SHF Holdings, Inc 8-K, filed Sep 21, 2022
SHF Holdings, Inc. (SHFS)
About this 8-K
SHF Holdings, Inc filed this 8-K on September 21, 2022.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| 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)) |
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| Item 8.01. | Other Events. |
As previously disclosed, on February 11, 2022, Northern Lights Acquisition Corp., a Delaware corporation (the “Company”) and 5AK, LLC, the Company’s sponsor (the “Sponsor”), entered into a definitive unit purchase agreement (the “Unit Purchase Agreement”) with SHF, LLC d/b/a Safe Harbor Financial, a Colorado limited liability company (the “Target”), SHF Holding Co., LLC, the sole member of the Target (the “Seller”), and Partner Colorado Credit Union, the sole member of the Seller (the “Seller Parent”), whereby the Company will purchase all of the issued and outstanding membership interests of the Target from the Seller (the “Business Combination”).
As described in the Company’s definitive proxy statement filed with the SEC and distributed to the stockholders on June 10, 2022 (the “June Proxy Statement”), the Target and the Seller Parent are party to that certain loan servicing agreement dated February 11, 2022 (the “Original Loan Servicing Agreement”), which sets forth the application, underwriting, and approval process for loans from the Seller Parent to borrowers that are cannabis-related businesses and the loan servicing and monitoring responsibilities provided by the Target and the Seller Parent.
On September 21, 2022, the Target and the Seller Parent entered into an amended and restated loan servicing agreement (the “Amended and Restated Loan Servicing Agreement”) to clarify certain provisions of the Original Loan Servicing Agreement. In particular, the Amended and Restated Loan Servicing Agreement was updated to include the procedures to be followed upon the default of a loan to ensure that neither the Target nor Seller Parent will take title to or possession of any cannabis-related assets, including real property, that may be collateral for a loan funded by the Seller Parent pursuant to the Amended and Restated Loan Servicing Agreement. The parties agreed to certain other non-substantive updates to the Amended and Restated Loan Servicing Agreement. The Seller Parent’s servicing fee at the annual rate of 0.25% of the then-outstanding principal balance of each loan funded by the Seller Parent remains unchanged. In addition, the Target’s obligations in the Amended and Restated Loan Servicing Agreement to indemnify the Seller Parent from all default-related loan losses (as defined in the Amended and Restated Loan Servicing Agreement) remain unchanged.
The foregoing description is only a summary of the Amended and Restated Loan Servicing Agreement and is qualified in its entirety by reference to the full text of the Amended and Restated Loan Servicing Agreement, which is filed as Exhibit 99.1 hereto and incorporated by reference herein.
In addition to filing the Amended and Restated Loan Servicing Agreement with this Current Report of Form 8-K, the Company has also determined to voluntarily supplement the June Proxy Statement by attaching the Amended and Restated Loan Servicing Agreement as Annex J thereto; the June Proxy Statement is hereby supplemented accordingly (and, as supplemented to date, is referred to herein as the “Amended Proxy Statement”).
Additional Information and Where to Find It
The proposed Business Combination involving the Company and the Target was submitted to the stockholders of the Company for their consideration. The Company filed the June Proxy Statement with the SEC on June 10, 2022, which was distributed to the stockholders of the Company in connection with the Company’s solicitation for proxies for the vote by the stockholders of the Company in connection with the proposed Business Combination and other matters as described in the June Proxy Statement. Before making any voting decision, the stockholders of the Company and other interested persons were advised to read the June Proxy Statement along with all other relevant documents filed with the SEC in connection with the proposed Business Combination and the Company’s solicitation of proxies for its special meeting of stockholders to be held to approve, among other things, the proposed Business Combination, because these documents contain important information about the Company, the Target, and the proposed Business Combination. The stockholders approved the Business Combination on June 28, 2022. On September 19, 2022, the Company filed a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) to supplement certain sections of the June Proxy Statement, as described in such report. Stockholders will be able to obtain free copies of the Amended Proxy Statement as well as other documents filed with the SEC regarding the proposed Business Combination and other documents filed with the SEC by the Company, without charge, at the SEC’s website located at www.sec.gov or by directing a request to Northern Lights Acquisition Corp., 10 East 53rd Street, Suite 3001, New York, NY, 10022, or by telephone at (615) 554-0044.
Participants in Solicitation
The Company and its directors and executive officers may be deemed participants in the solicitation of proxies from the Company’s stockholders with respect to the Business Combination. Information about those directors and executive officers and a description of their interests in the Company is contained in the Company’s Registration Statement on Form S-1 filed with the SEC on June 2, 2021 in connection with its initial public offering, its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 25, 2022, the Amended Proxy Statement, each of which was filed with the SEC and is available free of charge at the SEC’s web site at www.sec.gov, or by directing a request to Northern Lights Acquisition Corp., 10 East 53rd Street, Suite 3001, New York, NY, 10022.
The Seller, the Seller Parent, the Target, and their respective directors, managers, and executive officers may also be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the Business Combination. A list of the names of such parties and information regarding their interests in the Business Combination may be obtained by reading the Amended Proxy Statement.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. These forward-looking statements include, but are not limited to, statements with respect to trends in the cannabis industry, including changes in U.S and state laws, rules, regulations and guidance relating to the Target’s services, the Target’s growth prospects and the Target’s market size, the Target’s projected financial and operational performance, including relative to its competitors, new product and service offerings the Target may introduce in the future, the proposed Business Combination, including the implied enterprise value, the expected post-closing ownership structure and the likelihood and ability of the parties to successfully consummate the Business Combination, the risk that the proposed Business Combination may not be completed in a timely manner or at all, which may adversely affect the price of the Company’s securities, the failure to satisfy the conditions to the consummation of the proposed Business Combination, the effect of the announcement or pendency of the proposed Business Combination on the Company’s or the Target’s business relationships, performance, and business generally, the outcome of any legal proceedings that may be instituted against the Company or the Target related to the Unit Purchase Agreement or the proposed Business Combination, the ability to maintain the listing of the Company’s securities on the Nasdaq Capital Market, the price of the Company’s securities, including volatility resulting from changes in the competitive and highly regulated industry in which the Target plans to operate, variations in performance across competitors, changes in laws and regulations affecting the Target’s business and changes in the combined capital structure, the ability to implement business plans, forecasts, and other expectations after the completion of the proposed Business Combination, and identify and realize additional opportunities, and other statements regarding the Target’s and the Company’s expectations, hopes, beliefs, intentions or strategies regarding the future. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
In addition to factors previously disclosed in the Company’s reports filed with the SEC, the Amended Proxy Statement, and those identified elsewhere in this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (i) the risk that the transactions contemplated by the Unit Purchase Agreement may not be completed in a timely manner or at all, which may adversely affect the price of the Company’s securities; (ii) the risk that the transactions contemplated by the Unit Purchase Agreement may not be completed by the Company’s Business Combination deadline as extended and the potential failure to obtain an additional extension of the Business Combination deadline if sought by the Company; (iii) the failure to satisfy the conditions to the consummation of the transactions contemplated by the Unit Purchase Agreement, including the satisfaction of the minimum cash amount following redemptions by the Company’s public stockholders and the receipt of certain governmental and regulatory approvals; (iv) the lack of a third-party valuation in determining whether or not to pursue the transactions contemplated by the Unit Purchase Agreement; (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the Unit Purchase Agreement prior to closing; (vi) the effect of the announcement or pendency of the transactions contemplated by the Unit Purchase Agreement on the Target’s business relationships, performance and business generally; (vii) risks that the transactions contemplated by the Unit Purchase Agreement disrupt current plans and operations of the Target; (viii) the outcome of any legal proceedings that may be instituted against the Target or the Company related to the Unit Purchase Agreement or the transactions contemplated thereby; (ix) the ability to maintain the listing of the Company’s securities on Nasdaq Capital Market; (x) the price of the Company’s securities, including following the closing, may be volatile due to a variety of factors, including changes in the competitive and regulated industries in which the Target operates, variations in performance across competitors, changes in laws and regulations affecting the Target’s business and changes in the capital structure, and the dilutive impact of the shares to be issued in connection with the Business Combination, the private placement to be completed in conjunction with the Business Combination, and the terms of the Forward Purchase Agreement; (xi) the ability to implement business plans, forecasts, and other expectations after the completion of the transactions contemplated by the Unit Purchase Agreement, and identify and realize additional opportunities; (xii) the risk of downturns and the possibility of rapid change in the highly competitive industry in which the Target operates, and the risk of changes in applicable law, rules, regulations and regulatory guidance that could adversely impact the Target’s operations; (xiii) the risk that the Target and its current and future collaborators are unable to successfully develop and commercialize the Target’s products or services, or experience significant delays in doing so; (xiv) the risk that the Target may not achieve or sustain profitability; (xv) the risk that the Target will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all; and (xvi) the risk that the Target experiences difficulties in managing its growth and expanding operations.
Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. All information set forth herein speaks only as of the date hereof in the case of information about the Company and the Target or the date of such information in the case of information from persons other than the Company or the Target, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding the Target’s industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. Annualized, pro forma, projected, and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
No Offer or Solicitation
This Current Report on Form 8-K relates to a proposed business combination between the Company and the Target and does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1* | Amended and Restated Loan Servicing Agreement | |
| 104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) | |
| * Certain of the exhibits to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish supplementally a copy of all omitted exhibits to the SEC upon its request. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NORTHERN LIGHTS ACQUISITION CORP. | ||
| Date: September 21, 2022 | By: | /s/ John Darwin |
| John Darwin | ||
| Co-Chief Executive Officer | ||
Exhibit 99.1
EXECUTION VERSION
AMENDED AND RESTATED LOAN SERVICING AGREEMENT
THIS AMENDED AND RESTATED LOAN SERVICING AGREEMENT (the “Agreement”) is between SHF, LLC, a Colorado limited liability company (hereinafter referred to as (“CUSO”), and Partner Colorado Credit Union, a Colorado-chartered credit union (hereinafter referred to as “Credit Union”), dated September 21, 2022 and is effective as of February 11, 2022 (the “Effective Date”). The parties agree as follows:
RECITALS
The CUSO is a credit union service organization that provides compliance and monitoring services to financial institutions desiring to provide banking services to cannabis-related businesses, and the Credit Union is a credit union that CUSO desires to engage with to provide business lending services.
The parties have entered into that certain Loan Servicing Agreement effective as of the Effective Date (the “Original Loan Servicing Agreement”) and desire to amend and restate the Original Loan Servicing Agreement to clarify certain provisions, as provided herein.
In connection with the execution and delivery by the parties of the Unit Purchase Agreement dated as of the date hereof (the “Purchase Agreement”) by and among Northern Lights Acquisition Corp., a Delaware corporation (“NLIT”); 5AK, LLC, a Delaware limited liability company, as Purchaser Representative; SHF Holding Co, LLC, a Colorado limited liability company (“Holding”); the Credit Union; and the CUSO, pursuant to which NLIT will acquire the CUSO from Holding, the parties desire to continue to relationship between them in connection with the services described herein, and such other services as set forth in the Amended and Restated Account Servicing Agreement and the Amended and Restated Support Services Agreement, each effective as of the Effective Date, on the terms and subject to the conditions set forth herein and therein.
| 1. | Services: |
| A. | The Credit Union agrees to consider potential cannabis-related business (“CRB”) borrowers referred to it by the CUSO or that otherwise approach the Credit Union for extensions of credit (individually, a “Loan,” and collectively, the “Loans”) that are consistent with the Credit Union’s Marijuana Related Business (MRB) Lending Policy (the “Loan Policy”), a copy of which is attached to this Agreement as Exhibit A. Each such Loan shall comply with the Loan Policy. The Credit Union agrees that it shall provide the CUSO with at least forty-five (45) days’ prior written notice of any proposed revisions or updates to the Loan Policy, and the Credit Union agrees to permit the CUSO to comment on such proposed revisions or updates and to use its commercially reasonable efforts to incorporate any such comments received from CUSO subject to any applicable regulatory requirements. The CUSO, or their designated third party, shall assist in obtaining from potential borrowers a Loan application, financial statements, and other information required for thorough underwriting pursuant to the Loan Policy (a “Loan Package”). After the loan underwriting process is completed, the CUSO or its designated third party shall submit each Loan Package, underwriting package and recommendation in electronic or other form as reasonably requested by the Credit Union. The Credit Union agrees to convene the Loan Committee to render an approval or denial within ten (10) days of receiving the Loan Package, underwriting package and recommendation from either the CUSO or its designated third party. In connection with any denials, the Credit Union shall consider any additional information reasonably provided regarding such potential borrower. The Loans will be documented using loan documents approved by the Credit Union (“Loan Documents”) and all amendments to any Loan Documents must be approved in advance by the Credit Union. All Loans will be serviced by a third-party loan servicer or the CUSO, with the exception of select loan types which will be serviced by the Credit Union. The Credit Union agrees to provide to such third-party servicer such information about the Loans and other information and assistance as the third-party servicer shall reasonably request. |
| B. | For any cannabis- or hemp-related Loan funded by the Credit Union that is subject to this Agreement, the CUSO agrees to indemnify and hold the Credit Union harmless from and against all claims related to CUSO’s cannabis related business, including but not limited to “Default-Related Losses” (as defined below) relating to a “Defaulted Loan,” which for this purpose shall mean a Loan for which an “event of default” as defined in the Loan Documents shall have occurred and be continuing and for which the Credit Union, CUSO, or their designated third party has been unsuccessful in negotiating a resolution or refinancing after commercially reasonable efforts. The CUSO will maintain or have access to sufficient liquidity to reimburse the Credit Union for all Default-Related Losses. Default-Related Losses due from the CUSO shall equal (i) the aggregate amount of unpaid principal balance of the Loan and (x) out-of-pocket expenses incurred by the Credit Union relating to the collection of the Loan, (y) the commercially reasonable foreclosure costs of any related security interest granted in connection with the Loan, and (z) the commercially reasonable costs of disposition of the collateral of the Loan, that is in excess of (ii) all amounts received from any action to collect the amounts due on the Loan, including actions against guarantors and the sale or collection of any collateral provided for the Loan. The CUSO shall be permitted, in its discretion and upon written notice to the Credit Union, to join the Credit Union in the management of any litigation in connection with a Defaulted Loan. | |
| C. | Exhibit B hereto sets forth the additional services to be provided by the parties pursuant to this Agreement. |
| 2. | Fee Schedule. The parties agree that, in consideration of the services provided by the Credit Union hereunder, the Credit Union shall be entitled to receive the fees as set forth on Exhibit C hereto. |
| 3. | Non-Solicitation. Each party agrees, in recognition of the time, effort and expense incurred by the other party in the training and education of its employees, that during the term of this Agreement and for a period of one (1) year after termination of this Agreement, neither party shall employ any employees of the other party for any position that involves direct or supervisory duties concerning the underwriting, documentation, application, servicing and/or sale of member business loans unless otherwise authorized in writing by the other party. |
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| 4. | Privacy. Each party (the “Receiving Party”) agrees that all information it receives from the other party (the “Disclosing Party”) to this Agreement with respect to the business, products, services or operations of the Disclosing Party including, without limitation, borrower information (“Borrower Information”) (collectively “Confidential Information”) will be kept confidential and will not be disclosed to third parties or otherwise used except in connection with the performance of this Agreement, except for (i) disclosures required by law, (ii) information which the Receiving Party receives from another source not known by the Receiving Party to be providing information in breach of a confidentiality agreement, (iii) information which is generally known to the trade or the public at the time of such disclosure or which later becomes generally known to the trade or the public subsequent to the time of disclosure, but not as a result of disclosure by the Receiving Party, (iv) information which is independently developed by the Receiving Party, or (v) information which is approved for release by the Disclosing Party; provided that the foregoing exceptions shall not apply to member information. Appropriate Federal and State supervisory authorities will be allowed full and complete access to all records and other information in CUSO’s possession or control pertaining to Credit Union if legally requested by said authorities and CUSO will provide Credit Union with notice of same. | |
| 6. | Relationship of the Parties. With regard to the services to be performed by Credit Union pursuant to the terms of this Agreement, it is understood and agreed that the parties hereto are two separate and distinct legal entities having no business relationship or connection other than Credit Union providing services to CUSO under the terms of this Agreement, the Account Services Agreement, and the Support Services Agreement on an independent contractor basis whose sole rights and responsibilities to one another are set forth under the terms of such agreements. Neither party shall have any authority whatsoever to enter into any contracts or assume any obligations on behalf of the other. This Agreement establishes that Credit Union shall provide services under the terms of this Agreement as an independent contractor and nothing in this Agreement shall establish any other relationship of any type whatsoever including but not limited to agent, co-partner or joint venture. | |
| 7. | Authorization of Authority. Each party warrants and represents to the other party that it has obtained the requisite authorization necessary to enter into this Agreement and its signatures set forth below evidence such authorization and no further authorization is required for such party to enter into and be bound by this Agreement. | |
| 8. | Warranty and Hold Harmless. The parties warrant and covenant that each will act in accordance with the law applicable to their respective obligations. Each party shall indemnify and hold harmless the other parties for any damages or losses sustained (including reasonable costs and attorneys’ fees) as a direct and proximate result of a party’s: (a) intentional or negligent failure to comply with the applicable laws and regulations; or (b) failure to discharge its duties or failure to honor its representations and warranties as stated in this Agreement. |
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| 9. | Specific Warranties. The parties warrant that each will provide the loan services as specified in Exhibit B in compliance with applicable law, rules, regulations and current guidance regarding Loans made to cannabis-related businesses. The parties agree to undertake reasonable investigation of all information provided by the other party, or by the CUSO’s designated third party, consistent with customary and reasonable loan approval, denial decision and servicing procedures. Each party will immediately notify the other party if such party has reasonable suspicion that there has been false or fraudulent information provided by or on behalf of a prospective or current borrower. | |
| 10. | Default. In the event either party is in default of its obligations hereunder, such Party shall be in default and the other party may, at its option and after sixty (60) days’ notice and opportunity to cure, terminate this Agreement and pursue any other remedies it may have. Notwithstanding the foregoing, upon request of either party upon receipt of a notice of default, the parties agree to a follow the dispute resolution process set forth in Paragraph 17 below. If mediation does not resolve the dispute (or is not applicable) the parties shall have all of the remedies available at law and equity. In the event of dispute over payment, payments not in dispute shall continue to be paid until termination of this Agreement. |
Either party shall be in default in the event such party is determined bankrupt, insolvent or unable to pay its debts in the ordinary course of business, or upon the appointment of a receiver or trustee for the benefit of creditors.
| 11. | Term and Termination. This Agreement shall be for an initial term of three (3) years from the Effective Date of this Agreement. The Agreement shall be renewed thereafter for one (1) year terms until and unless a party provides one hundred twenty (120) days written notice prior the end of the current term or there is a termination for cause. Notwithstanding the foregoing, during the initial term, the Credit Union shall not be entitled to provide notice of its intention not to renew this Agreement until thirty (30) months following Effective Date of this Agreement. |
| 12. | Governing Law. This Agreement shall be governed by the internal laws, and not by the laws regarding conflicts of laws, of the State of Colorado. Each party hereby submits to the jurisdiction of the courts of such state, and waives any objection to venue with respect to actions brought in such courts. |
| 13. | Assignment. This Agreement shall not be assigned by any party without the express prior written consent of the other party. |
| 14. | Legal Construction. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability shall not affect any other provision thereof, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision had never been contained in it. |
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| 15. | Parties Bound; Third Party Beneficiary. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and/or assigns when permitted by this Agreement. The parties acknowledge and agree that NLIT is an intended third-party beneficiary of this Agreement and shall be entitled to enforce the provisions of this Agreement. For the avoidance of doubt, except as otherwise provided in this Agreement, the Agreement shall not be terminated, cancelled, amended, modified, supplemented or changed, or any provision, default, breach or performance waived, or any assignment or novation made in any manner, without the prior written consent of NLIT (such consent to be granted or withheld in NLIT’s sole discretion). If a regulatory body with jurisdiction over the Credit Union requires the termination, cancellation, amendment, modification, supplement or novation, the parties agree to negotiate in good faith a mutually satisfactory termination, cancellation, amendment, modification, supplement or novation of this Agreement that is consistent with the purposes of this Agreement and the requirements of such regulatory body. |
| 16. | Entire Agreement. This Agreement, together with the Amended and Restated Account Servicing Agreement and the Amended and Restated Support Services Agreement, constitutes the entire agreement of the parties with respect to the subject matter hereof and thereof. This Agreement does not affect or modify any current employee manual and procedures of the Credit Union or the CUSO; provided, however, that if any such manual or procedures conflict with the terms of this Agreement, the manual or procedures shall control and the parties shall amend this Agreement as appropriate. The parties each agree to provide the other party with not less than forty-five (45) days’ prior written notice of any changes to such manual or procedures that may conflict with the terms of this Agreement; provided, however, if such changes, in a party’s reasonable judgment, are determined to be necessary to avoid violation of applicable laws, rules or regulations, then such party shall be permitted to amend such manual or procedures as are reasonably necessary to bring such manual or procedures into compliance with such laws, rules or regulations, with contemporaneous written notice to the other party. |
| 17. | Disputes. In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the construction, interpretation, performance, breach, termination, enforceability or validity thereof (a “Dispute”), the party raising such Dispute shall notify the other promptly and no later than sixty (60) days from the date of its discovery of the Dispute. The parties shall cooperate and attempt in good faith to resolve any Dispute promptly by negotiating between persons who have authority to settle the Dispute. The proceedings contemplated by this Section shall be as confidential and private as permitted by law. The parties agree that no services to be provided under this Agreement shall be disrupted as a result of any Dispute while such Dispute is pending between the parties, except as otherwise provided herein. If, following efforts taken in good faith by the parties for up to sixty (60) days, the dispute, controversy or claim is not resolved to the reasonable satisfaction of both parties, then the parties shall be entitled to seek such remedies as are available at law or in equity. |
| 18. | Counterparts. This Agreement may be executed and delivered by the parties in counterparts, including by electronic signatures, each of which shall be deemed an original and both of which together shall constitute one and the same instrument. |
| 19. | WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. |
[SIGNATURES ON FOLLOWING PAGE]
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| SHF, LLC | PARTNER COLORADO CREDIT UNION | |||
| By: | /s/ Sundie Seefried | By: | /s/ Douglas M. Fagan | |
| Name: | Sundie Seefried | Name: | Douglas M. Fagan | |
| Title: | Chief Executive Officer | Title: | Chief Executive Officer | |
| Address for notices: | Address for notices: | |||
| 5269 W. 62nd Avenue | 6221 Sheridan Boulevard | |||
| Arvada, CO 80003 | Arvada, Colorado 80003 | |||
| Email: | sundie@shfinancial.org | Email: | FaganD@partnercoloradocu.org | |
| Date: | September 20, 2022 | Date: | September 20, 2022 | |
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EXHIBIT A
LOAN POLICY
[Omitted pursuant to Item 601(a)(5) of Regulation S-K]
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EXHIBIT B
BUSINESS LOAN SERVICES
Lending Services
| ■ | Assistance with establishing CUSO’s Business Loan Policy |
| ○ | Credit Union Responsibility |
| ● | Credit Union will provide a Business Loan Policy template, including underwriting guidelines |
| ○ | CUSO Responsibility |
| ● | CUSO will have the final Business Loan Policy reviewed by CUSO’s legal counsel. | |
| ● | CUSO’s Board will review and formally approve the Business Loan Policy. |
| ■ | Loan approval process |
| ○ | CUSO Responsibility |
| ● | CUSO will establish an efficient and effective application, processing and underwriting process for all loan applications; either internally or with a designated third-party. | |
| ● | CUSO shall keep Credit Union consistently informed of the lending pipeline for liquidity and policy compliance purposes. |
| ○ | Credit Union Responsibility |
| ● | Credit Union will review all completed and submitted Loan Packages within ten (10) days of receipt from the CUSO or its designated third-party. | |
| ● | Credit Union will advise CUSO and its designated third party of final approval or denial decision at the end of the review period on each Loan Package submitted. |
| ■ | Servicing Responsibilities |
| ○ | CUSO Responsibility |
| ● | CUSO will service, or have serviced through a designated third party, all approved and Credit Union funded cannabis loans except for agreed upon loan types. | |
| ● | CUSO will perform all annual required annual reviews; either internally or through a designated third-party. |
| ○ | Credit Union Responsibilities |
| ● | Credit Union will close, fund, and service all lines of credit loans as well as other agreed upon loan types or specific individual loans. |
| ■ | Monitoring Responsibilities |
| ○ | Consistent with its ongoing obligations as a financial institution, and in addition to monitoring conducted by CUSO, Credit Union will monitor all cannabis loans for compliance with all policies and guidelines. | |
| ○ | Credit Union will provide management reports to CUSO within fifteen (15) days after each month end. Reports will include: |
| ● | Compliance with all relevant policies and procedures; |
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| ● | Delinquency information detailed as requested by the CUSO or its designated third party (limited to available information); and | |
| ● | Capacity for additional lending based on all relevant policy and regulatory limits. |
| ■ | Lending Capacity Responsibilities |
| ○ | Credit Union agrees to not fund non-cannabis related commercial loans to an extent that may limit the maximum aggregate amount of allowed cannabis-related loans. | |
| ○ | Credit Union agrees to set aside an amount of its net worth, not to exceed policy limits, for funding of cannabis loans. | |
| ○ | CUSO agrees to follow all Credit Union policies as they relate to cannabis lending underwriting standards, concentration limits, liquidity limits, and regulatory limits. |
| ■ | Collection Procedures |
| ○ | Credit Union and CUSO each agree that the collection procedures to be used by the parties for all Loans to which this Agreement applies shall be designed to ensure that neither Credit Union nor CUSO, nor CUSO’s designated third party engaged to assist with the liquidation or foreclosure process, will take possession of cannabis inventory, cannabis paraphernalia, or other cannabis-related assets, nor will they take title to real estate used in cannabis-related businesses. Upon default of a loan, a third-party agent will be engaged to work with the borrower to have the borrower sell collateral securing the loan to a third party or to institute a foreclosure proceeding to have such collateral sold to generate funds towards the payoff of the loan. Alternatively, the parties agree that a defaulted loan may be sold if such a sale would yield higher proceeds or if a sale could be accomplished more quickly than a foreclosure proceeding while yielding proceeds comparable to what would be expected from a foreclosure sale. Such sale of the loan shall be conducted through a third-party administrative agent. |
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EXHIBIT C
FEES
The Credit Union is entitled to a servicing fee at the annual rate of 0.25% of the then-outstanding principal balance of each Credit Union funded loan, for services provided by the Credit Union related to servicing of loans hosted on the Credit Union core system, monthly management reporting of concentration compliance, and Loan Committee management time.
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