, Rents and Revenues. The Loan shall be secured by an assignment of all Leases, Rents and Revenues.
4.4 Assignmentof Operating Contracts and Permits. The Bank will also be granted a first priority pledge, assignment and security interest in all Operating Contracts and Permits. No material modifications, amendments or material changes to the Operating Contracts and Permits shall be made without the prior written approval of the Bank. Any required consents to the assignment of the Operating Contracts and Permits shall be delivered to the Bank, along with the assignments, on or prior to Closing Date. To the extent there is an alcoholic beverage liquor license issued or to be used in connection with the Hotel, the same shall be pledged to the Bank, with such pledge being approved by all applicable Governmental Authorities.
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4.5 Guaranty. The Bank will require a limited recourse carve-out guaranty to be executed and delivered by the Guarantor.
4.6 **CrossDefault and Cross Collateralization.******The Loan shall be cross-defaulted and cross-collateralized with the St. Petersburg Loan made by the Bank to the Borrower Affiliate.
4.7 PartialRelease. If the Borrower desires to sell one of the Hotel properties (the “Property to be Sold”) prior to loan maturity, an updated appraisal will be ordered by the Bank, at Borrower’s expense, for the remaining property (the “Remaining Property”). The release of the Property to be Sold shall be subject to the updated appraised value of the Remaining Property as evidenced by the updated appraisal (the “Updated Appraised Valued”) being sufficient to result in a loan to value ratio at the time of sale, based upon the ratio of the then current principal balance of the Remaining Property loan (the “Then Current Balance”) and the Updated Appraised Value (said LTV referred to as the “Updated LTV”), being no higher than the loan to value ratio established by using the original appraised value of the Remaining Property set forth in the original appraisal received by the Bank at the time of the closing of the Loan (the “Original Appraised Value”) and the Then Current Balance (said LTV referred to as the “Base LTV”). If the Updated LTV exceeds the Base LTV, the Bank will only release the Property to be Sold if the Borrower pays down the Then Current Balance to a level that reduces the Updated LTV to the Base LTV. Upon satisfaction of the conditions herein, the Bank shall release the Property to be Sold from any collateral held under the Loan Documents and this Agreement shall then terminate and be without further force and effect and the Bank shall record a release of any mortgage or deed of trust and a termination of this Agreement.
ARTICLE V: INSURANCE AND CONDEMNATION PROCEEDS
5.1 Insurance. So long as this Agreement shall remain in effect or any of Borrower’s obligations remain unsatisfied or any amount of the loan account or the Note shall remain outstanding, Borrower shall keep (or cause the applicable Tenant to keep) in full force and effect the following types of insurance coverage:
| A. | Casualty. Fire and extended coverage property insurance including such other insurable hazards<br>as the Bank may require, such as vandalism, malicious mischief, or damage by snow and ice, collapse, law and ordinance, cost of demolition,<br>removal of debris and increased cost of construction, coverage to be in an amount not less than 100% of the full replacement value of<br>the Collateral without co-insurance and any improvements used in connection therewith or incorporated therein shall be maintained. Such<br>insurance shall cover all improvements, furniture, fixtures and equipment necessary for operation of the Hotel, including coverage for<br>loss by burglary, theft or mysterious disappearance. |
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| --- | | B. | General Liability. Commercial general liability insurance, including explosion and collapsed<br>coverage covering personal injury and property damage with such limits for personal injury and for property damage as the Bank shall,<br>from time to time, determine to be reasonable and necessary for a person of comparable financial net worth engaged in the same or similar<br>business as Borrower in the same jurisdiction, but in no event with a combined limit less than $1,000,000.00 per occurrence and $2,000,000.00<br>in the aggregate. | | --- | --- | | C. | Flood. If any building is or shall be located in a special flood hazard area as designated by<br>the Department of Housing and Urban Development, a flood insurance policy with respect to such building as required by the Flood Protection<br>Act of 1973. | | --- | --- | | D. | Business interruption. Business interruption insurance shall be maintained in amounts of not less<br>than twelve (12) months gross revenues income from the Mortgaged Premises. | | --- | --- | | E. | Other. Such other insurance as the Bank shall reasonably request from time to time, in such<br>amounts and in such form as shall be satisfactory to the Bank in the reasonable exercise of its discretion, including but not limited<br>to: | | --- | --- | | (i) | Earthquake, collapse due to faulty<br>construction or design error, collapse due to weight of ice, sleet or snow; | | --- | --- | | (ii) | Loss due to boiler and sprinkler<br>damage; | | --- | --- | | (iii) | Contingent liability from operation<br>of any building loss pertaining to zoning and building code non-conforming property; and | | --- | --- | | (iv) | If alcoholic beverages are permitted<br>and/or served on the Mortgaged Premises, full liquor liability insurance coverage in amounts<br>and with companies satisfactory to the Bank. | | --- | --- | | F. | General Insurance Requirements.All insurance under this Section (i) shall be written<br>by an insurance carrier licensed or otherwise authorized to transact business in the State of North Caroline and in the location of the<br>Collateral having no less than a general policyholders' rating "A" in Best's Key Rating Guide, (ii) shall be for the benefit<br>of and, except for liability policies, payable in case of loss to the Bank, its successors and assigns, as mortgagee and lender loss payable<br>and to the Borrower, as its interest may appear, (iii) in the case of liability policies, shall name the Bank as an "Additional<br>Insured" and (iv) shall contain a provision that it shall not be canceled or modified without at least thirty (30) days' prior<br>written notice to the Bank (10 days for non-payment); and the Borrower will deliver to the Bank, at any time upon its request, all insurance<br>policies or memoranda thereof and will deliver to the Bank new policies or memoranda thereof for any insurance about to expire at least<br>twenty (20) days' prior to such expiration. Notwithstanding anything contained herein to the contrary, if the terms and provisions of<br>the Lease obligate the Operating Company to procure or maintain any or all of the insurance coverages described herein, the Borrower shall<br>not also be obligated to maintain such insurance coverage for so long as the Operating Company procures and maintains the coverages on<br>the same terms therein described. | | --- | --- |
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| --- | | G**.** | Temporary Binder. The Borrower shall provide at or prior to the Closing Date Required Certificates<br>the following certificates: Liability (Accord 25); Property & Business Interruption (Accord 28); and a Temporary Binder (Accord<br>75).The Temporary Binder is required due to the disclaimer language contained in the Accord 28. As the Mortgagee cannot be added to the<br>policy until after Closing, the Temporary Binder is required to show that that the Bank is insured in the interim. A copy of the Declarations<br>Page & Schedule of Values from the actual policy, showing that the Bank has been added to the policy, is required within 45 days<br>of the Closing Date. | | --- | --- |
5.2 Damage/Destruction. In the event of damage to or destruction of all or any part of the Collateral, or taking of all or any part of the Mortgaged Premises by eminent domain, the parties hereto shall cooperate in order to recover the proceeds of insurance or the awards of damages with the Borrower to have primary responsibility for such recovery, subject to the approval of the Bank, which approval shall not be unreasonably withheld. Any proceeds of insurance or eminent domain award shall be paid to the Bank to the extent of all outstanding amounts due the Bank under this Loan Agreement and the Note and be applied as set forth in the Mortgage.
ARTICLE VI: FINANCIAL REPORTING AND PERFORMANCE COVENANTS
6.1 FinancialReporting. The Borrower shall keep books of account in accordance with GAAP and shall furnish the Bank with the following:
| A. | Audited financial statements of the Borrower and the Guarantor within one hundred twenty (120) days after<br>the close of each fiscal year. |
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| B. | Copies of the Borrower’s annual income tax returns within one hundred twenty (120) days after the<br>close of each fiscal year. if any party files an extension of time to file its income tax return, a copy of the extension shall be delivered<br>to the Bank within fifteen (15) days of filing. If on extension, the Borrower shall provide an internally-prepared profit and loss statement<br>on or before April 30 of that year. Thereafter, a copy of the tax return shall be delivered to the Bank within fifteen (15) days<br>of filing, but in no event later than five (5) days after the last possible filing date. |
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| --- | | C. | Borrower will provide the Bank with (i) all quality assurance and other reports conducted and prepared<br>by the Franchisor within 30 days of receipt by the Operating Company or the Borrower and (ii) all STR Reports on a quarterly basis<br>within 30 days of each calendar quarter end. | | --- | --- | | E. | Such additional customary and reasonable financial statements and other supporting information from time to time reasonably requested<br>by the Bank which the Borrower or Guarantors, as the case may be, shall deliver to the Bank within a reasonable time of its request. | | --- | --- |
6.2 FinancialPerformance. The Borrower will maintain the following financial covenants:
| A. | During the term of the Loan, the Borrower shall maintain a minimum Global Debt Service Coverage Ratio<br> – Annual Operations for Wilmington and St. Petersburg (“GDSCR”) of 1.25 to 1.0, to be computed and tested annually commencing<br>as of December 31, 2024 and based on the audited financial statements required to be submitted. If the Borrower fails to meet the<br>GDSCR covenant, it will have a period of thirty (30) days to cure same by providing the Bank with cash collateral into a Debt Service<br>Reserve account at the Bank in an amount equal to the shortfall in annual global net operating income and the net operating income necessary<br>to achieve the required GDSCR for such annual period. The cash collateral shall remain on deposit with the Bank until the required DSCR<br>has been met at the time of the next annual test, at which time any cash collateral remaining in the account will be returned to the Borrower. |
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| B. | The Borrower will maintain the Bank as its primary depository bank for the Hotel and will open and maintain<br>at the Bank a Mortgaged Premises operating account, and capital expenditure or other reserve, escrow and real estate tax accounts associated<br>with the Mortgaged Premises and the Hotel. |
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| C. | The Guarantor shall maintain a minimum Net Worth (defined as total assets minus total liabilities, both<br>as determined in accordance with GAAP) of $25,000,000 and evidence minimum liquidity of $750,000 at all times, as evidenced by the annual<br>the annual 10-K financial statements of the Guarantor. |
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| D. | The Borrower shall escrow for real estate taxes by depositing in an escrow account at the Bank one-twelfth<br>(1/12) of the estimated annual real estate taxes on each Payment Date. |
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| --- | | E. | The Borrower shall escrow an amount equal to 4% of gross income in a FF&E reserve account at the Bank<br>on each Payment Date. The 4% reserve shall be calculated based on the actual gross income generated at the Hotel over the previous calendar<br>year. The Bank shall allow Borrower to transfer such amounts required by Borrower from time to time to Borrower’s operating account,<br>provided that the Borrower provides reasonable evidence to Bank for FF & E improvement costs to the Hotel, if requested by Bank<br>in writing. | | --- | --- | | F. | The Borrower will not incur any additional debt or permit any junior liens on the Collateral, except as<br>set forth herein without prior written approval of the Bank. | | --- | --- | | G. | Until the Loan shall have been paid in full, the Borrower shall not, without the Bank’s written<br>consent ,which consent will not be unreasonably withheld directly or indirectly, lend funds to, or make payments on account of, or transfer<br>any collateral for any part of, any loan or indebtedness ("Affiliated Creditor Debt") to its members, managers, officers, Subsidiaries<br>or Affiliates, (hereinafter collectively referred to as the "Affiliated Creditors"), and neither the Borrower nor Affiliated<br>Creditors shall otherwise take or permit any action prejudicial to or inconsistent with the Bank's priority position over the Affiliated<br>Creditors created by this Agreement. Scheduled payments of principal and interest pre-approved by the Bank may be made as long as no Event<br>of Default under Loan Documents has occurred but shall be subordinate in all respects to the Loan. Should any payment on account of or<br>any Collateral for any part of Affiliated Creditor Debt be received by the Affiliated Creditors except as allowed herein, such payment<br>or collateral shall be delivered forthwith to the Bank by the recipient for application to the Loan. Until so delivered, any such payment<br>or collateral shall be held by the recipient in trust for the Bank and shall not be commingled with other funds or property of the recipient. | | --- | --- |
ARTICLE VII: NEGATIVE COVENANTS
7.1 NegativeCovenants. The Borrower covenants and agrees that until payment is made in full of the Note and the performance of all of Borrower’s obligations hereunder are complete, the Borrower shall not unless the Bank otherwise consents in writing:
| A. | Incur or permit to exist any lien (in the case of a pre-judgment lien, a lien not dismissed, bonded or<br>discharged within ninety (90) days of Borrower’s receipt of notice of the same), mortgage, security interest, pledge, charge or<br>other encumbrance, against any of its property or assets, whether now owned or hereafter acquired, except for Permitted Encumbrances.<br>All Subordinated Debt, whether now existing or hereafter arising, shall be expressly subordinated to the Bank debt on terms reasonably<br>acceptable to the Bank. Scheduled interest payments on the debt evidencing the Permitted Encumbrances and Subordinated Debt shall be allowed<br>as long as no Event of Default has occurred. |
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| --- | | B. | Create or incur any indebtedness for borrowed money, become liable, either actually or contingently, in<br>respect of letters of credit or banker's acceptance or issue or sell any obligations of the Borrower, excluding, however, from the operation<br>of this covenant, the Note and all other Bank Obligations and ordinary trade payables incurred in the ordinary course of the Borrower’s<br>business. | | --- | --- | | C. | Except for the Lease and the Occupancy Agreements, sell, lease, pledge, transfer or otherwise dispose<br>of all or any of its assets (other than for value in the ordinary course of the Borrower’s business or other than assets that are<br>replaced with assets of approximately the same value) whether now owned or hereafter acquired except for liens or encumbrances required<br>or permitted hereby or by any Loan Document. | | --- | --- | | D. | Assume, guarantee, endorse or otherwise become liable upon the obligations of any person, firm or corporation<br>except by the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business. | | --- | --- | | E. | Merge or consolidate with or into any other entity; and, for the purposes of this Section, the acquisition<br>by the Borrower of all or substantially all of the assets, together with the assumption of all or substantially all of the obligations<br>and liabilities, of any other entity shall be deemed to be a consolidation of such other entity with the Borrower, without the prior consent<br>of the Bank. | | --- | --- | | F. | Purchase or otherwise acquire any shares of stock or obligations of, or make loans or advances to, (other<br>than deposits or payments to trade creditors in the ordinary course of the Borrower's business), without the prior consent of the Bank<br>which shall not be unreasonably withheld, invest in any individual, firm, entity or corporation, other than investments in direct obligations<br>of the United States of America or certificates of deposit (or similar investments) issued by the Bank. | | --- | --- | | G. | Enter into, or be a party to, any transaction with any Subsidiary or any Affiliate (including, without<br>limitation, transaction involving the purchase, sale or exchange of property, the rendering of services or the sale of stock) except in<br>the ordinary course of business pursuant to the reasonable requirements of the Borrower and upon fair and reasonable terms no less favorable<br>to the Borrower than Borrower would obtain in a comparable arm's-length transaction with a person other than a subsidiary or an affiliate. | | --- | --- |
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| --- | | H. | Make any change in the ownership of the Borrower resulting in fifty (50%) percent or more of the voting<br>membership interest in the Borrower becoming vested in any party or parties who is not an affiliate or subsidiary of the Guarantor without<br>the prior written approval of the Bank, which shall not be unreasonably withheld, conditioned or delayed. | | --- | --- | | I. | Change its name or conduct its business under any trade name or style other than as herein set forth or<br>change its place of business or the present location of the Collateral or a material portion of its assets or records relating thereto<br>from the addresses set forth herein, without the prior written consent of the Bank. | | --- | --- | | J. | Allow any business or activity to be conducted on the Mortgaged Premises that uses, manufactures, treats,<br>stores or disposes of any Hazardous Materials other than reasonably necessary cleaning supplies which are not otherwise prohibited. | | --- | --- |
ARTICLE VIII: EVENTS OF DEFAULT AND REMEDIES
8.1 Eventsof Default. The following events shall be “Events of Default” under this Agreement and the terms “Events of Default” or “Default” shall mean whenever they are used in this Agreement any one or more of the following events which continue beyond applicable notice, grace and cure periods:
| A. | Failure by the Borrower to make any loan payment of interest and/or principal or any other payment required<br>to be paid hereunder or under the Note or other Loan Documents within ten (10) days of its due date. |
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| B. | Intentional material inaccuracy or intentional incompleteness of any representation or warranty made by<br>or on behalf of the Borrower in connection with this transaction. |
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| C. | The Borrower or Guarantor shall be involved in: |
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| (i) | Commencement of a voluntary case under Title 11 of the United States Code or the entry of an Order for Relief in any voluntary<br>case commenced under said Title 11; |
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| (ii) | Admitting or failing to deny the material allegations of a petition filed against it, commencing an involuntary case under said<br>Title 11, or if such petition or proceeding under said involuntary petition is not dismissed within forty-five (45) days<br>from the date on which it has been filed or instituted; |
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| --- | | (iii) | Seeking relief as a debtor under any applicable law of any jurisdiction relating to the liquidation or<br>reorganization of debtors, or to the modification or alteration of the rights of creditors, or by consenting to or acquiescing in such<br>relief; | | --- | --- | | (iv) | Making an assignment for the benefit of or entering into a composition with creditors, or appointing or<br>consenting to the appointment of a receiver or other custodian for all or a substantial part of its property, by the entry of an Order<br>of any Court of competent jurisdiction, including the Bankruptcy Court, finding it to be bankrupt or insolvent, or ordering or approving<br>its liquidation, reorganization or any modification or alteration of the rights of its creditors, or assuming custody of or appointing<br>a receiver or other custodian for all or a substantial part of its property. | | --- | --- | | D. | The acceleration of the maturity of any indebtedness of the Borrower for borrowed money in excess of $250,000<br>(whether or not evidenced by a note, bond, debenture or similar obligation and whether or not subordinated to the indebtedness hereunder<br>and the failure of the Borrower to pay the same in full) and which remains unpaid or uncured following the expiration of any grace or<br>cure period.. | | --- | --- | | E. | If all or any part of the legal or equitable ownership of all or any part of the Mortgaged Premises or<br>other Collateral shall be transferred or shall become vested in any person or persons other than the Borrower or an affiliate or subsidiary<br>of the Guarantor, or if the Mortgaged Premises or other Collateral, or any part thereof, is sold, conveyed, alienated, transferred or<br>otherwise voluntarily encumbered other than as expressly permitted by the Loan Documents. | | --- | --- | | F. | If insurance coverage is no longer provided to the Bank and said insurance is not reinstated or acquired<br>within seven (7) days after written notice of such failure has been given to the Borrower by Bank or the applicable insurance company. | | --- | --- | | G. | Any judgment, warrant, warrant of attachment, garnishment, or any similar process is entered or filed<br>against the Borrower or against any of the Borrower’s properties or assets in an amount greater than $250,000, and is not vacated,<br>bonded or stayed within sixty (60) days after the expiration of all applicable appeal periods. | | --- | --- |
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| --- | | H. | The occurrence and continuance of an Event of Default under the terms of the Loan Documents beyond any<br>applicable notice and cure periods. | | --- | --- | | I. | An Event of Default under any other Obligations of the Borrower to the Bank not cured within ten (10) days<br>after written notice of such Event of Default has been given to Borrower by Bank. | | --- | --- | | J. | Discontinuation, revocation or termination of the guaranty of the Guarantor. | | --- | --- | | K. | An event of default under, or a termination of, any of the Hotel Documents not cured within ten (10) days<br>after written notice of such event has been given to Borrower by Bank or any party to the applicable Hotel Documents. | | --- | --- | | L. | An event of default by the Borrower under the Lease not cured within ten (10) days after written<br>notice of such default has been given to the Borrower by the Bank or any party to the Lease. | | --- | --- | | M. | The transfer of the controlling interest in the Borrower without the prior written consent of the Bank.<br>For purposes hereof, a transfer of fifty (50%) percent or more of the voting membership interest in the Borrower to a party other than<br>an affiliate or subsidiary of the Guarantor shall constitute a transfer of the controlling interest. | | --- | --- | | N. | The Borrower shall dissolve or liquidate or be dissolved or liquidated or cease to legally exist, or merge<br>or consolidate or be merged or consolidated with or into any other business entity. | | --- | --- | | O. | An Event Default under the St. Petersburg Loan continuing beyond applicable notice and cure periods. | | --- | --- | | P. | Failure by the Borrower to observe or perform any other covenant, condition, or agreement, on its part<br>to be observed or performed in this Agreement or any of the Loan Documents, for a period of thirty (30) days after written notice of such<br>failure has been given to the Borrower by Bank, provided however, if such failure is of a nature that it cannot in the exercise of reasonable<br>diligence be cured within said thirty (30) days, the Borrower shall have such additional time as is reasonably necessary (not to exceed<br>an additional 60 days) to cure said failure provided that the Borrower has commenced such cure within said thirty (30) days and thereafter<br>diligently prosecutes the same to completion. | | --- | --- |
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8.2 Remedies. Whenever any uncured Event of Default under this Agreement shall have happened, the Bank may:
| A. | By notice in writing to the Borrower, declare all loan payments of principal, accrued interest, and other<br>amounts payable hereunder and pursuant to the Note to be immediately due and payable whereupon the same shall become immediately due and<br>payable without presentation, demand, protest, or other notice of dishonor of any kind, all of which are hereby expressly waived. |
|---|---|
| B. | Adjust the interest rate to the Default Rate. |
| --- | --- |
| C. | In the Bank's sole and absolute discretion, but subject to the provisions of applicable law: (i) enter<br>upon the Mortgaged Premises and employ watchmen to protect the Mortgaged Premises, all at the risk, cost and expense of the Borrower,<br>and consent to, and authorization for, such entry being hereby irrevocably given by the Borrower; (ii) assume any contracts made<br>by the Borrower in any way relating to the Mortgaged Premises and take over and use all or any part of the labor, materials, supplies<br>and equipment contracted for by the Borrower, whether or not previously incorporated into the Mortgaged Premises; (iii) pay, settle<br>or compromise all bills or claims which may become liens against the Collateral, and (iv) take or refrain from taking such action<br>hereunder as the Bank in its commercially reasonable discretion may from time to time determine. The Borrower shall be liable to the Bank<br>for all sums reasonably paid or incurred pursuant to the provisions of this Section or otherwise, and all reasonable payments made<br>or liabilities incurred by the Bank hereunder of any kind whatsoever shall be paid by the Borrower to the Bank upon demand with interest<br>at the rate as provided in the Note from the date of payment by the Bank to the date of payment to the Bank and shall be secured by the<br>Collateral to the extent permitted by applicable laws. For the purpose of exercising the rights granted hereunder, the Borrower hereby<br>irrevocably constitutes and appoints the Bank its true and lawful attorney in fact to execute, acknowledge and deliver any instruments<br>and to do and perform any acts in the name and on behalf of the Borrower. |
| --- | --- |
| D. | Bring suit on the Loan Documents and/or foreclose the Mortgage or any of the Collateral Documents granted<br>in favor of the Bank in any manner available under applicable law or otherwise. Enforce the provisions of this Agreement by legal proceedings<br>for the specific performance of any covenant or agreement contained herein, or for the enforcement of any other appropriate, legal or<br>equitable remedy, and may recover damages caused by any breach by the Borrower of the provisions of this Agreement, including court costs,<br>reasonable attorney’s fees, and other reasonable costs and expenses incurred in enforcing the obligations of this Agreement or the<br>Loan Documents referred to above. |
| --- | --- |
| E. | To the extent Borrower could legally do so, use all trademarks, service marks, trade names, trade styles,<br>logos, goodwill, trade secrets, franchises, licenses and patents which the Borrower now has or may hereafter acquire with respect to the<br>Mortgaged Premises. |
| --- | --- |
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| --- | | F. | Exercise any other remedies provided by this Agreement, the Note, the Mortgage and any other document<br>contemplated therein, or provided by applicable law or in equity, all of which shall be cumulative and may be exercised singularly or<br>concurrently. | | --- | --- |
8.3 Reimbursement. The Borrower shall reimburse the Bank for any actual and reasonable out of pocket cost incurred by the Bank, including reasonable attorneys’ fees in connection with the collection and enforcement of the provisions of this Agreement and the Loan Documents.
8.4 Set-Off. Any and all deposits or other sums at any time credited by or due from the Bank to and all securities or other property in possession of the Bank belonging to the Borrower are and shall be subject to a security interest in favor of the Bank to secure payment of the Note and performance of the obligations pursuant to this Agreement and the payment and performance of any and all other liabilities and obligations, direct or indirect, absolute or contingent, due or to become due, or that may hereafter be contracted of the Borrower. Upon any of the events specified hereof, the Bank may sell or dispose of any or all of said securities or other property and may exercise any and all of the rights accorded the Bank by the Uniform Commercial Code in effect in the State of North Carolina. The provisions of this paragraph are cumulative to and not exclusive of any other rights that the Bank has with respect to such deposits, sums, securities, or other property under other agreements or applicable principles of law.
8.5 DelayNot Waiver. No delay or omission of the Bank in exercising any right or remedy hereunder shall constitute a waiver of any such right or remedy. A waiver on one occasion shall not operate as a bar to or waiver of any right or remedy on any future occasions.
ARTICLE IX: WAIVERS
9.1 GeneralWaivers. Borrower hereby waives presentment, notice of dishonor, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to this Agreement, the Note and Loan Documents and any Collateral now or hereafter securing the same, Borrower assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of any collateral now or hereafter securing the Note and Loan Documents, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromising or adjusting thereof, all in such manner and at such time or times as the Bank may deem advisable. The Bank shall have no duty as to the collection or protection of any Collateral now or hereafter securing the Note and Loan Documents or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining thereto beyond the safe custody thereof. The Bank may exercise its rights with respect to any Collateral without resorting or regard to other Collateral now or hereafter securing the Note and Loan Documents or sources of reimbursement for liability. The Bank shall not be deemed to have waived any of its rights upon or under any document or agreement relating to the Obligations of the Borrower or any Collateral now or hereafter securing any such Obligations unless such waiver is in writing and signed by the Bank. No delay or omission on the part of the Bank in exercising any right shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to or waiver of any right on any future occasion. The Bank may revoke any permission or waiver previously granted to Borrower, such revocation shall be effective when given in writing. All rights and remedies of the Bank with respect to this Agreement, the Note, the Loan Documents or any Collateral now or hereafter securing the same, whether evidenced hereby or by any other instrument or document, shall be cumulative and may be exercised singularly or concurrently.
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9.2 JuryTrial Waiver. THE BANK AND THE BORROWER ACKNOWLEDGE THAT EACH HAS BEEN REPRESENTED BY COUNSEL AND THAT THIS DOCUMENT WAS AVAILABLE FOR REVIEW AND NEGOTIATION PRIOR TO ITS EXECUTION. THE BORROWER HEREBY AGREES THAT ALL OF BANK'S RIGHTS WERE THE RESULT OF NEGOTIATIONS BETWEEN THE BANK AND THE BORROWER AND WERE INDUCED IN A MATERIAL RESPECT BY THE BENEFITS GRANTED TO THE BORROWER HEREUNDER. IN THIS CONTEXT, THE BORROWER AND THE BANK AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN TORT, AT LAW OR IN EQUITY, AS TO ANY AND ALL MATTERS AND ISSUES WHICH MAY ARISE HEREFROM OR FROM ANY OTHER DOCUMENT, LETTER OR AGREEMENT EXECUTED IN CONJUNCTION HEREWITH, WHETHER DIRECTLY OR INDIRECTLY, INCLUDING WITHOUT LIMITATION, COUNTERCLAIMS, IF ANY. NO OFFICER OF THE BANK HAS AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION FOLLOWING THE EXECUTION OF THIS AGREEMENT.
ARTIVLE X: ADDITIONAL PROVISIONS
10.1 Pre-ClosingSubmittals. The Borrower shall provide to the Bank, prior to the closing hereof, the following:
| A. | Taxes. Reasonable evidence that all past and current taxes or payments in lieu thereof, and assessments<br>applicable to the Mortgaged Premises or the Collateral or payable by the Borrower have been paid in full. |
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| B. | Authority. Evidence of the Borrower’s authority to enter into, and current compliance with,<br>all the terms of the Loan Documents. |
| --- | --- |
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| --- | | C. | Opinions. The opinion letter of the Borrower’s counsel dated as of the date of closing as<br>to due authorization, execution and enforceability of all loan documents and as to such other matters required by the Bank and its counsel.<br>Said opinion shall also certify that to the best of said counsel's knowledge, there are no actions, suits or other proceedings pending<br>or threatened against or otherwise affecting the Borrower and such other reasonable and customary opinions required of Borrower’s<br>counsel by the Bank’s counsel. | | --- | --- | | D. | Title Policy. There must be delivered to the Bank an ALTA Mortgagee Policy of Title Insurance in<br>the face amount of the Loan issued by a nationally recognized, responsible title insurance company acceptable to the Bank (the “Title<br>Insurance Company”) with standard exceptions deleted and subject only to other exceptions, if any, satisfactory to the Bank. All<br>endorsements to such policy required by the Bank or Bank counsel shall be provided with the policy, including comprehensive, land same<br>as survey, contiguity, access and entry, zoning, single tax parcel, waiver of arbitration, variable rate, authentication, location and<br>other required endorsements. | | --- | --- | | E. | Zoning. Either an opinion letter of Borrower’s counsel or letter from the municipal zoning<br>official as to compliance of the Mortgaged Premises and the Improvements thereon with all applicable Building and Zoning Laws or a Zoning-Completed<br>Structure Title Insurance endorsement. | | --- | --- | | F. | Appraisal. An appraisal ordered by and addressed to the Bank evidencing an “as is”<br>appraised value of both the Mortgaged Premises and the St. Petersburg Premises resulting in a combined loan to value ratio of no greater<br>than 65%, which appraisal shall be paid for by the Borrower. | | --- | --- | | G. | PCR. An engineering property condition report by a firm and in a form reasonably acceptable<br>to the Bank, at Borrower’s expense. | | --- | --- | | H. | Environmental Reports. An Environmental Report satisfactory to the Bank, at Borrower’s expense. | | --- | --- | | I. | Lien Search Reports. A report satisfactory to the Bank as to the existence and status of any outstanding<br>UCC-1 financing statements, Federal and State tax liens, litigation, unsatisfied judgments or bankruptcy filings involving the Borrower<br>or the Guarantor. | | --- | --- | | J. | Insurance Certificates. Updated insurance certificates as required herein. | | --- | --- |
10.2 Documentsof Title. All documents of title to Collateral shall be subject to approval by the Bank’s legal counsel.
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10.3 Maintenanceof Collateral. The Borrower shall maintain or cause to be maintained all Collateral in good repair and working order, ordinary wear and tear excepted.
10.4 ConditionsExclusive. All conditions of the obligation of the Bank to make advances hereunder are imposed exclusively for the benefit of the Bank and its assigns and no other person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that the Bank will refuse to make advances in the absence of strict compliance with any or all thereof and no person shall, under any circumstances, be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by the Bank at any time if, in its sole but commercially reasonable discretion, it deems it advisable to do so; provided, however, that a waiver on one occasion shall not constitute a waiver of the Bank’s rights at any other time hereunder.
10.5 LegalFees and Expenses. Any and all customary and reasonable out of pocket legal fees of outside counsel incurred by the Bank in connection with this loan, including reasonable attorneys’ fees/costs for the title examination, review of documents, preparation of documents, recording expenses and any other expenses normally incident to a commercial loan transaction shall be paid by the Borrower. In addition, the Borrower will be responsible for the payment of all reasonable costs and expenses of collection, including attorneys’ fees/costs incurred or paid by the Bank in enforcing this Loan Agreement, the Note, the Mortgage or any other Loan Document contemplated herein or therein.
10.6 Prohibitionof Assignment. This Agreement shall not be assigned or transferred by the Borrower without the prior written consent of the Bank.
10.7 Participation. The Bank reserves the right to participate this loan in whole or in part, provided there is no additional cost to the Borrower.
10.8 Notice. Any notice under this Agreement shall be in writing and shall be deemed delivered if (i) mailed certified mail, return receipt requested or (ii) by nationally recognized overnight delivery service, if to the Bank, to the offices of the Bank at 245 Long Hill Road, Middletown, Connecticut 06457 to the attention of CRE Department; if to the Borrower or the Guarantors in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920. Any such notice shall be conclusively deemed to have been received three days after the day it was sent in accordance with subsection (i) or the next Business Day after the day it was sent in accordance with subsection (ii) above or such later date as the nationally recognized overnight delivery service confirms delivery, or on the date delivered by hand.
10.9 Invalidity. In the event that any provision of this Agreement or any of the Loan Documents shall be held to be invalid in any circumstance, such invalidity shall not affect any other provision or circumstance in each remaining term and provision of this Agreement and Loan Documents, and each shall be valid and shall be enforceable to the extent permitted by law.
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10.10 BindingEffect. This Agreement shall inure to the benefit of and shall be binding upon the Bank, the Borrower, and their respective successors, assigns, and legal representatives; subject, however, to the specific provisions hereof.
10.11 Amendment. This Agreement may be amended only by written Agreement executed by the Bank and the Borrower.
10.12 GoverningLaw. This Agreement and all other documents contemplated hereby shall be governed and construed in accordance with the laws of the State of North Carolina. The Borrower agrees that the execution of this Agreement and the Loan Documents and performance of the Borrower's obligations hereunder and thereunder shall be deemed to have both a Connecticut and North Carolina situs and Borrower shall be subject to the personal jurisdiction of the Courts of the State of Connecticut, the State of North Carolina and the Federal Courts located therein with respect to any action the Bank or its successors or assigns may commence hereunder or thereunder. Accordingly, the Borrower hereby specifically and irrevocably consents to the jurisdiction of the Courts of the State of Connecticut, the State of North Carolina and the Federal Courts located therein with respect to all matters concerning this Agreement, the Loan Documents, the Note or the enforcement of any of the foregoing, except to the extent of any conflicting provisions of the laws of the state where the Mortgaged Premises or any other Collateral is located which govern the enforcement of any of the foregoing, in which case, the laws of such state shall control. The Borrower, in connection with any proceeding commenced as aforesaid, hereby consents to service of process being made upon them by mail or otherwise at the address set forth in Section 10.8 hereof.
10.13 Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit, or describe the scope or the intent of any provisions of this Agreement.
10.14 Post-ClosingCompliance. The Borrower shall, at any time and from time to time, execute and deliver such further instruments or take such further action as may be reasonably requested by the Bank in each case further and more perfectly to carry out the provisions of this Agreement; provided, however, nothing contained herein shall require the Borrower to sign or enter into any document or instrument or take any action which increases the obligations or liabilities of Borrower or Guarantor. In addition, the Borrower shall allow the Bank, by or through any of its officers, agents, attorneys, or accountants designated by it, for the purpose of ascertaining whether or not each and every provision hereof and of any related agreement, instrument or document is being performed and for the purpose of examining the assets of the Borrower and the records relating thereto, to enter the offices of the Borrower to examine or inspect books and records or extracts therefrom relating to the Mortgaged Premises and to make copies thereof and to discuss the affairs, finances and accounts thereof with the Borrower and its accountants, all at such reasonable times and as often as the Bank may reasonably request, upon providing Borrower advanced written notice of not less than forty-eight (48) hours.
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10.15 PatriotAct. In order to comply with the USA Patriot Act and Federal Regulation, Liberty Bank is required to notify you of the following important information when you open a new account:
TO HELP THE GOVERNMENT FIGHT THE FUNDING OF TERRORISM AND MONEY LAUNDERING ACTIVITIES, FEDERAL LAW REQUIRES ALL FINANCIAL INSTITUTIONS TO OBTAIN, VERIFY AND RECORD INFORMATION THAT IDENTIFIES EACH PERSON WHO OPENS AN ACCOUNT. WHAT THIS MEANS TO YOU: WHEN YOU OPEN AN ACCOUNT, WE WILL ASK FOR YOUR NAME, ADDRESS, (POSTAL OFFICE BOXES ARE UNACCEPTABLE), DATE OF BIRTH, TAXPAYER IDENTIFICATION NUMBER AND OTHER INFORMATION THAT WILL ALLOW US TO IDENTIFY YOU. WE MAY ALSO ASK TO SEE YOUR DRIVER’S LICENSE OR OTHER IDENTIFYING DOCUMENTS ON BEHALF OF A BUSINESS ENTITY, DOCUMENTS RELATING TO THE BUSINESS MAY ALSO BE REQUESTED. WE MAY ALSO USE NON-DOCUMENTARY METHODS TO VERIFY YOUR IDENTITY.
10.16 BeneficialOwnership Regulation. Effective May 11, 2018, Bank Secrecy Act regulation issued by the Financial Crime Enforcement Network (FinCEN) requires all legal entities to certify beneficial owner(s) and a control person by completing a Certification of Beneficial Ownership and Control Person form with every new account opened or as requested by the financial institutions.
10.17 PermittedTransfers. Notwithstanding anything contained herein or in any of the Loan Documents to the contrary, in all events, the trading, transfer, sale, pledge, assignment or conveyance of any shares in the Guarantor is allowed without any notice to or consent by the Bank provided the applicable liquidity and net worth covenants remain in compliance. In the event of any conflict between this Section 10.17 and any provisions of any other Loan Document, this Section 10.17 shall prevail and be binding on the parties.
[Remainder of page intentionally left blank. Signatures on following pages]
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EXECUTED as a sealed instrument as of the date and year first above written.
| PHR WNC, LLC, | |||
|---|---|---|---|
| /s/ Ryan Stark | By: | /s/ James A. Procaccianti | |
| Witness | Name: James A. Procaccianti | ||
| Title: Manager | |||
| STATE OF FLORIDA | ) | ||
| ) | |||
| COUNTY OF PALM BEACH | ) |
On this the 24th day of April, 2024, before me, the undersigned officer, personally appeared James A. Procaccianti, known to me (or satisfactorily proven) to be the Manager of PHR WNC, LLC a Delaware limited liability company and acknowledged that he executed the foregoing instrument for the purposes therein contained as his free act and deed and the free act and deed of said limited liability company.
In Witness Whereof I hereunto set my hand.
| /s/ Lynn Critides Horne |
|---|
| Notary Public/My Commission Expires: 4/30/27 |
[Signatures continue on following page]
Loan Agreement Signature Page
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EXECUTED as a sealed instrument as of the date and year first above written.
| LIBERTY BANK | ||
|---|---|---|
| /s/ Rebecca Giles | By: | /s/ Joe Premont |
| Witness | Name: Joe Premont | |
| Title: First Vice President Commercial Real<br> Estate |
Loan Agreement Signature Page
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Exhibit 10.3
COMMERCIAL NOTE
| $10,850,000.00 | Middletown, Connecticut |
|---|---|
| Dated: April 26, 2024 |
FOR VALUE RECEIVED, PHR WNC, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (hereinafter referred to as the “Borrower”), promises to pay to LIBERTY BANK, a mutual bank organized and existing under the laws of the State of Connecticut, having its principal place of business at 245 Long Hill Road, Middletown, Connecticut 06457 (hereinafter referred to as the “Bank”), or its order, at the banking house of said Bank, the principal sum of TEN MILLION EIGHT HUNDRED FIFTY THOUSAND and 00/100 ($10,850,000.00) DOLLARS in lawful money of the United States, together with interest thereon or on so much as is advanced and outstanding pursuant to the terms of that certain Loan Agreement by and between the Borrower and the Bank of even date herewith (the “Loan Agreement”) and payable at a variable rate for each Term SOFR Interest Period (as defined herein) equal to the sum of the one-month Term SOFR (as defined herein) plus two hundred twenty-fifty (250) basis points.
Interest only on so much as is advanced and outstanding shall be payable monthly for a period of two (2) years commencing on June 1, 2024 and continuing on the first day of each month thereafter (each such date a “Payment Date”) for the subsequent twenty-three (23) months (the “Interest Only Period”). The above notwithstanding, if the date of this Note is not the first day of a calendar month, the Borrower will pay in advance on the date of this Note interest for the actual number of days that will elapse from the date of this Note through the first day of the following calendar month and the first Payment Date will then be the first day of the subsequent calendar month. After the Interest Only Period, principal shall be amortized over a three hundred (300) month amortization schedule at the interest rate set forth above with consecutive monthly payments of fixed principal plus interest in accordance with said schedule commencing on the twenty-fifth (25th) Payment Date and continuing on the first day of each month thereafter until paid in full. The above notwithstanding, all principal and accrued interest thereon shall be due and payable in full five (5) years from the date of the Note (the “Maturity Date”).
During the Interest Only Period, interest will be calculated on the basis of the actual number of days elapsed over a year of three hundred sixty (360) days. After the Interest Only Period, interest will be calculated on the basis of a three hundred sixty (360) day year with twelve (12) thirty-day months There shall be a late charge in the amount of five (5.00%) percent of any regular monthly installment payment (but excluding, in all cases, any payment or amounts due at Maturity or acceleration of this Note) received more than ten (10) days after its due date. The Borrower may prepay this Note in whole or in part, subject however to the following: If a prepayment occurs prior to the first anniversary of this Note, there will be due and payable to the Bank a prepayment premium in the amount of three percent (3%) of the amount prepaid. If a prepayment of this Note occurs on or after the first anniversary of this Note but prior to the second anniversary of this Note, there will be due and payable to the Bank a prepayment premium in the amount of two percent (2%) of the amount prepaid. If a prepayment of this Note occurs on or after the second anniversary of this Note but prior to the third anniversary of this Note, there will be due and payable to the Bank a prepayment premium in the amount of one percent (1%) of the amount prepaid. On or after the third anniversary of this Note, this Note may be prepaid in whole or in part without penalty or premium. Notwithstanding anything contained herein, no such prepayment penalty shall be due and owing in connection with any prepayment pursuant to Section 5.2 of the Loan Agreement or Articles V and VI of the Mortgage. Any principal prepayment, whether by acceleration or otherwise, shall be applied against principal payments in the inverse order of their maturity.
The following additional definitions shall be applicable to this Note:
Business Day means any weekday that is a U.S. Government Securities Business Day and is not a legal holiday in New York and or a day on which banking institutions in New York are authorized or required by law or regulation to be closed. For the purposes hereof, “U.S. Government Securities Business Day” means any weekday, except any weekday on which any of the Securities Industry and Financial Markets Association, the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business because such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.
Reset Date shall mean the first day of each month commencing on June 1, 2024 and shall be the date as of which the calculation of Term SOFR Rate plus two hundred fifty (250) basis points shall be reset and put into effect as the interest rate for that succeeding Term SOFR Interest Period.
SOFR means the secured overnight financing rate published by the Term SOFR Administrator on the Term SOFR Administrator’s Website.
SOFR Administrator’s Website means the website of the Term SOFR Administrator currently at https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
SOFR Reserve Percentage shall mean, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
Term SOFR Administrator means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Bank in its reasonable discretion).
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Term SOFR means, with respect to any amount to which the Term SOFR applies, for any applicable Term SOFR Interest Period, the interest rate per annum determined by dividing (the resulting quotient rounded upwards, at the Bank’s discretion, to the nearest 1/100th of 1%) (A) the Term SOFR Reference Rate for a tenor comparable to such Term SOFR Interest Period, as published by the Term SOFR Administrator on the day that is two (2) Business Days prior to the first day of such Term SOFR Interest Period (the “Term SOFR Determination Date”), by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. The Term SOFR shall be adjusted automatically without notice to the Borrower on and as of (i) the Reset Date, and (ii) the effective date of any change in the SOFR Reserve Percentage.
Term SOFR Interest Period shall mean, with respect to any amount to which Term SOFR applies as set forth herein, the period of thirty (30) days (subject to the availability thereof) commencing on the date of the Note and on each successive Reset Date thereafter; provided that:
| (i) | if a Term SOFR Interest Period would end on a day that is not a Business Day, it shall end on the next<br>succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Term SOFR Interest Period shall<br>end on the next preceding Business Day; |
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| (ii) | a Term SOFR Interest Period may not end on a day after the Maturity Date; and |
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| (iii) | any Term SOFR Interest Period that begins on the last Business Day of a calendar month (or on a day for<br>which there is no numerically corresponding day in the last calendar month of such Term SOFR Interest Period) shall end on the last Business<br>Day of the next calendar month. |
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Term SOFR Reference Rate shall mean the forward-looking term rate based on SOFR.
Payments shall be made subject to the Following Business Day Convention, hereafter defined. "Following Business Day Convention" means the convention for adjusting any relevant date that would otherwise fall on a day that is not a Business Day, so that the date will be the date that is the first following day that is a Business Day.
At the option of the Bank, the entire outstanding principal balance of this Note and all accrued interest thereon shall become immediately due and payable without notice or demand upon the occurrence at any time of any of the following events, which events shall be referred to as an “Event of Default”, and the terms “Events of Default” or “Default” shall mean, whenever they are used in this Note, any one or more of the following events:
(1) Failure by the Borrower to make any loan payment of interest and/or principal or any other payment required to be paid hereunder within ten (10) days of the date when due;
(2) Omitted;
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(3) The occurrence of the following with respect to the Borrower:
(i) Commencement of a voluntary case under Title 11 of the United States Code or the entry of an Order for Relief in any voluntary case commenced by Borrower under said Title 11;
(ii) Admitting or failing to deny the material allegations of a petition filed against it, commencing an involuntary case under said Title 11, or if such petition or proceeding under said involuntary petition is not dismissed within forty-five (45) days from the date on which it has been filed or instituted;
(iii) Seeking relief as a debtor under any applicable law of any jurisdiction relating to the liquidation or reorganization of debtors, or to the modification or alteration of the rights of creditors, or by consenting to or acquiescing in such relief;
(iv) Making an assignment for the benefit of or entering into a composition with creditors, or appointing or consenting to the appointment of a receiver or other custodian for all or a substantial part of its property, by the entry of an Order of any Court of competent jurisdiction, including the Bankruptcy Court, finding it to be bankrupt or insolvent, or ordering or approving its liquidation, reorganization or any modification or alteration of the rights of its creditors, or assuming custody of or appointing a receiver or other custodian for all or a substantial part of its property.
(4) The occurrence and continuance of an Event of Default beyond applicable notice and cure periods under the terms of any of the Loan Documents, all of which are hereby incorporated herein as if set forth at length. For the purposes hereof, “Loan Documents” means this Note, the Loan Agreement, that certain Deed of Trust, Security Agreement and Assignment of Occupancy Agreements, Rents and Revenues of even date herewith and all other collateral agreements and related loan documents required by the Bank to be delivered, or caused to be delivered, by the Borrower in connection with this Note.
Upon the occurrence of any uncured Event of Default hereunder or upon maturity hereof (by acceleration or otherwise), the entire outstanding principal balance of this Note, at the option of the Bank, shall bear interest, from the date of occurrence of such Event of Default until payment (or, if permitted by the Bank, the curing of the Default), at the default rate of five (5.0%) percent per annum in excess of the interest rate otherwise in effect at the time of such Event of Default or Maturity Date.
Until an Event of Default has occurred, all payments hereunder shall be applied first to late charges, fees, expenses and other amounts due to the Bank (excluding principal and interest), if any, under this Note and under the other Loan Documents, then to interest which is due and payable under this Note and the remainder, if any, to principal outstanding under this Note. After the occurrence, and during the continuance, of an Event of Default, such payments shall be applied first to late charges, costs of collection and enforcement and other similar amounts, if any due under this Note or under the other Loan Documents, then to any obligations of the Borrower to the Bank as Bank in any order and combination that Bank may determine in its sole discretion.
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The Borrower and any endorsers and/or guarantors hereof severally waive presentment, protest, notice of protest, demand and notice of dishonor and nonpayment of this Note and expressly agree that this Note or any payment thereunder may be extended with or without consideration therefor, without in any way affecting the liability of the Borrower, endorsers and guarantors hereof.
Any and all deposits or other sums at any time credited by or due from the Bank and all securities or other property in the possession of the Bank belonging to the Borrower shall be subject to a security interest in favor of the Bank and shall be treated as collateral to secure the payment of this Note, performance of the obligations pursuant to this Note and the payment and performance of any and all other liabilities and obligations, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the aforesaid parties to the Bank, and upon the occurrence and during the continuance of an uncured Event of Default, the Bank may sell or dispose of any or all of said securities or other property and may exercise any and all of the rights accorded the Bank by the Uniform Commercial Code as in effect in the State of Connecticut. The provisions of this paragraph are cumulative to and not exclusive of any other rights that the Bank has with respect to such deposits, sums, securities or other personal property under other Agreements or applicable principles of law.
The Bank may transfer this Note and deliver to the transferee all or any part of the Mortgaged Property (as defined in the Mortgage), if any, then held by it as security hereunder, and the transferee shall become vested with all the powers and rights herein given to the Bank with respect to the property, if any, so transferred, but the Bank shall retain all rights and powers hereby given with respect to any property, if any, not so transferred.
No delay or omission on the part of the Bank in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. A waiver on any one occasion shall not be construed as a bar to or a waiver of any such right and/or remedy on any future occasion.
The Bank is hereby authorized, in its sole and exclusive discretion, and without notice to the Borrower, to date this Note as of the date when the transaction is first closed; cause or permit one or more co-makers, endorsers, guarantors, or other sureties to be added, released, substituted, or withdrawn as parties hereto, either before or after the making of the Loan; and to release, exchange, or substitute any collateral pledged, assigned, or secured to the Bank in connection herewith, by one or more co-makers, endorsers, guarantors, or sureties, and return the Note to the Borrower when paid in full.
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In the event any payment of principal or interest received upon this obligation and paid by the Borrower, or any surety, co-maker or endorser, shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or otherwise due to any party other than the Bank, then in any such event, the obligation of the Borrower, or any surety, co-maker, or endorser shall, jointly and severally, survive as an obligation due hereunder and shall not be discharged or satisfied by said payment or payments, notwithstanding return by the Bank to said parties of the original hereof, or any endorsement, or the like.
It is not intended under this Note to charge interest at a rate exceeding the maximum rate of interest permitted to be charged under applicable law, but if, notwithstanding, interest exceeding said maximum rate shall be paid hereunder, the excess shall be, at the Bank’s option, either (i) deemed a voluntary prepayment of principal or (ii) refunded to the Borrower.
The Borrower expressly warrants that the proceeds of the loan shall be used solely for business purposes and that this transaction is not a consumer transaction subject to Federal Reserve Board Regulation Z, or other “consumer protection” statutes, regulations, or restrictions, without exception.
In addition to principal, interest and late charges, the Bank shall be entitled to collect all reasonable costs of collection, including, but not limited to, reasonable and actual out or pocket attorneys’ fees and expenses, incurred in connection with the protection or realization of collateral or in connection with any of the Bank’s collection efforts, whether or not suit on this Note or any foreclosure proceeding is filed, and all such costs and expenses shall be payable on demand and until paid shall, to the extent permitted by applicable law, also be secured by the Loan Documents and by all other collateral held by the Bank as security for Borrower’s obligations to the Bank.
Any check, draft, money order or other instrument given in payment of all or any portion hereof may be accepted by the Bank, but the same shall not constitute payment hereunder or diminish any rights of the Bank until actual cash proceeds of such instrument are unconditionally received by the Bank.
In the event that any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part, or in any respect, or in the event that any one or more of the provisions of this Note shall operate, or would respectively operate, to invalidate this Note, then, in any such event such provision or provisions only shall be deemed to be null and void and of no force and effect and shall not affect any other provision of this Note, and the remaining provisions of this Note shall remain operative and in full force and effect.
The terms and conditions of this Note and all other Loan Documents constitute the entire agreement and supersede any prior agreements or undertakings, both written and oral, of the Bank and the Borrower with respect to the subject matter hereof and may not be modified or amended except in writing and signed by the Bank and the Borrower.
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All of the Bank’s rights and remedies, whether evidenced hereby or by any other agreement, instrument or paper, shall be cumulative and may be exercised singularly or concurrently.
The neuter, singular pronoun used throughout this document shall read as the masculine, feminine, or neuter form of pronoun, in singular or plural, as the context shall require.
The word “Borrower” where used herein shall mean the undersigned payer or other endorsers, co-signers, sureties and any other person signing this Note.
The word “Bank” where used herein shall mean the payee, holder or other endorsee of this Note who is in possession of it, or the bearer herein if this Note is, at the time, payable to the bearer.
The Borrower hereby agrees that all of the Bank’s rights were the result of negotiations between the Bank and the Borrower and were induced in a material respect by the benefits granted to the Borrower hereunder. THE BANK AND THE BORROWER IRREVOCABLY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY PROCEEDING HEREAFTER INSTITUTED BY OR AGAINST THE BANK OR THE BORROWER IN RESPECT TO THIS NOTE OR ARISING OUT OF ANY DOCUMENT, INSTRUMENT OR AGREEMENT EVIDENCING, GOVERNING OR SECURING THIS NOTE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO MAKE THE LOAN TO THE BORROWER EVIDENCED BY THIS NOTE. No officer of the Bank has authority to waive, condition, or modify this provision whether directly or indirectly following the Bank’s execution of the Loan Agreement.
The Borrower agrees to be bound by the terms and conditions as stated herein and acknowledges receipt of a completed copy of this Note.
This Note and the rights and obligations of the parties hereunder shall be construed and interpreted in accordance with the laws of the State of Connecticut. The Borrower hereby agrees that the execution of this Note and the performance of the Borrower’s obligations hereunder shall be deemed to have a State of Connecticut situs and Borrower shall be subject to the personal jurisdiction of the Courts of the State of Connecticut and the Federal Courts located therein with respect to any action the Bank or its successors or assigns may commence hereunder or thereunder. Accordingly, the Borrower hereby specifically and irrevocably consents to the jurisdiction of the Courts of the State of Connecticut and the Federal Courts located therein with respect to all matters concerning this Note or the enforcement of the foregoing.
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In order to comply with the USA Patriot Act and Federal Regulation, the Bank is required to notify you of the following important information when you open a new account:
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. What this means to you: When you open an account, we will ask for your name, address, (post office boxes are unacceptable), date of birth, taxpayer identification number and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents on behalf of a business entity, documents relating to the business may also be requested. We may also use non-documentary methods to verify your identity.
This Note is secured by a first mortgage on the property located at 1014 Ashes Drive, Wilmington, North Carolina (the “Mortgaged Property”), as more particularly described in the Mortgage, as well as other collateral as set forth in the Loan Documents executed in connection herewith.
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Signature and acknowledgement
follow on the next page
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Executed as a sealed instrument as of the day and year first above written.
| PHR WNC, LLC | |||
|---|---|---|---|
| /s/ Ryan Stark | By: | /s/ James A. Procaccianti | |
| Witness | Name: James A. Procaccianti | ||
| Title: Manager | |||
| /s/ Gregory<br> Vickowski | |||
| Witness | |||
| STATE OF FLORIDA | ) | ||
| ) | |||
| COUNTY OF PALM BEACH | ) |
On this the 24th day of April, 2024, before me, the undersigned officer, personally appeared James A. Procaccianti, known to me (or satisfactorily proven) to be the Manager of PHR WNC, LLC a Delaware limited liability company and acknowledged that he executed the foregoing instrument for the purposes therein contained as his free act and deed and the free act and deed of said limited liability company.
In Witness Whereof I hereunto set my hand.
| /s/ Lynn Critides Horne |
|---|
| Notary Public/My Commission Expires: 4/30/27 |
Commercial Note – Signature page
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Exhibit 10.4
AMENDED AND RESTATED COMMERCIAL NOTE
| $12,820,000.00 | Middletown, Connecticut |
|---|---|
| Dated: April 26, 2024 |
This Amended and Restated Commercial Note is made as of the 26th day of April, 2024 by PHR STPFL, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (hereinafter referred to as the “Borrower”), in favor of LIBERTY BANK, a mutual bank organized and existing under the laws of the State of Connecticut, having its principal place of business at 245 Long Hill Road, Middletown, Connecticut 06457 (hereinafter referred to as the "Bank").
THIS AMENDED AND RESTATED COMMERCIAL NOTE AMENDS AND RESTATES IN FULL THAT CERTAIN PROMISSORY NOTE BY BORROWER IN FAVOR OF JPMORGAN CHASE BANK, NATIONAL ASSOCIATION DATED JUNE 29, 2017 IN THE AMOUNT OF $13,325,000.00 (‘ORIGINAL NOTE”), AS ASSIGNED TO WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMDB COMMERCIAL MORTGAGE SECURITIES TRUST 2017- C7, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2017-C7 DATED OCTOBER 31, 2017 AS ASSUMED BY BORROWER AND PHR STPFL OPCO SUB, LLC PURSUANT TO LOAN ASSUMPTION AND MODIFICATION AGREEMENT DATED MARCH 29, 2018, RECORDED IN OFFICIAL RECORDS BOOK 199995, PAGE 1084 OF THE PUBLIC RECORDS OF PINELLAS COUNTY, FLORIDA (INSTRUMENT NO. 2018099650) (“ASSUMPTION AGREEMENT”). FLORIDA DOCUMENTARY STAMP TAX IN THE AMOUNT OF $46,637.50 WERE PAID IN CONNECTION WITH THE ORIGINAL NOTE IN CONNECTION WITH THE RECORDATION OF THAT CERTAIN MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND SECURITY AGREEMENT (THE “ORIGINAL MORTGAGE”) OF BORROWER TO JPMORGAN CHASE BANK, NATIONAL ASSOCIATION DATED JUNE 29, 2017 RECORDED IN THE PUBLIC RECORDS OF PINELLAS COUNTY, FLORIDA ON JUNE 30, 2017 IN OFFICIAL RECORDS BOOK 19688, PAGE 110 (INSTRUMENT NO, 2017204868) AND FLORIDA DOCUMENTARY STAMP TAX IN THE AMOUNT OF $46,637.50 WERE PAID IN CONNECTION WITH THE ASSUMPTION AGREEMENT. NO ADDITIONAL DOCUMENTARY STAMP TAX IS DUE AND PAYABLE IN CONNECTION WITH THE EXECUTION OF THIS NOTE.
RECITALS:
1. The Bank is making a loan (the “Loan”) in the principal amount of TWELVE MILLION EIGHT HUNDRED TWENTY THOUSAND and 00/100 ($12,820,000.00) DOLLARS the proceeds of which are to be used to refinance the Original Mortgage on the Borrower’s property at 940 5^th^ Avenue South, St. Petersburg, Florida; and
2. As part of the refinancing of the Original Mortgage, and at the request of the Borrower, the Bank has agreed to accept the assignment, and is now the holder of, that certain Promissory Note of the Borrower to JPMorgan Chase Bank, National Association dated June 29, 2017 in the amount of $13,325,000.00 (the “Original Note”) which was previously assigned to Wells Fargo Bank, National Association, as Trustee for the benefit of the registered holders of JPMDB Commercial Mortgage Securities Trust 2017- C7, Commercial Mortgage Pass-Through Certificates, Series 2017-C7.
2. Borrower confirms that that the total principal amount outstanding under the Original Note as of the date hereof is $12,477,877.10 (the “Existing Loan Balance”) and that there are no offsets, advances, setoffs, defenses or counterclaims against payment of said amount.
3. The Bank and Borrower have agreed to modify the terms of the Original Note and in connection therewith, to amend, restate and consolidate the Original Note into a single Amended, Restated and Consolidated Note upon the terms and conditions set forth herein.
NOW, THEREFORE, Borrower and the Bank hereby amend and restate in its entirety the Original Note and consolidate the same into this Amended, Restated and Consolidated Note (the Original Note and this Amended, Restated and Consolidated Note are hereinafter collectively, referred to as the "Note") as follows:
FOR VALUE RECEIVED, PHR STPFL, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (hereinafter referred to as the “Borrower”), promises to pay to LIBERTYBANK, a mutual bank organized and existing under the laws of the State of Connecticut, having its principal place of business at 245 Long Hill Road, Middletown, Connecticut 06457 (hereinafter referred to as the “Bank”), or its order, at the banking house of said Bank, the principal sum of TWELVE MILLION EIGHT HUNDRED TWENTY THOUSAND and 00/100 ($12,820,000.00) DOLLARS in lawful money of the United States, together with interest thereon or on so much as is advanced and outstanding pursuant to the terms of that certain Loan Agreement by and between the Borrower and the Bank of even date herewith (the “Loan Agreement”) and payable at a variable rate for each Term SOFR Interest Period (as defined herein) equal to the sum of the one-month Term SOFR (as defined herein) plus two hundred twenty-fifty (250) basis points.
Interest only on so much as is advanced and outstanding shall be payable monthly for a period of two (2) years commencing on June 1, 2024 and continuing on the first day of each month thereafter (each such date a “Payment Date”) for the subsequent twenty-three (23) months (the “Interest Only Period”). The above notwithstanding, if the date of this Note is not the first day of a calendar month, the Borrower will pay in advance on the date of this Note interest for the actual number of days that will elapse from the date of this Note through the first day of the following calendar month and the first Payment Date will then be the first day of the subsequent calendar month. After the Interest Only Period, principal shall be amortized over a three hundred (300) month amortization schedule at the interest rate set forth above with consecutive monthly payments of fixed principal plus interest in accordance with said schedule commencing on the twenty-fifth (25th) Payment Date and continuing on the first day of each month thereafter until paid in full. The above notwithstanding, all principal and accrued interest thereon shall be due and payable in full five (5) years from the date of the Note (the “Maturity Date”).
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During the Interest Only Period, interest will be calculated on the basis of the actual number of days elapsed over a year of three hundred sixty (360) days. After the Interest Only Period, interest will be calculated on the basis of a three hundred sixty (360) day year with twelve (12) thirty-day months There shall be a late charge in the amount of five (5.00%) percent of any regular monthly installment payment (but excluding, in all cases, any payment or amounts due at Maturity or acceleration of this Note) received more than ten (10) days after its due date. The Borrower may prepay this Note in whole or in part, subject however to the following: If a prepayment occurs prior to the first anniversary of this Note, there will be due and payable to the Bank a prepayment premium in the amount of three percent (3%) of the amount prepaid. If a prepayment of this Note occurs on or after the first anniversary of this Note but prior to the second anniversary of this Note, there will be due and payable to the Bank a prepayment premium in the amount of two percent (2%) of the amount prepaid. If a prepayment of this Note occurs on or after the second anniversary of this Note but prior to the third anniversary of this Note, there will be due and payable to the Bank a prepayment premium in the amount of one percent (1%) of the amount prepaid. On or after the third anniversary of this Note, this Note may be prepaid in whole or in part without penalty or premium. Notwithstanding anything contained herein, no such prepayment penalty shall be due and owing in connection with any prepayment pursuant to Section 5.2 of the Loan Agreement or Articles V and VI of the Mortgage. Any principal prepayment, whether by acceleration or otherwise, shall be applied against principal payments in the inverse order of their maturity.
The following additional definitions shall be applicable to this Note:
Business Day means any weekday that is a U.S. Government Securities Business Day and is not a legal holiday in New York and or a day on which banking institutions in New York are authorized or required by law or regulation to be closed. For the purposes hereof, “U.S. Government Securities Business Day” means any weekday, except any weekday on which any of the Securities Industry and Financial Markets Association, the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business because such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.
Reset Date shall mean the first day of each month commencing on June 1, 2024 and shall be the date as of which the calculation of Term SOFR Rate plus two hundred fifty (250) basis points shall be reset and put into effect as the interest rate for that succeeding Term SOFR Interest Period.
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SOFR means the secured overnight financing rate published by the Term SOFR Administrator on the Term SOFR Administrator’s Website.
SOFR Administrator’s Website means the website of the Term SOFR Administrator currently at https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
SOFR Reserve Percentage shall mean, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
Term SOFR Administrator means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Bank in its reasonable discretion).
Term SOFR means, with respect to any amount to which the Term SOFR applies, for any applicable Term SOFR Interest Period, the interest rate per annum determined by dividing (the resulting quotient rounded upwards, at the Bank’s discretion, to the nearest 1/100th of 1%) (A) the Term SOFR Reference Rate for a tenor comparable to such Term SOFR Interest Period, as published by the Term SOFR Administrator on the day that is two (2) Business Days prior to the first day of such Term SOFR Interest Period (the “Term SOFR Determination Date”), by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. The Term SOFR shall be adjusted automatically without notice to the Borrower on and as of (i) the Reset Date, and (ii) the effective date of any change in the SOFR Reserve Percentage.
Term SOFR Interest Period shall mean, with respect to any amount to which Term SOFR applies as set forth herein, the period of thirty (30) days (subject to the availability thereof) commencing on the date of the Note and on each successive Reset Date thereafter; provided that:
| (i) | if a Term<br> SOFR Interest Period would end on a day that is not a Business Day, it shall end on the next<br> succeeding Business Day unless such day falls in the next succeeding calendar month in which<br> case the Term SOFR Interest Period shall end on the next preceding Business Day; |
|---|---|
| (ii) | a Term<br> SOFR Interest Period may not end on a day after the Maturity Date; and |
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| (iii) | any Term<br> SOFR Interest Period that begins on the last Business Day of a calendar month (or on a day<br> for which there is no numerically corresponding day in the last calendar month of such Term<br> SOFR Interest Period) shall end on the last Business Day of the next calendar month. |
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Term SOFR Reference Rate shall mean the forward-looking term rate based on SOFR.
Payments shall be made subject to the Following Business Day Convention, hereafter defined. "Following Business Day Convention" means the convention for adjusting any relevant date that would otherwise fall on a day that is not a Business Day, so that the date will be the date that is the first following day that is a Business Day.
At the option of the Bank, the entire outstanding principal balance of this Note and all accrued interest thereon shall become immediately due and payable without notice or demand upon the occurrence at any time of any of the following events, which events shall be referred to as an “Event of Default”, and the terms “Events of Default” or “Default” shall mean, whenever they are used in this Note, any one or more of the following events:
(1) Failure by the Borrower to make any loan payment of interest and/or principal or any other payment required to be paid hereunder within ten (10) days of the date when due;
(2) Omitted;
(3) The occurrence of the following with respect to the Borrower:
(i) Commencement of a voluntary case under Title 11 of the United States Code or the entry of an Order for Relief in any voluntary case commenced by Borrower under said Title 11;
(ii) Admitting or failing to deny the material allegations of a petition filed against it, commencing an involuntary case under said Title 11, or if such petition or proceeding under said involuntary petition is not dismissed within forty-five (45) days from the date on which it has been filed or instituted;
(iii) Seeking relief as a debtor under any applicable law of any jurisdiction relating to the liquidation or reorganization of debtors, or to the modification or alteration of the rights of creditors, or by consenting to or acquiescing in such relief;
(iv) Making an assignment for the benefit of or entering into a composition with creditors, or appointing or consenting to the appointment of a receiver or other custodian for all or a substantial part of its property, by the entry of an Order of any Court of competent jurisdiction, including the Bankruptcy Court, finding it to be bankrupt or insolvent, or ordering or approving its liquidation, reorganization or any modification or alteration of the rights of its creditors, or assuming custody of or appointing a receiver or other custodian for all or a substantial part of its property.
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(4) The occurrence and continuance of an Event of Default beyond applicable notice and cure periods under the terms of any of the Loan Documents, all of which are hereby incorporated herein as if set forth at length. For the purposes hereof, “Loan Documents” means this Note, the Loan Agreement, that certain Mortgage, Security Agreement and Assignment of Occupancy Agreements, Rents and Revenues of even date herewith and all other collateral agreements and related loan documents required by the Bank to be delivered, or caused to be delivered, by the Borrower in connection with this Note.
Upon the occurrence of any uncured Event of Default hereunder or upon maturity hereof (by acceleration or otherwise), the entire outstanding principal balance of this Note, at the option of the Bank, shall bear interest, from the date of occurrence of such Event of Default until payment (or, if permitted by the Bank, the curing of the Default), at the default rate of five (5.0%) percent per annum in excess of the interest rate otherwise in effect at the time of such Event of Default or Maturity Date.
Until an Event of Default has occurred, all payments hereunder shall be applied first to late charges, fees, expenses and other amounts due to the Bank (excluding principal and interest), if any, under this Note and under the other Loan Documents, then to interest which is due and payable under this Note and the remainder, if any, to principal outstanding under this Note. After the occurrence, and during the continuance, of an Event of Default, such payments shall be applied first to late charges, costs of collection and enforcement and other similar amounts, if any due under this Note or under the other Loan Documents, then to any obligations of the Borrower to the Bank as Bank in any order and combination that Bank may determine in its sole discretion.
The Borrower and any endorsers and/or guarantors hereof severally waive presentment, protest, notice of protest, demand and notice of dishonor and nonpayment of this Note and expressly agree that this Note or any payment thereunder may be extended with or without consideration therefor, without in any way affecting the liability of the Borrower, endorsers and guarantors hereof.
Any and all deposits or other sums at any time credited by or due from the Bank and all securities or other property in the possession of the Bank belonging to the Borrower shall be subject to a security interest in favor of the Bank and shall be treated as collateral to secure the payment of this Note, performance of the obligations pursuant to this Note and the payment and performance of any and all other liabilities and obligations, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the aforesaid parties to the Bank, and upon the occurrence and during the continuance of an uncured Event of Default, the Bank may sell or dispose of any or all of said securities or other property and may exercise any and all of the rights accorded the Bank by the Uniform Commercial Code as in effect in the State of Connecticut. The provisions of this paragraph are cumulative to and not exclusive of any other rights that the Bank has with respect to such deposits, sums, securities or other personal property under other Agreements or applicable principles of law.
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The Bank may transfer this Note and deliver to the transferee all or any part of the Mortgaged Property (as defined in the Mortgage), if any, then held by it as security hereunder, and the transferee shall become vested with all the powers and rights herein given to the Bank with respect to the property, if any, so transferred, but the Bank shall retain all rights and powers hereby given with respect to any property, if any, not so transferred.
No delay or omission on the part of the Bank in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. A waiver on any one occasion shall not be construed as a bar to or a waiver of any such right and/or remedy on any future occasion.
The Bank is hereby authorized, in its sole and exclusive discretion, and without notice to the Borrower, to date this Note as of the date when the transaction is first closed; cause or permit one or more co-makers, endorsers, guarantors, or other sureties to be added, released, substituted, or withdrawn as parties hereto, either before or after the making of the Loan; and to release, exchange, or substitute any collateral pledged, assigned, or secured to the Bank in connection herewith, by one or more co-makers, endorsers, guarantors, or sureties, and return the Note to the Borrower when paid in full.
In the event any payment of principal or interest received upon this obligation and paid by the Borrower, or any surety, co-maker or endorser, shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or otherwise due to any party other than the Bank, then in any such event, the obligation of the Borrower, or any surety, co-maker, or endorser shall, jointly and severally, survive as an obligation due hereunder and shall not be discharged or satisfied by said payment or payments, notwithstanding return by the Bank to said parties of the original hereof, or any endorsement, or the like.
It is not intended under this Note to charge interest at a rate exceeding the maximum rate of interest permitted to be charged under applicable law, but if, notwithstanding, interest exceeding said maximum rate shall be paid hereunder, the excess shall be, at the Bank’s option, either (i) deemed a voluntary prepayment of principal or (ii) refunded to the Borrower.
The Borrower expressly warrants that the proceeds of the loan shall be used solely for business purposes and that this transaction is not a consumer transaction subject to Federal Reserve Board Regulation Z, or other “consumer protection” statutes, regulations, or restrictions, without exception.
In addition to principal, interest and late charges, the Bank shall be entitled to collect all reasonable costs of collection, including, but not limited to, reasonable and actual out or pocket attorneys’ fees and expenses, incurred in connection with the protection or realization of collateral or in connection with any of the Bank’s collection efforts, whether or not suit on this Note or any foreclosure proceeding is filed, and all such costs and expenses shall be payable on demand and until paid shall, to the extent permitted by applicable law, also be secured by the Loan Documents and by all other collateral held by the Bank as security for Borrower’s obligations to the Bank.
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Any check, draft, money order or other instrument given in payment of all or any portion hereof may be accepted by the Bank, but the same shall not constitute payment hereunder or diminish any rights of the Bank until actual cash proceeds of such instrument are unconditionally received by the Bank.
In the event that any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part, or in any respect, or in the event that any one or more of the provisions of this Note shall operate, or would respectively operate, to invalidate this Note, then, in any such event such provision or provisions only shall be deemed to be null and void and of no force and effect and shall not affect any other provision of this Note, and the remaining provisions of this Note shall remain operative and in full force and effect.
The terms and conditions of this Note and all other Loan Documents constitute the entire agreement and supersede any prior agreements or undertakings, both written and oral, of the Bank and the Borrower with respect to the subject matter hereof and may not be modified or amended except in writing and signed by the Bank and the Borrower.
All of the Bank’s rights and remedies, whether evidenced hereby or by any other agreement, instrument or paper, shall be cumulative and may be exercised singularly or concurrently.
The neuter, singular pronoun used throughout this document shall read as the masculine, feminine, or neuter form of pronoun, in singular or plural, as the context shall require.
The word “Borrower” where used herein shall mean the undersigned payer or other endorsers, co-signers, sureties and any other person signing this Note.
The word “Bank” where used herein shall mean the payee, holder or other endorsee of this Note who is in possession of it, or the bearer herein if this Note is, at the time, payable to the bearer.
The Borrower hereby agrees that all of the Bank’s rights were the result of negotiations between the Bank and the Borrower and were induced in a material respect by the benefits granted to the Borrower hereunder. THE BANK AND THE BORROWER IRREVOCABLY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY PROCEEDING HEREAFTER INSTITUTED BY OR AGAINST THE BANK OR THE BORROWER IN RESPECT TO THIS NOTE OR ARISING OUT OF ANY DOCUMENT, INSTRUMENT OR AGREEMENT EVIDENCING, GOVERNING OR SECURING THIS NOTE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO MAKE THE LOAN TO THE BORROWER EVIDENCED BY THIS NOTE. No officer of the Bank has authority to waive, condition, or modify this provision whether directly or indirectly following the Bank’s execution of the Loan Agreement.
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The Borrower agrees to be bound by the terms and conditions as stated herein and acknowledges receipt of a completed copy of this Note.
This Note and the rights and obligations of the parties hereunder shall be construed and interpreted in accordance with the laws of the State of Connecticut. The Borrower hereby agrees that the execution of this Note and the performance of the Borrower’s obligations hereunder shall be deemed to have a State of Connecticut situs and Borrower shall be subject to the personal jurisdiction of the Courts of the State of Connecticut and the Federal Courts located therein with respect to any action the Bank or its successors or assigns may commence hereunder or thereunder. Accordingly, the Borrower hereby specifically and irrevocably consents to the jurisdiction of the Courts of the State of Connecticut and the Federal Courts located therein with respect to all matters concerning this Note or the enforcement of the foregoing.
In order to comply with the USA Patriot Act and Federal Regulation, the Bank is required to notify you of the following important information when you open a new account:
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. What this means to you: When you open an account, we will ask for your name, address, (post office boxes are unacceptable), date of birth, taxpayer identification number and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents on behalf of a business entity, documents relating to the business may also be requested. We may also use non-documentary methods to verify your identity.
This Note is secured by a first mortgage on the property located at 940 5^th^ Avenue South, St. Petersburg, Florida (the “Mortgaged Property”), as more particularly described in the Mortgage, as well as other collateral as set forth in the Loan Documents executed in connection herewith.
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Signature and acknowledgement follow on the next page
| 9 |
| --- |
Executed as a sealed instrument as of the day and year first above written.
| PHR STPFL, LLC | |||
|---|---|---|---|
| /s/ Ryan Stark | By: | /s/ James A. Procaccianti | |
| Witness | Name: James A. Procaccianti | ||
| Title: Manager | |||
| /s/ Gregory<br> Vickowski | |||
| Witness | |||
| STATE OF FLORIDA | ) | ||
| ) | |||
| COUNTY OF PALM BEACH | ) |
On this the 24th day of April, 2024, before me, the undersigned officer, personally appeared James A. Procaccianti, known to me (or satisfactorily proven) to be the Manager of PHR STPFL, LLC a Delaware limited liability company and acknowledged that he executed the foregoing instrument for the purposes therein contained as his free act and deed and the free act and deed of said limited liability company.
In Witness Whereof I hereunto set my hand.
| /s/ Lynn Critides Horne |
|---|
| Notary Public/My Commission Expires: 4/30/27 |
Amended, Restated and Consolidated Commercial Note – Signature Page
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Exhibit 10.5
GUARANTY OF RECOURSE CARVE-OUTS
THIS GUARANTY OF RECOURSE CARVE-OUTS (the "Guaranty"), dated as of the 26th day of April, 2024 (the “Effective Date”) is made by PROCACCIANTI HOTEL REIT, INC. a Maryland corporation with a usual place of business at c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (the "Guarantor") in favor of LIBERTY BANK, a mutual bank organized and existing under the laws of the State of Connecticut, having its principal place of business at 245 Long Hill Road, Middletown, Connecticut 06457 (the "Lender").
ARTICLE I: RECITALS
1.1 The Lender is making a loan (the "Loan") in the amount of $12,820,000.00 to PHR STPFL, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (the “Borrower” and a subsidiary of the Guarantor) pursuant to a Loan Agreement dated as of the date hereof by and between the Borrower and the Lender (as the same may be amended, restated, renewed, extended, supplemented or otherwise modified from time to time, the "Loan Agreement"). The Borrower will use the proceeds of the Loan to refinance the existing first mortgage on the Borrower’s property at 940 5^th^Avenue South, St. Petersburg, Florida (the “Mortgaged Premises”) upon which is located a 119 room Staybridge Suites hotel facility (the "Hotel") operated by PHR STPFL OPCO SUB, LLC a Delaware limited liability company with an address at in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (the “Operating Company”). Collectively, the Loan Agreement, and all documents executed and delivered by the parties in connection therewith are referred to as the "Loan Documents".
1.2 Lender requires as a condition to the making of the Loan that Guarantor shall have executed and delivered this Guaranty for the benefit of Lender and this Guaranty is executed and delivered to induce the Lender to make the Loan and to lend the Loan Proceeds to the Borrower. The Guarantor represents and warrants that the Guarantor is an interested party and directly benefits from the consummation of the Loan.
1.3 All capitalized words or phrases in this Guaranty which are not otherwise specifically defined hereinabove or elsewhere in this Guaranty shall have the same meaning herein as assigned in the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and in order to induce Lender to make the Loan to Borrower, Guarantor hereby represents, warrants and covenants to Lender as follows:
ARTICLE II: THE GUARANTY
2.1 ObligationsGuaranteed.
| A. | Environmental. Guarantor unconditionally guarantees to Lender the performance of the Borrower’s<br>obligations under the Hazardous Materials Compliance and Indemnity Agreement of the Borrower to the Lender and the reimbursement to the<br>Lender for the reasonable costs incurred by the Lender acting to protect his interest as lienholder or otherwise in the Project Premises<br>to effect filings for, remediate, dispute or otherwise respond to a release (past, present or future), or imminent threat of release,<br>of regulated hazardous materials to or upon the Project Premises after the Borrower has failed to take such action subject to and as required<br>pursuant to the Hazardous Materials Compliance and Indemnity Agreement (the “Environmental Obligation”). |
|---|---|
| B. | Fraud. Guarantor unconditionally guarantees to Lender the reimbursement to the Lender for actual<br>out of pocket damages and reasonable costs incurred by the Lender as a result of the following (the “Fraud Obligation”): (a) fraud<br>or material misrepresentation by or on behalf of the Borrower or the Operating Company in connection with the Loan or the operation of<br>the Hotel; (b) intentional willful misconduct of the Borrower or the Operating Company constituting waste in connection with the<br>operation of the Hotel; (c) the removal or disposal of all or any material portion of the Collateral, as defined under the Loan Agreement<br>by the Borrower or the Operating Company in connection with the operation outside the ordinary course of business of the Hotel after an<br>Event of Default and expiration of any applicable cure or grace period under the Loan Documents, unless such Collateral is replaced with<br>new Collateral of substantially the same value as the removed Collateral; (d) the intentional misappropriation, misapplication or<br>conversion of funds inconsistent with the Loan Documents, by the Borrower or the Operating Company which funds arise from: (i) any<br>insurance proceeds paid by reason of any loss, damage or destruction to all or any part of the Mortgaged Premises, (ii) any awards<br>or other amounts received in connection with the condemnation of all or any part of the Mortgaged Premises, (iii) any rents revenues<br>or other income from the Mortgaged Premises which are not first applied to current and fixed operating expenses (including taxes, assessments<br>and/or utility charges) and debt service on the Mortgaged Premises, including security deposits of tenants/occupants of the Mortgaged<br>Premises which are not turned over upon foreclosure or other exercise of its rights by the Lender; (iv)Omitted; (v) Omitted; or (vi) Omitted;<br>and (e) unpaid taxes, assessments and/or utility charges with respect to the Mortgaged Premises (provided there is sufficient cash<br>flow from operations at the Hotel made available to Borrower to pay the same).. |
| --- | --- |
All of the above referenced obligations in Section 2.1 are referred to in this Guaranty collectively as the “Guarantor’s Obligations.” Notwithstanding anything contained herein to the contrary, Guarantor Obligations shall not include any costs or damages incurred by Lender which arise from punitive, consequential, special or exemplary damages or diminution of value losses.
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2.2 GuarantyAbsolute and Unconditional. Subject to the limits set forth in Section 2.1, this Guaranty is an absolute, unconditional, present and continuing guaranty of payment and performance of the Guarantor Obligations and not of collection and is in no way conditioned or contingent upon any attempt to enforce Lender’s rights against Borrower or to collect from the Borrower or upon any other condition or contingency; accordingly, Lender shall have the right to proceed against Guarantor to the extent of this Guaranty immediately upon any Event of Default and expiration of any applicable cure or grace period (as defined in the Loan Agreement) under any mortgages securing the Loan (collectively, the “Mortgage”) or any of the Loan Documents without taking any prior action or proceeding to enforce the Loan Documents or any of them or for the liquidation or foreclosure of any security Lender may at any time hold pursuant thereto. Unless and until the Loan are paid in full, Guarantor hereby waives and releases any claim (within the meaning of 11 U.S.C. § 101) which Guarantor may have against Borrower arising from a payment made by Guarantor under this Guaranty and agrees not to assert or take advantage of any subrogation rights of Guarantor or any right of Guarantor to proceed against Borrower for reimbursement unless and until the Loan are paid in full. It is expressly understood that the waivers and agreements of Guarantor constitute additional and cumulative benefits given to Lender for its security and as an inducement for its extension of the Loan to Borrower. After an Event of Default and expiration of any applicable cure or grace period, Lender may at any time and from time to time take any and/or all actions and enforce all rights and remedies available to it hereunder or under applicable law to collect from Guarantor any amounts then due and payable hereunder by Guarantor and/or to cause Guarantor to fulfill his, her or its obligations hereunder.
2.3 LiabilityUnimpaired. Except as specifically limited herein, Guarantor’s liability hereunder for the Guarantor Obligations shall in no way be limited or impaired by, and Guarantor hereby consents to and agrees to be bound by, any amendment or modification of the provisions of any of the Loan Documents or any other instrument made to or with Lender by Borrower or Guarantor. In addition, Guarantor’s liability hereunder for the Guarantor Obligations shall in no way be limited or impaired by (i) any extensions of time for performance required by any of the Loan Documents, (ii) any sale or assignment of the Loan Documents or foreclosure of the Mortgage or any sale or transfer of all or part of the Project Premises covered by the Mortgage, (iii) any exculpatory provision in any of said instruments limiting Lender’s recourse to the Project Premises or to any other security, or limiting Lender’s rights to a deficiency judgment against Borrower, (iv) the release of Borrower or any other person from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law or otherwise, (v) the release or substitution in whole or in part of any security for the Loan, (vi) Lender’s failure to record the Mortgage or file any UCC financing statements (or Lender’s improper recording or filing of same) or to otherwise perfect, protect, secure or insure any security interest or lien given as security for the Loan, (vii) the invalidity, irregularity or unenforceability, in whole or in part, of any of the Loan Documents, this Guaranty or any other instrument or agreement executed or delivered to Lender in connection with the Loan, (viii) the inaccuracy of any of the representations and warranties made by Borrower in the Loan Agreement, the Mortgage, the other Loan Documents or any disbursement certificates or requests for disbursements made under the Loan Agreement, or (ix) any other action or circumstance whatsoever which constitutes, or might be construed to constitute, a legal or equitable discharge or defense (except full payment and satisfaction) of Borrower for its obligations under any of the Loan Documents or of Guarantor under this Guaranty, it being the intention of Guarantor that the obligations of Guarantor for the Guarantor Obligations hereunder are absolute, unconditional and irrevocable to the extent provided in Section 2.1 herein and except as otherwise provided herein; and, in any such case, whether with or without notice to Guarantor and with or without consideration.
2.4 Litigation,Compliance with Judgments. The Guarantor represents and warrants that there are no actions, suits or proceedings pending or to Guarantor’s knowledge threatened against or affecting the Guarantor, at law, in equity or before or by any governmental authorities which would have a material effect on such Guarantor’s ability to perform his obligations hereunder. To the best of Guarantor’s actual knowledge, Guarantor is not in default with respect to any order, writ, injunction, decree or demand of any court or governmental authorities.
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2.5 Authorizationand Enforceability; No Conflicts. The Guarantor has the full power and authority to enter into and perform its obligations under this Guaranty and this Guaranty is a legal, valid and binding instrument, enforceable against Guarantor in accordance with its terms, subject to applicable law, bankruptcy and laws of equity. The execution, delivery and performance of this Guaranty have been authorized by all proper and necessary actions of the Guarantor. The Guarantor represents and warrants that to the best of its knowledge, the consummation of the transactions contemplated hereby and the performance of this Guaranty have not resulted and will not result in any breach of, or constitute a default under, any mortgage, deed of trust, lease, bank loan or credit agreement, corporate charter, by-laws, partnership agreement or other instrument to which such Guarantor is a party or by which such Guarantor may be bound or affected.
2.6 Compliancewith Laws. The Guarantor represents and warrants that such Guarantor is to the best of its knowledge, in compliance with, and the transactions contemplated by the Loan Documents and this Guaranty does not and will not violate any provision of, or require any filing, registration, consent or approval under, any federal, state or local law, rule, regulation, ordinance, order, writ, judgment, injunction, decree, determination or award (hereinafter, “Laws”) presently in effect having applicability to such Guarantor. Guarantor will comply promptly with all Laws now or hereafter in effect having applicability to Guarantor; provided, however that Guarantor may challenge the applicability, interpretation or validity of any such Laws on reasonable legal grounds without violating the foregoing, so long as the rights or collateral of the Lender are not jeopardized thereby in the reasonable judgment of the Lender.
2.7 Releaseof Guaranty. Guarantor’s guaranty shall continue in full force in effect until the Loan and all other Obligations of the Borrower to the Bank under the Loan Documents are paid in full. Notwithstanding anything to the contrary contained herein or in the Loan Documents, the Guarantor shall not have any liability for any Guarantor Obligations: (a) which first occur after a transfer of the Mortgaged Property to a lender or third-party (that is not an affiliate of Borrower or Guarantor) resulting from a foreclosure or deed-in-lieu thereof or during any period that a receiver is in possession of the Mortgaged Property, (b) arising from the intentional acts of the Lender or exercise of its rights under the Loan Documents or (c) upon payment in full of the outstanding principal balance and accrued and unpaid interest on the Loan and all other sums owing under the Loan Documents (excluding any contingent obligations that survive repayment of the Loan) in accordance with their terms.
2.8 Non-WaiverRemedies Cumulative. No failure or delay on Lender’s part in exercising any right, power or privilege under any of the Loan Documents, this Guaranty or any other document made to or with Lender in connection with the Loan shall operate as a waiver of any such privilege, power or right or shall be deemed to constitute Lender’s acquiescence in any default by Borrower or Guarantor under any of said documents. A waiver by Lender of any right or remedy under any of the Loan Documents, this Guaranty or any other document made to or with Lender in connection with the Loan on any one occasion shall not be construed as a bar to any right or remedy which Lender otherwise would have on any future occasion. The rights and remedies provided in said documents are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.
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2.9 Representationsand Warranties of Guarantor. The Guarantor makes the following representations, warranties and covenants as an inducement to the Lender to make the Loan:
| A. | Suits, Proceedings. There are no suits or proceedings pending or to the actual knowledge of the Guarantor<br>threatened against or affecting the Guarantor or the Project Premises nor any proceedings involving the Guarantor by or before Governmental<br>Authorities which bring into question the validity or enforceability of this Agreement or the Loan Documents to which it is a party and<br>which, if determined adversely to the Guarantor, would have a materially adverse effect on the Guarantor’s financial conditions<br>or businesses or the ability of the Guarantor to enter into and carry out the terms and provisions of this Agreement. |
|---|---|
| B. | Conflicts, Records. To the Guarantor’s knowledge, the execution, delivery, and performance of this<br>Agreement and all Loan Documents to which Guarantor is a party will not conflict with or result in any breach or contravention of, or<br>the creation of any lien under, any indenture, agreement, lease, instrument or undertaking, to which the Guarantor may be a party or by<br>which it may be bound. |
| --- | --- |
| C. | Defaults. The Guarantor shall promptly, upon becoming aware of the existence of any condition, or event<br>which constitutes an Event of Default hereunder, or any condition or event which upon notice or lapse of time or both will constitute<br>an Event of Default hereunder, or any threatened or pending litigation or administrative proceedings any of which could reasonably be<br>expected to have a material adverse effect on the financial condition of the Guarantor, give written notice of the same to the Lender<br>specifying the nature thereof and the action proposed to be taken with respect thereto. |
| --- | --- |
| D. | Omitted. |
| --- | --- |
| E. | Financial Representations. Any and all financial statements heretofore delivered to the Lender by the<br>Guarantor are true and correct in all material respects and fairly present the financial conditions of the subjects thereof as of the<br>respective dates thereof, and that no materially adverse change has occurred in the financial conditions reflected therein since the respective<br>dates thereof. |
| --- | --- |
| F. | Tax Filings. The Guarantor has and will continue to file all federal, state and local tax returns and<br>other reports required by law to be filed and has paid and will continue to pay all taxes, assessments and other charges of Government<br>Authorities when due and payable and will reserve funds or make adequate provision for the payment of such taxes, assessments or other<br>charges accruing but not yet payable. The Guarantor has no actual knowledge of any deficiency or additional assessment in connection with<br>any taxes, assessments or charges not provided for on the Guarantor’s books. |
| --- | --- |
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2.10 FinancialCovenants. During the term of the Loan, the Guarantor shall maintain a minimum Net Worth (defined as total assets minus total liabilities, both as determined in accordance with GAAP) of $25,000,000 and evidence minimum liquidity of $750,000 at all times, as evidenced by the annual Form 10-K financial statements of the Guarantor filed annually with the United States Securities and Exchange Commission.
2.10 Severability. Any provision of this Guaranty, or the application thereof to any person or circumstance, which, for any reason, in whole or in part, is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Guaranty (or the remaining portions of such provision) or the application thereof to any other person or circumstance, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision (or portion thereof) or the application thereof to any person or circumstance in any other jurisdiction.
2.11 EntireAgreement; Amendments. This Guaranty contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior oral or written agreements or statements relating to such subject matter, and none of the terms and provisions hereof may be waived, amended or terminated except by a written instrument signed by the person against whom enforcement of the waiver, amendment or termination is sought.
2.12 Successorsand Assigns. This Guaranty shall be binding upon and shall inure to the benefit of Lender and Guarantor and their respective heirs, personal representatives, successors and assigns. This Guaranty may be assigned by Lender with respect to all or any portion of the obligations guaranteed hereby, and when so assigned Guarantor shall be liable under this Guaranty to the assignee(s) of the portion(s) of the obligations guaranteed hereby so assigned without in any manner affecting the liability of Guarantor hereunder to Lender with respect to any portion of the obligations guaranteed hereby retained by Lender.
2.13 WAIVEROF TRIAL BY JURY. GUARANTOR, AND BY ITS ACCEPTANCE HEREOF, LENDER, EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLEOF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARDTO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURYIS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTOR AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE ASTO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. GUARANTOR AND LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPHIN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
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2.14 ADDITIONALWAIVERS IN THE EVENT OF ENFORCEMENT. GUARANTOR HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION ORPROCEEDING BROUGHT BY OR ON BEHALF OF LENDER ON THIS GUARANTY, ANY AND EVERY RIGHT GUARANTOR MAY HAVE TO (I) TO OBJECT TO THEJURISDICTION OR VENUE OF ANY STATE OR FEDERAL COURT SITTING IN THE TOWN OF LITCHFIELD, LITCHFIELD COUNTY, CONNECTICUT, (II) TO INJUNCTIVERELIEF, (III) TO INTERPOSE ANY COUNTERCLAIM THEREIN (OTHER THAN COMPULSORY COUNTERCLAIMS), AND (IV) TO HAVE THE SAME CONSOLIDATEDWITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING HEREIN CONTAINED SHALL PREVENT OR PROHIBIT GUARANTOR FROM INSTITUTING ORMAINTAINING A SEPARATE ACTION AGAINST LENDER WITH RESPECT TO ANY ASSERTED CLAIM. THE FOREGOING WAIVERS ARE GIVEN KNOWINGLY AND VOLUNTARILYBY GUARANTOR. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF ANY OR ALL OF THEFOREGOING WAIVERS.
2.15 GoverningLaw; Submission To Jurisdiction. This Guaranty and the rights and obligations of the parties hereunder shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of Connecticut (the “State”) (without giving effect to the State’s principles of conflicts of law). Guarantor hereby irrevocably submits to the jurisdiction and venue of any state or federal courts in the State of Conecticut, as well as to the jurisdiction of any other court, including all courts from which an appeal may be taken from such courts, for the purpose of any suit, action or proceeding arising out of or relating to this Guaranty, and Guarantor hereby agrees and consents that, in addition to any methods of service of process provided for under applicable law, all service of process in any such suit, action or proceeding in any state or federal court sitting in the State Connecticut, may be made by certified or registered mail, return receipt requested, directed to Guarantor at the address set forth in the introductory paragraph or such other address provided to Lender by notice as provided in the Loan Agreement*,* and service so made shall be complete five (5) days after the same shall have been so mailed.
2.16 ParagraphHeadings. Any paragraph headings and captions in this Guaranty are for convenience only and shall not affect the interpretation or construction hereof.
2.17 LiabilityUnaffected by Release. Any other person liable upon or in respect of any obligation hereby guaranteed, may be released without affecting the liability of Guarantor hereunder.
2.18 Notices. Notices shall be given in the manner provided in the Loan Agreement.
2.19 Principlesof Construction. All references to sections, paragraphs, schedules and exhibits are to sections, schedules and exhibits in or to this Guaranty unless otherwise specified. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty. The recitals to this Guaranty shall be deemed a part hereof and all exhibits and schedules attached hereto, if any, are incorporated herein by reference for all purposes. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined and “including” means including without limitation. Whenever the context requires, each gender shall include all other genders.
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2.20 PatriotAct. Lender is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56) (signed into law October 26, 2001) (the “Act”) and hereby notifies the Guarantor that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies the Guarantor, which information includes the name and address of the Guarantor and other information that will allow Lender to identify the Guarantor in accordance with the Act.
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Signature and notary acknowledgement
follow on the next page
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IN WITNESS WHEREOF, this Guaranty has been executed and delivered by the undersigned as of the date first above written.
| GUARANTOR: | |||
|---|---|---|---|
| PROCACCIANTI HOTEL REIT, INC. | |||
| /s/ Ryan Stark | By: | /s/ James A. Procaccianti | |
| Witness | Name: James A. Procaccianti | ||
| Title: President | |||
| STATE OF FLORIDA | ) | ||
| ) | |||
| COUNTY OF PALM BEACH | ) |
On this 24th day of April 2024, before me the undersigned notary public, personally appeared the above-named James A. Procaccianti, in his/her capacity as President of PROCACCIANTI HOTEL REIT, INC. and proved to me through satisfactory evidence of identification to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose as his/her free act and deed and the free act and deed of PROCACCIANTI HOTEL REIT, INC.
| Before<br>me, | ||
|---|---|---|
| /s/ Lynn Critides Horne | ||
| ,Notary<br>Public | ||
| My Commission Expires: | 4/30/2027 |
Guaranty Recourse Carve-outs – Signature Page
9
Exhibit 10.6
GUARANTY OF RECOURSE CARVE-OUTS
THIS GUARANTY OF RECOURSE CARVE-OUTS (the "Guaranty"), dated as of the 26th day of April, 2024 (the “Effective Date”) is made by PROCACCIANTI HOTEL REIT, INC. a Maryland corporation with a usual place of business at c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (the "Guarantor") in favor of LIBERTY BANK, a mutual bank organized and existing under the laws of the State of Connecticut, having its principal place of business at 245 Long Hill Road, Middletown, Connecticut 06457 (the "Lender").
ARTICLE I: RECITALS
1.1 The Lender is making a loan (the "Loan") in the amount of $10,850,000.00 to PHR WNC, LLC, a Delaware limited liability company with an address in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (the “Borrower” and a subsidiary of the Guarantor) pursuant to a Loan Agreement dated as of the date hereof by and between the Borrower and the Lender (as the same may be amended, restated, renewed, extended, supplemented or otherwise modified from time to time, the "Loan Agreement"). The Borrower will use the proceeds of the Loan to refinance the existing first mortgage on the Borrower’s property at 1014 Ashes Drive, Wilmington, North Carolina (the “Mortgaged Premises”) upon which is located a 120 room SpringHill Suites by Marriot Wilmington Mayfaire hotel facility (the "Hotel") operated by PHR WNC OPCO SUB, LLC a Delaware limited liability company with an address at in c/o The Procaccianti Group, LLC 1140 Reservoir Avenue, Cranston, Rhode Island 02920 (the “Operating Company”). Collectively, the Loan Agreement, and all documents executed and delivered by the parties in connection therewith are referred to as the "Loan Documents".
1.2 Lender requires as a condition to the making of the Loan that Guarantor shall have executed and delivered this Guaranty for the benefit of Lender and this Guaranty is executed and delivered to induce the Lender to make the Loan and to lend the Loan Proceeds to the Borrower. The Guarantor represents and warrants that the Guarantor is an interested party and directly benefits from the consummation of the Loan.
1.3 All capitalized words or phrases in this Guaranty which are not otherwise specifically defined hereinabove or elsewhere in this Guaranty shall have the same meaning herein as assigned in the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and in order to induce Lender to make the Loan to Borrower, Guarantor hereby represents, warrants and covenants to Lender as follows:
ARTICLE II: THE GUARANTY
2.1 ObligationsGuaranteed.
| A. | Environmental. Guarantor unconditionally guarantees to Lender the performance of the Borrower’s<br>obligations under the Hazardous Materials Compliance and Indemnity Agreement of the Borrower to the Lender and the reimbursement to the<br>Lender for the reasonable costs incurred by the Lender acting to protect his interest as lienholder or otherwise in the Project Premises<br>to effect filings for, remediate, dispute or otherwise respond to a release (past, present or future), or imminent threat of release,<br>of regulated hazardous materials to or upon the Project Premises after the Borrower has failed to take such action subject to and as required<br>pursuant to the Hazardous Materials Compliance and Indemnity Agreement (the “Environmental Obligation”). |
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| B. | Fraud. Guarantor unconditionally guarantees to Lender the reimbursement to the Lender for actual<br>out of pocket damages and reasonable costs incurred by the Lender as a result of the following (the “Fraud Obligation”): (a) fraud<br>or material misrepresentation by or on behalf of the Borrower or the Operating Company in connection with the Loan or the operation of<br>the Hotel; (b) intentional willful misconduct of the Borrower or the Operating Company constituting waste in connection with the<br>operation of the Hotel; (c) the removal or disposal of all or any material portion of the Collateral, as defined under the Loan Agreement<br>by the Borrower or the Operating Company in connection with the operation outside the ordinary course of business of the Hotel after an<br>Event of Default and expiration of any applicable cure or grace period under the Loan Documents, unless such Collateral is replaced with<br>new Collateral of substantially the same value as the removed Collateral; (d) the intentional misappropriation, misapplication or<br>conversion of funds inconsistent with the Loan Documents, by the Borrower or the Operating Company which funds arise from: (i) any<br>insurance proceeds paid by reason of any loss, damage or destruction to all or any part of the Mortgaged Premises, (ii) any awards<br>or other amounts received in connection with the condemnation of all or any part of the Mortgaged Premises, (iii) any rents revenues<br>or other income from the Mortgaged Premises which are not first applied to current and fixed operating expenses (including taxes, assessments<br>and/or utility charges) and debt service on the Mortgaged Premises, including security deposits of tenants/occupants of the Mortgaged<br>Premises which are not turned over upon foreclosure or other exercise of its rights by the Lender; (iv)Omitted; (v) Omitted; or (vi) Omitted;<br>and (e) unpaid taxes, assessments and/or utility charges with respect to the Mortgaged Premises (provided there is sufficient cash<br>flow from operations at the Hotel made available to Borrower to pay the same).. |
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All of the above referenced obligations in Section 2.1 are referred to in this Guaranty collectively as the “Guarantor’s Obligations.” Notwithstanding anything contained herein to the contrary, Guarantor Obligations shall not include any costs or damages incurred by Lender which arise from punitive, consequential, special or exemplary damages or diminution of value losses.
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2.2 GuarantyAbsolute and Unconditional. Subject to the limits set forth in Section 2.1, this Guaranty is an absolute, unconditional, present and continuing guaranty of payment and performance of the Guarantor Obligations and not of collection and is in no way conditioned or contingent upon any attempt to enforce Lender’s rights against Borrower or to collect from the Borrower or upon any other condition or contingency; accordingly, Lender shall have the right to proceed against Guarantor to the extent of this Guaranty immediately upon any Event of Default and expiration of any applicable cure or grace period (as defined in the Loan Agreement) under any mortgages securing the Loan (collectively, the “Mortgage”) or any of the Loan Documents without taking any prior action or proceeding to enforce the Loan Documents or any of them or for the liquidation or foreclosure of any security Lender may at any time hold pursuant thereto. Unless and until the Loan are paid in full, Guarantor hereby waives and releases any claim (within the meaning of 11 U.S.C. § 101) which Guarantor may have against Borrower arising from a payment made by Guarantor under this Guaranty and agrees not to assert or take advantage of any subrogation rights of Guarantor or any right of Guarantor to proceed against Borrower for reimbursement unless and until the Loan are paid in full. It is expressly understood that the waivers and agreements of Guarantor constitute additional and cumulative benefits given to Lender for its security and as an inducement for its extension of the Loan to Borrower. After an Event of Default and expiration of any applicable cure or grace period, Lender may at any time and from time to time take any and/or all actions and enforce all rights and remedies available to it hereunder or under applicable law to collect from Guarantor any amounts then due and payable hereunder by Guarantor and/or to cause Guarantor to fulfill his, her or its obligations hereunder.
2.3 LiabilityUnimpaired. Except as specifically limited herein, Guarantor’s liability hereunder for the Guarantor Obligations shall in no way be limited or impaired by, and Guarantor hereby consents to and agrees to be bound by, any amendment or modification of the provisions of any of the Loan Documents or any other instrument made to or with Lender by Borrower or Guarantor. In addition, Guarantor’s liability hereunder for the Guarantor Obligations shall in no way be limited or impaired by (i) any extensions of time for performance required by any of the Loan Documents, (ii) any sale or assignment of the Loan Documents or foreclosure of the Mortgage or any sale or transfer of all or part of the Project Premises covered by the Mortgage, (iii) any exculpatory provision in any of said instruments limiting Lender’s recourse to the Project Premises or to any other security, or limiting Lender’s rights to a deficiency judgment against Borrower, (iv) the release of Borrower or any other person from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law or otherwise, (v) the release or substitution in whole or in part of any security for the Loan, (vi) Lender’s failure to record the Mortgage or file any UCC financing statements (or Lender’s improper recording or filing of same) or to otherwise perfect, protect, secure or insure any security interest or lien given as security for the Loan, (vii) the invalidity, irregularity or unenforceability, in whole or in part, of any of the Loan Documents, this Guaranty or any other instrument or agreement executed or delivered to Lender in connection with the Loan, (viii) the inaccuracy of any of the representations and warranties made by Borrower in the Loan Agreement, the Mortgage, the other Loan Documents or any disbursement certificates or requests for disbursements made under the Loan Agreement, or (ix) any other action or circumstance whatsoever which constitutes, or might be construed to constitute, a legal or equitable discharge or defense (except full payment and satisfaction) of Borrower for its obligations under any of the Loan Documents or of Guarantor under this Guaranty, it being the intention of Guarantor that the obligations of Guarantor for the Guarantor Obligations hereunder are absolute, unconditional and irrevocable to the extent provided in Section 2.1 herein and except as otherwise provided herein; and, in any such case, whether with or without notice to Guarantor and with or without consideration.
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2.4 Litigation,Compliance with Judgments. The Guarantor represents and warrants that there are no actions, suits or proceedings pending or to Guarantor’s knowledge threatened against or affecting the Guarantor, at law, in equity or before or by any governmental authorities which would have a material effect on such Guarantor’s ability to perform his obligations hereunder. To the best of Guarantor’s actual knowledge, Guarantor is not in default with respect to any order, writ, injunction, decree or demand of any court or governmental authorities.
2.5 Authorizationand Enforceability; No Conflicts. The Guarantor has the full power and authority to enter into and perform its obligations under this Guaranty and this Guaranty is a legal, valid and binding instrument, enforceable against Guarantor in accordance with its terms, subject to applicable law, bankruptcy and laws of equity. The execution, delivery and performance of this Guaranty have been authorized by all proper and necessary actions of the Guarantor. The Guarantor represents and warrants that to the best of its knowledge, the consummation of the transactions contemplated hereby and the performance of this Guaranty have not resulted and will not result in any breach of, or constitute a default under, any mortgage, deed of trust, lease, bank loan or credit agreement, corporate charter, by-laws, partnership agreement or other instrument to which such Guarantor is a party or by which such Guarantor may be bound or affected.
2.6 Compliancewith Laws. The Guarantor represents and warrants that such Guarantor is to the best of its knowledge, in compliance with, and the transactions contemplated by the Loan Documents and this Guaranty does not and will not violate any provision of, or require any filing, registration, consent or approval under, any federal, state or local law, rule, regulation, ordinance, order, writ, judgment, injunction, decree, determination or award (hereinafter, “Laws”) presently in effect having applicability to such Guarantor. Guarantor will comply promptly with all Laws now or hereafter in effect having applicability to Guarantor; provided, however that Guarantor may challenge the applicability, interpretation or validity of any such Laws on reasonable legal grounds without violating the foregoing, so long as the rights or collateral of the Lender are not jeopardized thereby in the reasonable judgment of the Lender.
2.7 Releaseof Guaranty. Guarantor’s guaranty shall continue in full force in effect until the Loan and all other Obligations of the Borrower to the Bank under the Loan Documents are paid in full. Notwithstanding anything to the contrary contained herein or in the Loan Documents, the Guarantor shall not have any liability for any Guarantor Obligations: (a) which first occur after a transfer of the Mortgaged Property to a lender or third-party (that is not an affiliate of Borrower or Guarantor) resulting from a foreclosure or deed-in-lieu thereof or during any period that a receiver is in possession of the Mortgaged Property, (b) arising from the intentional acts of the Lender or exercise of its rights under the Loan Documents or (c) upon payment in full of the outstanding principal balance and accrued and unpaid interest on the Loan and all other sums owing under the Loan Documents (excluding any contingent obligations that survive repayment of the Loan) in accordance with their terms.
2.8 Non-WaiverRemedies Cumulative. No failure or delay on Lender’s part in exercising any right, power or privilege under any of the Loan Documents, this Guaranty or any other document made to or with Lender in connection with the Loan shall operate as a waiver of any such privilege, power or right or shall be deemed to constitute Lender’s acquiescence in any default by Borrower or Guarantor under any of said documents. A waiver by Lender of any right or remedy under any of the Loan Documents, this Guaranty or any other document made to or with Lender in connection with the Loan on any one occasion shall not be construed as a bar to any right or remedy which Lender otherwise would have on any future occasion. The rights and remedies provided in said documents are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.
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2.9 Representationsand Warranties of Guarantor. The Guarantor makes the following representations, warranties and covenants as an inducement to the Lender to make the Loan:
| A. | Suits, Proceedings. There are no suits or proceedings pending or to the actual knowledge of the Guarantor<br>threatened against or affecting the Guarantor or the Project Premises nor any proceedings involving the Guarantor by or before Governmental<br>Authorities which bring into question the validity or enforceability of this Agreement or the Loan Documents to which it is a party and<br>which, if determined adversely to the Guarantor, would have a materially adverse effect on the Guarantor’s financial conditions<br>or businesses or the ability of the Guarantor to enter into and carry out the terms and provisions of this Agreement. |
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| B. | Conflicts, Records. To the Guarantor’s knowledge, the execution, delivery, and performance of this<br>Agreement and all Loan Documents to which Guarantor is a party will not conflict with or result in any breach or contravention of, or<br>the creation of any lien under, any indenture, agreement, lease, instrument or undertaking, to which the Guarantor may be a party or by<br>which it may be bound. |
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| C. | Defaults. The Guarantor shall promptly, upon becoming aware of the existence of any condition, or event<br>which constitutes an Event of Default hereunder, or any condition or event which upon notice or lapse of time or both will constitute<br>an Event of Default hereunder, or any threatened or pending litigation or administrative proceedings any of which could be reasonably<br>be expected to have a material adverse effect on the financial condition of the Guarantor, give written notice of the same to the Lender<br>specifying the nature thereof and the action proposed to be taken with respect thereto. |
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| D. | Omitted. |
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| E. | Financial Representations. Any and all financial statements heretofore delivered to the Lender by the<br>Guarantor are true and correct in all material respects and fairly present the financial conditions of the subjects thereof as of the<br>respective dates thereof, and that no materially adverse change has occurred in the financial conditions reflected therein since the respective<br>dates thereof. |
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| F. | Tax Filings. The Guarantor has and will continue to file all federal, state and local tax returns and<br>other reports required by law to be filed and has paid and will continue to pay all taxes, assessments and other charges of Government<br>Authorities when due and payable and will reserve funds or make adequate provision for the payment of such taxes, assessments or other<br>charges accruing but not yet payable. The Guarantor has no actual knowledge of any deficiency or additional assessment in connection with<br>any taxes, assessments or charges not provided for on the Guarantor’s books. |
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2.10 FinancialCovenants. During the term of the Loan, the Guarantor shall maintain a minimum Net Worth (defined as total assets minus total liabilities, both as determined in accordance with GAAP) of $25,000,000 and evidence minimum liquidity of $750,000 at all times, as evidenced by the annual Form 10-K financial statements of the Guarantor filed annually with the United States Securities and Exchange Commission.
2.10 Severability. Any provision of this Guaranty, or the application thereof to any person or circumstance, which, for any reason, in whole or in part, is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Guaranty (or the remaining portions of such provision) or the application thereof to any other person or circumstance, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision (or portion thereof) or the application thereof to any person or circumstance in any other jurisdiction.
2.11 EntireAgreement; Amendments. This Guaranty contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior oral or written agreements or statements relating to such subject matter, and none of the terms and provisions hereof may be waived, amended or terminated except by a written instrument signed by the person against whom enforcement of the waiver, amendment or termination is sought.
2.12 Successorsand Assigns. This Guaranty shall be binding upon and shall inure to the benefit of Lender and Guarantor and their respective heirs, personal representatives, successors and assigns. This Guaranty may be assigned by Lender with respect to all or any portion of the obligations guaranteed hereby, and when so assigned Guarantor shall be liable under this Guaranty to the assignee(s) of the portion(s) of the obligations guaranteed hereby so assigned without in any manner affecting the liability of Guarantor hereunder to Lender with respect to any portion of the obligations guaranteed hereby retained by Lender.
2.13 WAIVEROF TRIAL BY JURY. GUARANTOR, AND BY ITS ACCEPTANCE HEREOF, LENDER, EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLEOF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARDTO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURYIS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTOR AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE ASTO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. GUARANTOR AND LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPHIN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
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2.14 ADDITIONALWAIVERS IN THE EVENT OF ENFORCEMENT. GUARANTOR HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION ORPROCEEDING BROUGHT BY OR ON BEHALF OF LENDER ON THIS GUARANTY, ANY AND EVERY RIGHT GUARANTOR MAY HAVE TO (I) TO OBJECT TO THEJURISDICTION OR VENUE OF ANY STATE OR FEDERAL COURT SITTING IN THE TOWN OF LITCHFIELD, LITCHFIELD COUNTY, CONNECTICUT, (II) TO INJUNCTIVERELIEF, (III) TO INTERPOSE ANY COUNTERCLAIM THEREIN (OTHER THAN COMPULSORY COUNTERCLAIMS), AND (IV) TO HAVE THE SAME CONSOLIDATEDWITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING HEREIN CONTAINED SHALL PREVENT OR PROHIBIT GUARANTOR FROM INSTITUTING ORMAINTAINING A SEPARATE ACTION AGAINST LENDER WITH RESPECT TO ANY ASSERTED CLAIM. THE FOREGOING WAIVERS ARE GIVEN KNOWINGLY AND VOLUNTARILYBY GUARANTOR. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF ANY OR ALL OF THEFOREGOING WAIVERS.
2.15 GoverningLaw; Submission To Jurisdiction. This Guaranty and the rights and obligations of the parties hereunder shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of Connecticut (the “State”) (without giving effect to the State’s principles of conflicts of law). Guarantor hereby irrevocably submits to the jurisdiction and venue of any state or federal courts in the State of Conecticut, as well as to the jurisdiction of any other court, including all courts from which an appeal may be taken from such courts, for the purpose of any suit, action or proceeding arising out of or relating to this Guaranty, and Guarantor hereby agrees and consents that, in addition to any methods of service of process provided for under applicable law, all service of process in any such suit, action or proceeding in any state or federal court sitting in the State Connecticut, may be made by certified or registered mail, return receipt requested, directed to Guarantor at the address set forth in the introductory paragraph or such other address provided to Lender by notice as provided in the Loan Agreement*,* and service so made shall be complete five (5) days after the same shall have been so mailed.
2.16 ParagraphHeadings. Any paragraph headings and captions in this Guaranty are for convenience only and shall not affect the interpretation or construction hereof.
2.17 LiabilityUnaffected by Release. Any other person liable upon or in respect of any obligation hereby guaranteed, may be released without affecting the liability of Guarantor hereunder.
2.18 Notices. Notices shall be given in the manner provided in the Loan Agreement.
2.19 Principlesof Construction. All references to sections, paragraphs, schedules and exhibits are to sections, schedules and exhibits in or to this Guaranty unless otherwise specified. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty. The recitals to this Guaranty shall be deemed a part hereof and all exhibits and schedules attached hereto, if any, are incorporated herein by reference for all purposes. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined and “including” means including without limitation. Whenever the context requires, each gender shall include all other genders.
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2.20 PatriotAct. Lender is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56) (signed into law October 26, 2001) (the “Act”) and hereby notifies the Guarantor that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies the Guarantor, which information includes the name and address of the Guarantor and other information that will allow Lender to identify the Guarantor in accordance with the Act.
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Signature and notary acknowledgement
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IN WITNESS WHEREOF, this Guaranty has been executed and delivered by the undersigned as of the date first above written.
| GUARANTOR: | |||
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| PROCACCIANTI HOTEL REIT, INC. | |||
| /s/ Ryan Stark | By: | /s/ James A. Procaccianti | |
| Witness | Name: James A. Procaccianti | ||
| Title: President | |||
| STATE OF FLORIDA | ) | ||
| ) | |||
| COUNTY OF PALM BEACH | ) |
On this 24th day of April 2024, before me the undersigned notary public, personally appeared the above-named James A. Procaccianti, in his/her capacity as President of PROCACCIANTI HOTEL REIT, INC. and proved to me through satisfactory evidence of identification to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose as his/her free act and deed and the free act and deed of PROCACCIANTI HOTEL REIT, INC.
| Before<br> me, | ||
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| /s/<br> Lynn Critides Horne | ||
| ,Notary<br> Public | ||
| My Commission Expires: | 4/30/2027 |
Guaranty Recourse Carve-outs Signature Page
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