SWRD 8-K
Stewards, Inc. (SWRD)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 1.
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________________________________________________ (Former name or former address, if changed since last 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 (17CFR 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: None
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.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Item 3.02 Unregistered Sales of Equity Securities.
On July 24, 2026, subsidiaries of Stewards, Inc. (the “Company”) closed a senior secured loan and a mezzanine loan in connection with the refinancing of the Company’s multifamily property commonly known as Block 40 / 1818 Park, located at 1818 Hollywood Boulevard, Hollywood, Florida (the “Property”).
On or about July 27, 2026, the Company also closed a $5.0 million secured convertible note financing and funded the initial tranche of a related convertible note investment in connection with the HOPCo transaction.
Senior Loan ($69.0 million)
Block 40 Property, LLC, a Delaware limited liability company and indirect subsidiary of the Company (“Mortgage Borrower”), entered into a Loan Agreement dated as of July 24, 2026 (the “Senior Loan Agreement”) with VMC CRE Master Lending Upper REIT LLC (the “Senior Lender”), pursuant to which the Senior Lender made a senior loan in the principal amount of $69,000,000 (the “Senior Loan”).
The Senior Loan is evidenced by an Amended and Restated Promissory Note dated July 24, 2026 in the principal amount of $69,000,000 and is secured by, among other things, an Amended and Restated Mortgage, Security Agreement, Assignment of Leases and Rents, Fixture Financing Statement and Notice of Future Advance encumbering the Property, together with related security documents.
Documentary stamp taxes required under Florida law were previously paid in connection with the prior indebtedness. The Senior Note evidences a renewal, amendment and restatement of such prior indebtedness, with no new obligors and no additional principal advanced. No additional Florida documentary stamp tax is due pursuant to Section 201.09, Florida Statutes.
Key material terms include interest at Term SOFR plus a margin of 350 basis points (3.50%) (subject to floors); provided, however, that from and after the Margin Change Date, the Term SOFR Margin shall be reduced to 300 basis points (3.00%), original maturity of August 7, 2028 with three successive one-year extension options, 1.00% origination and exit fees, customary cash-management and SPE covenants, and limited-recourse carve-outs supported by guaranties from the Company and certain of its affiliates, including Shaun A. Quin (Chief Executive Officer), Glen Steward (Chairman of the Board), and Stewards International.
Mezzanine Loan ($10.0 million)
Simultaneously, Block 40 Holdco LLC, a Delaware limited liability company (“Mezzanine Borrower”), entered into a Mezzanine Loan Agreement dated as of July 24, 2026 (the “Mezzanine Loan Agreement”) with 1818 Mezz Lender LLC (the “Mezzanine Lender”), pursuant to which the Mezzanine Lender made a mezzanine loan in the principal amount of up to $10,000,000 (the “Mezzanine Loan”).
The Mezzanine Loan is evidenced by a Mezzanine Promissory Note and is secured by a first-priority Pledge and Security Agreement pledging 100% of the limited liability company interests in Mortgage Borrower, together with related collateral assignments and UCC filings.
Key material terms include interest at Term SOFR plus 12.00% (floor 14.50%) until the Margin Change Date, thereafter Term SOFR plus 10.50% (floor 14.00%), original maturity of August 7, 2028 with three successive one-year extension options (subject to parallel Senior Loan extension, LTV and debt-yield tests), 1.00% origination and exit fees, an Interest and Carry Reserve, and guaranties from the Company and certain of its affiliates, including Shaun A. Quin, Glen Steward, and Stewards International, covering limited-recourse carve-outs, carry costs/debt service, and a limited payment guaranty capped at $19,750,000. The Senior Lender and Mezzanine Lender are parties to an Intercreditor Agreement.
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$5.0 Million Secured Convertible Note Financing
On or about July 27, 2026, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with three accredited investors pursuant to which the Company issued and sold Secured Convertible Promissory Notes in the aggregate principal amount of $5,000,000 (the “Convertible Notes”) and accompanying Common Stock Purchase Warrants (the “Warrants”).
Key material terms of the Convertible Notes include:
§ Principal amount: $5,000,000 in the aggregate.
§ Interest: 15% per annum, computed on a 365-day year.
§ Maturity: 180 days after issuance.
§ Automatic conversion on the Maturity Date of outstanding principal plus accrued interest into shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), at a conversion price of $3.00 per share. Any conversion prior to maturity requires the Company’s prior written consent. Cash repayment in lieu of conversion also requires the Company’s prior written agreement.
§ Prepayable at any time without premium or penalty upon 15 days’ notice.
§ Events of Default include non-payment (5-business-day cure), bankruptcy, material breach (30-day cure), and cessation of ordinary-course business; default interest increases to 18%.
§ Full recourse; secured by a first-priority security interest.
The Convertible Notes are secured by a Security Agreement dated as of the same date granting the investors a continuing first-priority security interest in substantially all of the Company’s personal property (Accounts, Chattel Paper, Deposit Accounts, Equipment, Inventory, General Intangibles (including intellectual property and customer lists), Instruments, Investment Property, and all proceeds and products thereof).
Each Warrant entitles the holder to purchase a number of shares of Common Stock equal to the principal amount of the related Convertible Note divided by $3.00 (aggregate 1,666,665 shares), at an exercise price of $3.00 per share, for a term of five years from issuance. Cashless exercise is prohibited.
The Convertible Notes and Warrants were issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D thereunder, solely to accredited investors. The securities are subject to customary transfer restrictions.
Proceeds are to be used to fund payments under the promissory note issued in connection with the HOPCo acquisition pursuant to the Letter of Intent dated June 2, 2026, and for general corporate purposes.
HOPCo Convertible Note (First Tranche Funding)
On or about July 27, 2026, HOPCo Intermediate Holdings II, Inc., a Delaware corporation (“HOPCo Issuer”), issued a Convertible Promissory Note (the “HOPCo Note”) to the Company in an Available Amount of up to $25,000,000.
Key material terms include:
§ Initial funding of at least $5,000,000 on the Closing Date, with the balance of the Available Amount to be funded on or prior to August 31, 2026.
§ Interest: 8% per annum, paid-in-kind (PIK) annually and compounding.
§ Maturity: July 27, 2031.
§ If an Equity Closing (Company or affiliate investment of at least $205,000,000 in Class A2 Units of HOPCo Group Holdings, L.P.) does not occur on or prior to October 31, 2026, the HOPCo Note automatically converts into Class A2 Units of HOPCo Group Holdings, L.P. at a Conversion Price based on a 20× Adjusted EBITDA enterprise value for the trailing twelve-month period ended August 31, 2026 (subject to confirmation by an independent valuation firm).
§ Upon an Equity Closing, the then-outstanding Repayment Amount is repaid in full (or may be netted against the equity purchase price by mutual agreement).
§ Structurally subordinated to senior secured debt of the HOPCo Issuer and its subsidiaries.
§ Unconditionally guaranteed by HOPCo Group Holdings, L.P.
The descriptions of the Senior Loan Agreement, Mezzanine Loan Agreement, Note Purchase Agreement, Convertible Notes, Security Agreement, Warrants, HOPCo Note, and related documents are qualified in their entirety by reference to the complete text of such agreements, copies of which are filed as exhibits to this Current Report on Form 8-K and are incorporated herein by reference.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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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.
Stewards, Inc.
/s/ Katuischia Murless
Katuischia Murless
Chief Financial Officer
Date July 30, 2026
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THE SECURITIES REPRESENTED BY THIS SECURED CONVERTIBLE PROMISSORY NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND LAWS.
SECURED CONVERTIBLE PROMISSORY NOTE
Principal Amount: $[*]
Date of Issuance: July [*], 2026
Maturity Date: the date that is one hundred eighty (180) days after the Date of Issuance.
FOR VALUE RECEIVED, Stewards, Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of [*] (the “Holder”), or the Holder’s registered assigns, the principal sum of $[*], together with interest on the unpaid principal balance at the rate of fifteen percent (15%) per annum. Interest shall accrue from the Date of Issuance and shall be computed on the basis of a three hundred sixty-five (365) day year and the actual number of days elapsed. This Note is secured by a first-priority security interest in certain personal property of the Company pursuant to a Security Agreement of even date herewith.
1. Payment of Principal and Interest
The Company shall pay the outstanding principal amount of this Note, together with all accrued and unpaid interest, on the Maturity Date, unless this Note is earlier converted or prepaid in accordance with its terms. All payments of principal and interest shall be made in lawful money of the United States of America by wire transfer of immediately available funds to an account designated in writing by the Holder.
2. Maturity
Unless earlier converted or prepaid in accordance with the terms of this Note, the entire outstanding principal amount of this Note, together
with all accrued and unpaid interest, shall become due and payable on the date that is one hundred eighty (180) days after the Date of
Issuance (the “Maturity Date”).
3. Conversion Rights
3.1 Automatic Conversion at Maturity. On the Maturity Date, the outstanding principal amount of this Note, together with all accrued and unpaid interest, shall automatically convert in full into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at a conversion price of Three Dollars ($3.00) per share (the “Conversion Price”), without any further action by the Holder or the Company.
3.2 Optional Conversion Prior to Maturity. At any time prior to the Maturity Date, the Holder may request to convert all or any portion of the outstanding principal amount of this Note, together with all accrued and unpaid interest on the portion being converted, into shares of Common Stock at the Conversion Price; provided, however, that any such conversion prior to the Maturity Date shall require the prior written consent of the Company, which consent may be granted or withheld in the Company’s sole discretion.
3.3 Cash Payment in Lieu of Conversion. Notwithstanding Section 3.1, if the Holder desires to receive cash repayment of the outstanding principal and accrued interest on the Maturity Date instead of automatic conversion into Common Stock, the Holder may request such cash payment in writing no later than ten (10) business days prior to the Maturity Date. Any such cash repayment shall require the prior written agreement of the Company, which agreement may be granted or withheld in the Company’s sole discretion. If the Company does not agree to cash repayment, the Note shall automatically convert in accordance with Section 3.1.
3.4 Conversion Procedure. To convert this Note, pursuant to Section 3.1 or 3.2, the Company (or the Holder, in the case of a consented early conversion) shall deliver written notice. Within five (5) business days after receipt of the Conversion Notice the conversion effective date, the Company shall issue and deliver to the Holder a certificate or book-entry confirmation representing the number of shares of Common Stock issuable upon such conversion. The number of shares of Common Stock to be issued upon conversion shall be determined by dividing the principal amount plus accrued and unpaid interest being converted by the Conversion Price, rounded down to the nearest whole share.
3.5 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of any fractional share, the Company shall pay the Holder an amount in cash equal to the product of such fraction multiplied by the Conversion Price.
3.6 Effect of Conversion. Upon conversion of this Note in full, the Company shall be released from all obligations under this Note, and this Note shall be deemed cancelled and of no further force or effect.
4. Prepayment
The Company may prepay all or any portion of the outstanding principal amount of this Note, together with all accrued and unpaid interest on the portion being prepaid, at any time without premium or penalty, upon at least fifteen (15) days’ prior written notice to the Holder. Any partial prepayment shall be applied first to accrued and unpaid interest and then to principal.
5. Events of Default
The occurrence of any of the following events shall constitute an “Event of Default” under this Note:
5.1 The Company fails to pay any principal or interest when due under this Note and such failure continues for five (5) business days after written notice from the Holder;
5.2 The Company files a petition in bankruptcy or for reorganization or arrangement under any law relating to bankruptcy, or makes an assignment for the benefit of creditors, or consents to the appointment of a receiver or trustee for itself or for a substantial part of its property;
5.3 An involuntary petition in bankruptcy is filed against the Company, or a receiver or trustee is appointed for the Company or for a substantial part of its property, and such petition or appointment is not dismissed or vacated within sixty (60) days;
5.4 The Company materially breaches any representation, warranty, or covenant contained in this Note and fails to cure such breach within thirty (30) days after written notice from the Holder (or immediately if such breach is not reasonably capable of cure); or
5.5 The Company dissolves, liquidates, or ceases to conduct its business in the ordinary course.
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6. Remedies Upon Event of Default
Upon the occurrence of an Event of Default, the Holder may, at the Holder’s option, declare the entire outstanding principal amount
of this Note, together with all accrued and unpaid interest, to be immediately due and payable, without presentment, demand, protest,
or further notice, all of which are hereby expressly waived by the Company. The Holder may also pursue any other rights and remedies available
at law or in equity. In addition, the Holder may exercise any and all rights and remedies available under the Security Agreement.
7. Interest Upon Default
Upon the occurrence and during the continuance of an Event of Default, the interest rate on the outstanding principal amount of this Note
shall increase to eighteen percent (18%) per annum until such Event of Default is cured or this Note is paid in full.
8. Full Recourse
The liability of the Company for the obligations under this Note shall not be limited to the Collateral, and the Company shall have full liability therefor beyond the Collateral.
9. Costs of Collection
Should the indebtedness represented by this Note, or any part hereof, be collected at law, in equity, or in any bankruptcy, receivership or other court proceeding, or this Note be placed in the hands of any attorney for collection after default, the Company agrees to pay, in addition to the principal and interest due hereon, all reasonable attorneys’ fees, plus all other costs and expenses of collection and enforcement, including any fees incurred in connection with such proceedings or collection of the Note and/or enforcement of the Holder’s rights with respect to the administration, supervision, preservation or protection of, or realization upon, any Collateral securing payment hereof.
10. Transfer and Assignment
This Note may be transferred or assigned by the Holder only in compliance with applicable securities laws and with the prior written consent
of the Company, except that the Holder may transfer this Note to an affiliate of the Holder without such consent. Any attempted transfer
in violation of this section shall be void.
11. Governing Law
This Note shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to its conflicts of law
principles.
12. Notices
All notices, requests, demands, and other communications under this Note shall be in writing and shall be deemed to have been duly given
when made in accordance with the notice provisions set forth in the Note Purchase Agreement dated as of July [*], 2026, by and among the
Company and the Investors party thereto (the “Note Purchase Agreement”). Notices to the Holder shall be sent to the address
designated for such Holder in Schedule I of the Note Purchase Agreement, or to such other address as the Holder may designate in writing
to the Company.
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13. Waiver of Presentment and Other Formalities
The Company hereby waives presentment for payment, demand, protest, notice of protest, notice of dishonor, and all other notices and demands
to which the Company may otherwise be entitled in connection with this Note.
14. Usury Savings Clause
If the interest rate provided for in this Note would violate any applicable usury law, then the interest rate shall automatically be reduced
to the maximum rate permitted by such law, and any excess interest previously paid shall be applied to reduce the principal amount outstanding
or returned to the Company.
15. Waiver of Jury Trial
The Company and the Holder each hereby waive any right to a trial by jury in any action or proceeding arising out of or relating to this
Note.
16. Severability
If any provision of this Note is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.
17. Entire Agreement
This Note constitutes the entire agreement between the Company and the Holder with respect to the subject matter hereof and supersedes
all prior agreements and understandings, whether written or oral.
18. Amendment
This Note may not be amended or modified except by a written instrument signed by the Company and the Holder.
IN WITNESS WHEREOF, the Company has caused this Secured Convertible Promissory Note to be executed and delivered as of the Date of Issuance first written above.
COMPANY:
Stewards, Inc.
a Nevada corporation
By: /s/ Shaun Quin______________________
Name: Shaun Quin
Title: Chief Executive Officer
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THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS SUCH SALE, TRANSFER, PLEDGE, OR HYPOTHECATION IS IN ACCORDANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
WARRANT
to Purchase Common Stock of
Stewards, Inc.
a Nevada Corporation
Warrant No.: [*]
Number of Shares:[*] shares of Common Stock
Exercise Price: $3.00 per share
Expiration Date: [*]
This Warrant certifies that [*] (the “Warrantholder”) is entitled to purchase from Stewards, Inc., a Nevada corporation (the “Company”), up to [*] shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at an exercise price of Three Dollars ($3.00) per share, subject to adjustment as provided herein, all upon the terms and conditions set forth below.
Section 1. Definitions.
As used in this Warrant, the following terms shall have the meanings set forth below:
“Articles” means the Articles of Incorporation of the Company, as amended from time to time.
“Common Stock” means the Company’s authorized common stock, $0.0001 par value per share.
“Exercise Price” means $3.00 per share of Common Stock, as adjusted from time to time pursuant to Section 3.
“Expiration Date” means [Date that is five (5) years after the Date of Issuance].
“Securities Act” means the Securities Act of 1933, as amended.
“Warrant” means this Warrant and any additional or replacement warrants issued upon division, combination, or substitution
of this Warrant.
“Warrant Stock” means the shares of Common Stock issuable upon exercise of this Warrant.
Section 2. Exercise of Warrant.
(a) Right to Exercise. The Warrantholder may exercise this Warrant, in whole or in part, at any time or from time to time on or prior to the Expiration Date.
(b) Method of Exercise. To exercise this Warrant, the Warrantholder shall surrender this Warrant to the Company at its principal executive office, together with:
- A duly completed and executed Subscription Form in the form attached as Exhibit A; and
- Payment of the Exercise Price in cash, by certified or cashier’s check, or by wire transfer of immediately available funds to an account designated by the Company.
Cashless exercise is expressly prohibited. This Warrant may be exercised only for cash.
(c) Issuance of Shares. Upon proper exercise and payment, the Company shall, as promptly as practicable (and in any event within five (5) business days), issue and deliver to the Warrantholder a certificate or book-entry confirmation representing the number of fully paid and nonassessable shares of Common Stock to which the Warrantholder is entitled.
(d) Partial Exercise. If this Warrant is exercised for less than all of the shares subject hereto, the Company shall issue a new Warrant of like tenor for the remaining shares.
(e) Fractional Shares. No fractional shares of Common Stock shall be issued upon exercise of this Warrant. In lieu thereof, the Company shall pay the Warrantholder an amount in cash equal to the product of such fraction multiplied by the Exercise Price then in effect.
(f) Valid Issuance. All shares of Warrant Stock issued upon exercise of this Warrant shall be duly authorized, validly issued, fully paid, and nonassessable, and shall be free and clear of all liens, charges, and encumbrances created by the Company.
Section 3. Adjustment of Exercise Price and Number of Shares.
(a) Stock Splits, Dividends, and Combinations. If the Company at any time (i) pays a dividend or makes a distribution on its Common Stock in shares of Common Stock, (ii) subdivides or splits its outstanding shares of Common Stock, or (iii) combines its outstanding shares of Common Stock into a smaller number of shares, then the Exercise Price shall be proportionately decreased or increased, and the number of shares of Warrant Stock shall be proportionately increased or decreased, so that the Warrantholder shall be entitled to receive the same percentage of the outstanding Common Stock as the Warrantholder would have been entitled to receive immediately prior to such event.
(b) Reclassification, Reorganization, Merger, or Sale of Assets. In case of any reclassification or change of the outstanding Common Stock (other than a subdivision, combination, or stock dividend), or in case of any consolidation or merger of the Company with or into another corporation or other business entity (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Common Stock), or in case of any sale or conveyance of all or substantially all of the assets of the Company, then, as a condition of such transaction, lawful provision shall be made so that the Warrantholder shall have the right to receive, upon exercise of this Warrant, the kind and amount of shares of stock, securities, or property that the Warrantholder would have been entitled to receive if the Warrantholder had exercised this Warrant immediately prior to such event.
(c) Notice of Adjustment. Whenever the Exercise Price or the number of shares of Warrant Stock subject to this Warrant is adjusted, the Company shall promptly deliver to the Warrantholder a certificate signed by an officer of the Company setting forth the new Exercise Price and the new number of shares purchasable, together with a brief statement of the facts requiring such adjustment.
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Section 4. Reservation of Shares.
The Company shall at all times reserve and keep available, free from preemptive rights and other restrictions, a sufficient number of
authorized but unissued shares of Common Stock to permit the full exercise of this Warrant and all other outstanding warrants of like
tenor.
Section 5. No Impairment.
The Company shall not, by amendment of its Articles or Bylaws or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant. The Company shall at all times in good faith assist in the carrying out of all such terms and in the taking
of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholder.
Section 6. Transfer of Warrant.
Subject to compliance with applicable securities laws, this Warrant and the rights hereunder are transferable in whole or in part by the
Warrantholder upon surrender of this Warrant to the Company together with a properly executed assignment in form reasonably satisfactory
to the Company. The Company shall issue a new Warrant registered in the name of the transferee.
Section 7. Loss, Theft, Destruction or Mutilation.
Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant,
and (in the case of loss, theft, or destruction) upon delivery of an indemnity agreement reasonably satisfactory to the Company, the Company
shall issue a new Warrant of like tenor.
Section 8. Notices.
All notices, requests, demands, and other communications required or permitted under this Warrant shall be given in accordance with the
notice provisions set forth in Section 6(h) of the Note Purchase Agreement dated as of July [*], 2026, among the Company and the Investors
named therein.
Section 9. Amendments and Waivers.
No amendment, modification, supplement, or waiver of any provision of this Warrant shall be effective unless in writing and signed by
the Company and the Warrantholder.
Section 10. Governing Law.
This Warrant shall be governed by, and construed in accordance with, the laws of the State of Nevada, without regard to conflicts of law
principles.
Section 11. Miscellaneous.
(a) Entire Agreement. This Warrant constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral.
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(b) Severability. If any provision of this Warrant is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.
(c) Successors and Assigns. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.
(d) Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Electronic signatures shall be deemed valid and binding.
(e) Waiver of Jury Trial. Each party hereby waives any right to trial by jury in any action or proceeding arising out of or relating to this Warrant.
(f) Headings. The headings in this Warrant are for convenience of reference only and shall not affect the interpretation of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of the date first written above.
COMPANY:
Stewards, Inc.
a Nevada corporation
By: /s/ Shaun Quin_____________________
Name: Shaun Quin
Title: Chief Executive Officer
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EXHIBIT A
SUBSCRIPTION FORM
To: Stewards, Inc.
The undersigned hereby irrevocably elects to exercise the attached Warrant and purchase [*] shares of Common Stock. Payment of the Exercise Price is made herewith in cash / by certified check / by wire transfer in the amount of $[*].
Please issue the shares in the name of:
Name: _______________________________
Address: _______________________________
________________________________
Tax Identification Number: _______________________________
Signature:_______________________________
Printed Name: _______________________________
Date: _______________________________
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LOAN AGREEMENT
Between
BLOCK 40 PROPERTY, LLC,
a Delaware limited liability company,
as Borrower
and
VMC CRE MASTER LENDING UPPER REIT LLC,
a Delaware limited liability company,
as Lender
Entered into as of July 24, 2026
TABLE OF CONTENTS
Page
| Article 1. DEFINITIONS | 1 |
| 1.1 DEFINED TERMS | 1 |
| Article 2. LOAN | 25 |
| 2.1 LOAN | 25 |
| 2.2 PURPOSE | 26 |
| 2.3 INTEREST RATE AND DEFAULT RATE | 26 |
| 2.4 TERMS OF PAYMENT | 26 |
| 2.5 EXIT FEE. | 26 |
| 2.6 PREPAYMENT | 26 |
| 2.7 GRANT OF SECURITY INTEREST IN REAL PROPERTY | 27 |
| 2.8 GRANT OF SECURITY INTEREST IN ACCOUNTS AND RESERVES; APPLICATIONS OF FUNDS | 27 |
| 2.9 DEPOSITS; FEES | 27 |
| 2.10 LOAN DOCUMENTS | 28 |
| 2.11 EFFECTIVE DATE | 28 |
| 2.12 FULL REPAYMENT AND RECONVEYANCE, SATISFACTION OR RELEASE | 28 |
| 2.13 FIRST OPTION TO EXTEND | 28 |
| 2.14 SECOND OPTION TO EXTEND | 30 |
| 2.15 THIRD OPTION TO EXTEND | 31 |
| Article 3. DISBURSEMENT and reserves | 33 |
| 3.1 CONDITIONS PRECEDENT. | 33 |
| 3.2 PLEDGE AND ASSIGNMENT AND DISBURSEMENT AUTHORIZATION | 36 |
| 3.3 DISBURSEMENTS | 36 |
| 3.4 INTENTIONALLY OMITTED | 36 |
| 3.5 INTENTIONALLY OMITTED. | 36 |
| 3.6 INTEREST AND CARRY RESERVE | 36 |
| 3.7 CAPITAL EXPENDITURES RESERVE | 37 |
| 3.8 LEASING RESERVE ACCOUNT | 39 |
| 3.9 INTENTIONALLY OMITTED | 42 |
| 3.10 TAX AND INSURANCE RESERVE | 42 |
| 3.11 GENERAL | 42 |
| Article 4. cash management PROVISIONS | 43 |
| 4.1 CASH MANAGEMENT ACCOUNT | 43 |
| Article 5. INSURANCE | 48 |
| 5.1 REQUIRED INSURANCE | 48 |
| 5.2 POLICY REQUIREMENTS | 51 |
| 5.3 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS. | 53 |
| Article 6. REPRESENTATIONS AND WARRANTIES | 57 |
| 6.1 AUTHORITY/ENFORCEABILITY | 57 |
| 6.2 BINDING OBLIGATIONS | 58 |
| 6.3 ORGANIZATION | 58 |
| 6.4 FORMATION AND ORGANIZATIONAL DOCUMENTS | 58 |
| 6.5 NO VIOLATION | 58 |
| 6.6 COMPLIANCE WITH LAWS; USE | 58 |
| 6.7 LITIGATION | 59 |
| 6.8 FINANCIAL CONDITION | 59 |
| 6.9 NO MATERIAL ADVERSE CHANGE | 59 |
| 6.10 ACCURACY | 59 |
| 6.11 UTILITIES | 59 |
| 6.12 AMERICANS WITH DISABILITIES ACT COMPLIANCE | 59 |
| 6.13 TAX LIABILITY | 59 |
| 6.14 BUSINESS LOAN | 59 |
| 6.15 FULL FORCE AND EFFECT | 59 |
| 6.16 ENFORCEABLE OBLIGATIONS | 60 |
| 6.17 NO DEFAULT | 60 |
| 6.18 ERISA | 60 |
| 6.19 INVESTMENT COMPANY ACT | 60 |
| 6.20 NO BANKRUPTCY FILING | 60 |
| 6.21 LEASES; MATERIAL AGREEMENTS | 60 |
| 6.22 NOT FOREIGN PERSON | 61 |
| 6.23 LABOR MATTERS | 61 |
| 6.24 TITLE | 62 |
| 6.25 NO ENCROACHMENTS | 62 |
| 6.26 PHYSICAL CONDITION | 62 |
| 6.27 FRAUDULENT CONVEYANCE | 62 |
| 6.28 MANAGEMENT | 63 |
| 6.29 CONDEMNATION | 63 |
| 6.30 ASSESSMENTS | 63 |
| 6.31 NO JOINT ASSESSMENT | 63 |
| 6.32 SECURITIES COMPLIANCE | 63 |
| 6.33 EB-5 PROGRAM | 63 |
| Article 7. SPECIAL PURPOSE ENTITY STATUS | 64 |
| 7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING SPECIAL PURPOSE ENTITY STATUS; FUTURE AND PAST ACTIVITIES | 64 |
| 7.2 SPE COVENANTS IN BORROWER ORGANIZATIONAL DOCUMENTS | 67 |
| 7.3 PAST ACTIVITIES | 67 |
| Article 8. HAZARDOUS MATERIALS | 69 |
| 8.1 SPECIAL REPRESENTATIONS AND WARRANTIES, COVENANTS AND INDEMNITY | 69 |
| Article 9. COVENANTS OF BORROWER | 70 |
| 9.1 EXPENSES | 70 |
| 9.2 ERISA COMPLIANCE | 70 |
| 9.3 LEASING | 70 |
| 9.4 LEASE COVENANTS | 70 |
| 9.5 NO LIENS ON CONTROLLING INTEREST IN BORROWER | 72 |
| 9.6 NO TRANSFER AND FURTHER ENCUMBRANCE | 72 |
| 9.7 NO MERGER, CONSOLIDATION AND TRANSFER OF ASSETS | 72 |
| 9.8 NO CHANGE IN STRUCTURE OR MANAGEMENT; SINGLE PURPOSE ENTITY | 72 |
| 9.9 NO ADDITIONAL DEBT AND NO SEPARATE GUARANTY | 73 |
| 9.10 EXISTENCE | 73 |
| 9.11 TAXES AND OTHER LIABILITIES | 73 |
| 9.12 NOTICE | 74 |
| 9.13 FACILITIES | 74 |
| 9.14 MANAGEMENT OF PROPERTY | 74 |
| 9.15 SUBDIVISION MAPS | 75 |
| 9.16 FURTHER ASSURANCES | 75 |
| 9.17 NO ASSIGNMENT | 75 |
| 9.18 SANCTIONS | 75 |
| 9.19 DISTRIBUTIONS TO MEMBERS OF BORROWER | 76 |
| 9.20 INTEREST RATE CAP AGREEMENT | 76 |
| 9.21 INTEREST RATE CAP AGREEMENT COVENANTS | 76 |
| 9.22 CONTROLLED SUBSTANCES. | 77 |
| 9.23 MATERIAL AGREEMENTS | 78 |
| 9.24 COMPLIANCE WITH LAWS | 78 |
| 9.25 MEZZANINE LOAN PROVISIONS. | 78 |
| 9.26 ALTERATIONS | 81 |
| 9.27 LIVE LOCAL ACT | 81 |
| 9.28 POST-CLOSING OBLIGATIONS. [RESERVED]. | 81 |
| 9.29 EB-5 PROGRAM COVENANTS | 82 |
| 9.30 CODE VIOLATIONS | 83 |
| Article 10. reserved | 83 |
| Article 11. FINANCIAL STATEMENTS | 83 |
| 11.1 BORROWER AND GUARANTOR FINANCIAL STATEMENTS | 83 |
| 11.2 MONTHLY PROPERTY REPORTING | 84 |
| 11.3 BOOKS AND RECORDS | 84 |
| 11.4 OTHER INFORMATION | 84 |
| 11.5 FORM, WARRANTY | 84 |
| 11.6 TAX RETURNS | 84 |
| 11.7 BUDGET | 84 |
| 11.8 FINANCIAL STATEMENTS | 85 |
| Article 12. DEFAULTS AND REMEDIES | 85 |
| 12.1 EVENTS OF DEFAULT | 85 |
| 12.2 ACCELERATION UPON EVENT OF DEFAULT; REMEDIES | 89 |
| 12.3 ACCELERATION UPON LOSS OF SECURITY | 89 |
| 12.4 DISBURSEMENTS TO THIRD PARTIES | 89 |
| 12.5 SET OFF | 89 |
| 12.6 RIGHTS CUMULATIVE; NO WAIVER | 90 |
| Article 13. MISCELLANEOUS PROVISIONS | 90 |
| 13.1 INDEMNITY | 90 |
| 13.2 NOTICES | 91 |
| 13.3 RELATIONSHIP OF PARTIES | 92 |
| 13.4 ATTORNEYS’ FEES AND EXPENSES; ENFORCEMENT | 92 |
| 13.5 NO WAIVER | 92 |
| 13.6 IMMEDIATELY AVAILABLE FUNDS | 92 |
| 13.7 LENDER’S AGENTS | 92 |
| 13.8 WAIVER OF RIGHT TO TRIAL BY JURY | 92 |
| 13.9 SEVERABILITY | 93 |
| 13.10 HEIRS, SUCCESSORS AND ASSIGNS | 93 |
| 13.11 INTENTIONALLY OMITTED | 93 |
| 13.12 INTENTIONALLY OMITTED | 93 |
| 13.13 TIME | 93 |
| 13.14 GOVERNING LAW AND CONSENT TO JURISDICTION | 93 |
| 13.15 USA PATRIOT ACT NOTICE, COMPLIANCE | 94 |
| 13.16 JOINT AND SEVERAL LIABILITY | 94 |
| 13.17 INTENTIONALLY DELETED | 94 |
| 13.18 NO THIRD PARTIES BENEFITED | 94 |
| 13.19 ACTIONS | 94 |
| 13.20 ASSIGNMENT OF LOAN DOCUMENTS | 94 |
| 13.21 HEADINGS | 94 |
| 13.22 ELECTRONIC TRANSMISSION OF DATA | 94 |
| 13.23 COUNTERPARTS | 94 |
| 13.24 POWERS OF ATTORNEY | 95 |
| 13.25 BROKERAGE COMMISSIONS | 95 |
| 13.26 RULES OF CONSTRUCTION | 95 |
| 13.27 USE OF SINGULAR AND PLURAL; GENDER | 95 |
| 13.28 EXHIBITS, SCHEDULES AND RIDERS | 95 |
| 13.29 INCONSISTENCIES | 95 |
| 13.30 INTEGRATION; INTERPRETATION | 95 |
| 13.31 ASSUMPTION OF LOAN | 95 |
| 13.32 INTENTIONALLY OMITTED | 96 |
| 13.33 INTENTIONALLY OMITTED. | 96 |
| 13.34 SERVICER | 96 |
| 13.35 SECONDARY MARKET PROVISIONS. | 97 |
| 13.36 SEVERANCE OF LOAN AND REGISTERED NOTE | 98 |
| 13.37 COSTS AND EXPENSES. | 100 |
| 13.38 EXCULPATION. | 100 |
| 13.39 ORAL AGREEMENTS | 101 |
| 13.40 INTERCREDITOR AGREEMENT | 101 |
| EXHIBIT A LEGAL DESCRIPTION | 1 |
| EXHIBIT B LOAN DOCUMENTS | 1 |
| EXHIBIT C OPTION TO EXTEND REQUEST LETTER FROM BORROWER | 1 |
| EXHIBIT D RESERVED | 1 |
| EXHIBIT E ORGANIZATIONAL CHART | 1 |
| SCHEDULE 1 MATERIAL AGREEMENTS | 1 |
| SCHEDULE 6.21(c) LEASING REP EXCEPTIONS | 2 |
| SCHEDULE 7.3 LITIGATION | 3 |
LOAN AGREEMENT
THIS LOAN AGREEMENT (“Agreement”) is entered into as of July 24, 2026 (the “Effective Date”), by and between BLOCK 40 PROPERTY, LLC, a Delaware limited liability company (“Borrower”), and VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”).
RECITALS
A. Borrower desires to borrow from Lender, and Lender agrees to loan to Borrower, the Loan for which provision is made herein.
B. Borrower owns certain real property described in Exhibit A attached hereto and all Improvements (as hereinafter defined) and certain additional personal property now or hereafter existing thereon and related thereto (collectively, the “Property”).
NOW, THEREFORE, Borrower and Lender agree as follows:
Article 1. DEFINITIONS
1.1 DEFINED TERMS. The following capitalized terms generally used in this Agreement shall have the meanings defined or referenced below. Certain other capitalized terms used only in specific sections of this Agreement are defined in such sections.
“Account Funds” – means all sums now or hereafter on deposit in or payable or withdrawable from the Accounts.
“Accounts” – means the Cash Management Account, the Restricted Account, the Reserve Accounts, any subaccounts created thereunder and all other accounts created hereunder and under the other Loan Documents from time to time.
“ADA” – means the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et seq., as now or hereafter amended or modified, and any similar and applicable law, rule or regulation relating to access by disabled persons.
“Advance” – means any advance of Loan proceeds pursuant to and in accordance with the terms hereof.
“Affiliate” – means, with respect to any Person, (i) any domestic Person which owns, directly or indirectly twenty percent (20%) or more of the equity interests in such Person, (ii) any foreign Person which owns, directly or indirectly ten percent (10%) or more of the equity interests in such Person, or (iii) any Person which is under common control with, controlled by, or controlling (in each case, by possession of a Controlling Interest) with, the applicable Person. For the avoidance of doubt, in no event shall any shareholder or any partner, managing member, officer, director, trustee or employee, of Guarantor be deemed to be an Affiliate hereunder unless such Person satisfies clauses (i) or (ii) of this definition.
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“Affiliate Lease” – means any Lease with an Affiliate of Borrower or Guarantor.
“Agreement” – shall have the meaning ascribed to such term in the preamble hereto.
“Alteration Threshold” shall mean $400,000 individually and in the aggregate.
“Annual Budget” – means the operating and capital budget for the Property setting forth, on a month-by-month basis, good faith estimate, of anticipated Gross Rents, Gross Income, Operating Expenses, in reasonable detail, each line item of Borrower’s TI Leasing Costs and Capital Expenditures for the applicable calendar year.
“Approved Accounting Method” – means (i) cash or federal tax basis accounting or GAAP (in each case, consistently applied) or (ii) such other method of accounting, consistently applied, as may be reasonably acceptable to Lender.
“Approved Annual Budget” – shall have the meaning set forth in Section 11.7 hereof.
“Approved Extraordinary Expense” means an Operating Expense or Capital Expenditure of the Property not set forth on the Approved Annual Budget, but approved by Lender in writing (which such approval shall not be unreasonably withheld, conditioned or delayed).
“Approved Lease” – means any Lease (or amendment or modification of an existing Lease) that (i) is existing as of the Effective Date, (ii) (A) is executed after the Effective Date, (B) is for residential purposes, (C) provides for rental rates required pursuant to any applicable law or, in Borrower’s commercially reasonable judgment, comparable to existing local market rates for similar properties, (D) does not contain any option, offer, right of first refusal or other similar entitlement to purchase all or any portion of the Property, and (E) is on Borrower’s standard residential lease form, which form has been approved by Lender in its reasonable discretion, and/or (iii) any other commercial Lease for the Property that is approved by Lender in its reasonable discretion pursuant to the terms and conditions of Section 9.4 hereof.
“Asset Management Agreement” – means that certain Management Agreement dated as of November 14, 2025, by and among Block 40, LLC, a Florida limited liability company (“Block 40”) and Asset Manager, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time pursuant to the terms of the Loan Documents. Said Asset Management Agreement has been assigned from Block 40 to Borrower pursuant to an assignment of contracts dated on or about the Effective Date.
“Asset Manager” – means GCF Development, LLC, a Florida limited liability company.
“Assignment of Leases and Rents” – means that certain Assignment of Leases and Rents dated as of the Effective Date executed by Borrower in favor of Lender, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time.
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“Assignment of Asset Management Agreement” – means that certain Assignment and Subordination of Asset Management Agreement dated as of the Effective Date executed by Borrower, Lender, and Asset Manager, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time
“Assignment of Management Agreement” – means that certain Assignment and Subordination of Management Agreement dated as of the Effective Date executed by Borrower, Lender, and Property Manager, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time.
“Balancing Payment” – means a payment into the applicable Reserve Account of a sum which, together with any initial deposit and any applicable monthly deposits into the applicable Reserve Account, will be sufficient to discharge the obligations and liabilities for which such Reserve Account was established as and when the same become due and payable. The amount of the Balancing Payment shall be determined by Lender in its reasonable discretion and shall be final and binding absent manifest error.
“Bankruptcy Code” – means the Bankruptcy Reform Act of 1978 (11 U.S.C. § 101-1330) as now or hereafter amended or recodified.
“Borrower” – shall have the meaning ascribed to such term in the preamble hereto.
“Borrowing Group” – means, individually and collectively: (a) the Borrower, (b) Guarantor, (c) any domestic Person owning or holding greater than or equal to twenty percent (20%) or more of the direct or indirect ownership interests in Borrower, (d) any foreign Person owning or holding greater than or equal to ten percent (10%) or more of the direct or indirect ownership interests in Borrower, and (e) any officer, director, member or partner or other person or entity acting on behalf of Borrower or Guarantor with respect to the Loan or this Agreement.
“Business Day” – means a day, except a Saturday, Sunday, or any other day which commercial banks in New York, New York are authorized or required by law to close. Unless specifically referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.
“Capital Expenditures” – means for any period, the amount expended (or to be expended, as the context requires) for (i) Capital Improvements that are set forth in the Approved Annual Budget, or otherwise approved by Lender in its reasonable discretion, (ii) expenditures set forth in the Approved Annual Budget or otherwise approved by Lender for soft costs related to Capital Improvements, including, without limitation, architectural, design, project management, engineering, financing and legal fees related thereto.
“Capital Expenditures Reserve Account” – shall have the meaning ascribed to it in Section 3.7.
“Capital Expenditures Reserve Funds” - shall have the meaning ascribed to it in Section 3.7.
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“Capital Expenditures Reserve Monthly Deposit” - shall have the meaning ascribed to it in Section 3.7.
“Capital Improvements” – means improvements, replacements or major repairs at the Property, as well as fixtures, furniture and equipment that are to be owned by Borrower and used in connection with or installed (or to be installed) into the Property.
“Carry Guaranty” – means that certain Guaranty of Debt Service and Carry Costs dated as of the Effective Date executed and delivered by Guarantor to Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Cash Management Account” – shall have the meaning set forth in Section 4.1 hereof.
“Cash Sweep Period” – means a period during the term of the Loan:
(i) commencing upon the Effective Date and expiring as of the date that the Property achieves a Debt Service Coverage Ratio equal to or greater than 1.10 for three (3) consecutive calendar months (“Initial DSCR Release”);
(ii) at any time following the Initial DSCR Release (if applicable), commencing upon the occurrence of the Debt Service Coverage Ratio falling below 1.0 for three (3) consecutive calendar months, and thereafter expiring upon the date that the Debt Service Coverage Ratio is thereafter equal to or greater than 1.10 for three (3) consecutive calendar months;
(iii) commencing upon the occurrence of a Mezzanine Event of Default and expiring upon the cure (if applicable) of such Mezzanine Event of Default; and/or
(iv) commencing upon the occurrence of an Event of Default and expiring upon the cure (if applicable) of such Event of Default.
“Code” – means the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.
“Collateral” – shall have the meaning ascribed to such term in the Security Instrument and shall also include any additional collateral pledged by Borrower to Lender pursuant to the terms of the Loan Documents.
“Condemnation Proceeds” – shall have the meaning set forth in Section 5.3(b) hereof.
“Contract Rate” – shall have the meaning ascribed to such term in the Note.
“Controlled Substances” – means marijuana, cannabis or other controlled substances as defined in the Federal Controlled Substances Act or that otherwise are illegal or regulated under any Controlled Substances Laws.
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“Controlled Substances Laws” – means the Federal Controlled Substances Act (21 U.S.C. § 801 et seq.) or any other similar or related federal, state or local law, ordinance, code, rule, regulation or order.
“Controlled Substances Uses” – means any cultivation, growth, creation, production, manufacture, sale, distribution, storage, handling, possession or other use of a Controlled Substance.
“Controlling Interest” – means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of such Person, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise, provided, however, that a member or partner containing customary “major decision” rights shall not be deemed a Controlling Interest; and “Control” when used as a defined term shall have the correlative meaning.
“Cost Breakdown” – means a reasonably detailed description and cost breakdown of the Work to be paid or reimbursed from the disbursement from any applicable Reserve.
“DACA – Restricted Account Agreement” – means that certain Deposit Account Control Agreement dated as of the Effective Date by and among Borrower, Lender and the Depository Bank, with respect to the Restricted Account, as the same may be amended, modified, supplemented or replaced from time to time.
“Debt” – shall mean the outstanding principal amount set forth in, and evidenced by, this Agreement and the Note, together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Note, this Agreement, the Security Instrument or any other Loan Document.
“Debt Service” – means, as to any applicable period, interest payments and principal payments (if any) with respect to the Loan, required to be paid during such period by Borrower in accordance with the terms and conditions of the Loan Documents.
“Debt Service Account” – shall have the meaning set forth in Section 4.1(a) hereof.
“Debt Service Coverage Ratio” – means, as of any date of calculation, the number obtained by dividing (i) Underwritten Net Operating Income by (ii) Debt Service (including, for the purposes of this definition, all debt service due and owing on the Mezzanine Loan), each calculated for the immediately succeeding twelve (12) month period, as calculated by Lender in its reasonable discretion.
“Debt Yield Ratio” – means the number (expressed as a percentage) obtained by dividing (i) Underwritten Net Operating Income, by (ii) the then total outstanding Principal Balance of the Loan and the Mezzanine Loan (in the aggregate), as calculated by Lender in its reasonable discretion.
“Default” – means any event which, with the giving of notice or the lapse of time (to the extent applicable pursuant to the terms of the Loan Documents), or both, would constitute an Event of Default.
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“Default Rate” – shall have the meaning ascribed to such term in the Note.
“Depository Bank” – means Well Fargo Bank, National Association, or such other Eligible Institution selected or approved by Lender in its reasonable discretion pursuant to the terms of this Agreement.
“Developer Agreement” – means that certain Amended and Restated Developer Agreement by and between City of Hollywood, a municipal corporation of the State of Florida, Broward County, Florida, the City of Hollywood Downtown Community Redevelopment Agency, a public instrumentality of the State of Florida, Broward County, Florida, and Block 40, LLC (as predecessor-in-interest to Block 40 Property, LLC, a Delaware limited liability company), recorded February 9, 2021, with the Broward County Commission, State of Florida, as Instrument No. 117046118
“Drug-Related Activities” – means any Controlled Substances Uses, any violation of any Controlled Substances Law or any business, communications, financial transactions or other activities related to Controlled Substances or Controlled Substances Uses.
“EB-5 Capital Contribution” – means any capital contribution made by an EB-5 Investor in connection with the EB-5 Program.
“EB-5 Investor” – means any investor who has made, or committed to make, an EB-5 Capital Contribution in connection with the EB-5 Program.
“EB-5 Offering Documents” – means, collectively, all private placement memoranda, subscription agreements, operating agreements, escrow agreements, investor agreements, and any other offering documents or agreements between any EB-5 Investor and Borrower, Mezzanine Borrower, Block 40, any Affiliate of Borrower, Mezzanine Borrower or Block 40, or the Regional Center, in connection with the EB-5 Program.
“EB-5 Program” – means the immigrant investor program established pursuant to Section 203(b)(5) of the Immigration and Nationality Act (8 U.S.C. § 1153(b)(5)), as amended by the EB-5 Reform and Integrity Act of 2022, and the rules and regulations promulgated thereunder by USCIS, as the same may be amended, modified, or supplemented from time to time.
“Effective Date” – shall have the meaning set forth in the introductory paragraph.
“Eligible Account” - means a separate and identifiable account from all other funds held by the holding institution that is an account or accounts maintained with a federal or state-chartered depository institution or trust company which (i) complies with the definition of Eligible Institution, (ii) has a combined capital and surplus of at least $50,000,000 and (iii) has corporate trust powers and is acting in its fiduciary capacity. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
“Eligible Institution” - means (i) a depository institution or trust company insured by the Federal Deposit Insurance Corporation (A) the short term unsecured debt obligations or commercial paper of which are rated at least “A-1+” (or its equivalent) from each of the Rating Agencies (in the case of accounts in which funds are held for thirty (30) days or less) and (B) the long term unsecured debt obligations of which are rated at least “A” (or its equivalent) from each of the Rating Agencies (in the case of accounts in which funds are held for more than thirty (30) days) or (ii) such other depository institution otherwise approved by the Rating Agencies from time-to-time, or (iii) Depository Bank.
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“Environmental Report” – means that certain Phase I Environmental Site Assessment dated July 1, 2026, prepared by AEI Consultants, as Project No. 531369.
“ERISA” – means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.
“ERISA Affiliate” – means, at any time, each trade or business (whether or not incorporated) that would, at the time, be treated together with Borrower as a single employer under Title IV or Section 302 of ERISA or Section 412 of the Code.
“Event of Default” – shall have the meaning ascribed to such term in Section 12.1 hereof.
“Excess Cash Flow” – shall have the meaning set forth in Section 4.1(c) hereof.
“Excess Cash Flow Account” – shall have the meaning set forth in Section 4.1(c) hereof.
“Excess Cash Flow Funds” – shall have the meaning set forth in Section 4.1(c) hereof.
“Exit Fee” – shall have the meaning assigned thereto in Section 2.5 hereof.
“First Extended Maturity Date” – means August 7, 2029.
“First Option to Extend” – means Borrower’s option, subject to the terms and conditions of Section 2.13 hereof, to extend the term of the Loan from the Original Maturity Date to the First Extended Maturity Date.
“GAAP” – means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of any date of determination.
“Governmental Authority” – means any court, board, agency, commission, office or authority of any executive, legislative, judicial, regulatory or administrative nature whatsoever or any governmental unit (federal, state, commonwealth, county, district, municipal, city, foreign or otherwise) whether now or hereafter in existence.
“Gross Income” – means, without duplication, all (i) Gross Rents, and (ii) all other income, computed in accordance with the Approved Accounting Method, derived from the ownership and operation of the Property from whatever source, including, without limitation, common area maintenance recoveries, real estate tax recoveries, utility recoveries, other miscellaneous expense recoveries, interest income, forfeited security deposits, late charges, and other miscellaneous income, including but not limited to pet fees, transfer fees, NSF fees, late fees and application fees, but excluding rental income taxes, sales taxes, use and occupancy taxes or other taxes on receipts required to be accounted for by Borrower to any Governmental Authority, refunds and uncollectible accounts, sales of furniture, fixtures and equipment, interest income, insurance proceeds (other than business interruption, rent loss, or other loss of income insurance), condemnation or similar awards, unforfeited security deposits, non-recurring or extraordinary income (including, without limitation, Lease Termination Payments, and any disbursements to Borrower from the Reserves), and any payments made to Borrower pursuant to any “in-the-money” Interest Rate Cap Agreement. For purposes of clarity, income calculated under clause (ii) shall not include any income calculated under clause (i) above.
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“Gross Rents” – means an amount equal to annual rental income for all Tenants under Leases for the Property (if any).
“Guarantor” – means, collectively and individually (as the context requires), (i) STEWARDS, INC., a Nevada corporation, (ii) SHAUN A. QUIN, (iii) CHARLES R. ABELE, (iv) PETER J. JAGO, (v) GLEN STEWARD, and (vi) any additional guarantor approved by Lender pursuant to the terms and conditions of this Agreement after the Effective Date.
“Guarantor Financial Covenants” – shall have the meaning set forth in Section 12.1(n) hereof.
“Guaranty” – means, collectively and individually (as the context requires), (i) the Limited Guaranty, (ii) Carry Guaranty, (iii) Limited Payment Guaranty, and (iv) any additional guaranty executed in connection with the Loan after the Effective Date.
“Hazardous Materials Indemnity” – means that certain Hazardous Materials Indemnity Agreement, dated as of the Effective Date, executed by Borrower and Guarantor in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Improvements” – means the buildings and improvements that are now existing on the Property (including, the 273-unit multifamily building), and any other improvements that may be constructed upon the Property, if applicable, or otherwise as expressly permitted hereunder or approved in writing by Lender, including all site work, utilities, infrastructure, paving, striping, signage, curb and gutter, landscaping and installation of all “common area” improvements.
“Indemnitees” - means Lender, Lender’s parent, subsidiaries and affiliates, any holder of or participant in the Loan and all directors, officers, employees, agents, successors and assigns of any of the foregoing. The term “Indemnitees” shall not include any Person who has not owned an interest in the Loan and acquires the Property at foreclosure or from Lender or any Affiliate thereof after a foreclosure or deed-in-lieu thereof.
“Job Creation Plan” – means the business plan and economic impact analysis submitted to USCIS in connection with the EB-5 Program describing the jobs to be created by the investment of the EB-5 Capital Contributions, as the same may be amended or supplemented from time to time with USCIS approval.
“Independent Manager” - shall mean a natural Person who (a) is not at the time of initial appointment and has never been, and will not while serving as independent manager be: (i) a stockholder, director (with the exception of serving as the independent manager of Borrower), officer, employee, partner, member (other than a “special member” or “springing member”), manager (with the exception of serving as the independent manager of Borrower), attorney or counsel of Borrower, equity owners of Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor; (ii) a customer, supplier or other person who derives any of its purchases or revenues from its activities with Borrower or any Guarantor, equity owners of Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor;
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(iii) a Person controlling or under common control with any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person of Borrower, equity owners of Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor; or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person of Borrower, equity owners of Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor and (b) has (i) prior experience as an independent director or independent manager for a corporation, a trust or limited liability company whose charter documents required the unanimous consent of all independent directors or independent managers thereof before such corporation, trust or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three (3) years of employment experience with CT Corporation, Corporation Service Company, National Registered Agents, Inc. or Stewart Management Company, or another nationally recognized company reasonably acceptable to Lender, that is not an Affiliate of Borrower and that provides, inter alia, professional independent directors or independent managers in the ordinary course of their respective business to issuers of securitization or structured finance instruments, agreements or securities or lenders originating commercial real estate loans for inclusion in securitization or structured finance instruments, agreements or securities (a “Professional Independent Director”) and is an employee of such a company or companies at all times during his or her service as an independent manager. A natural Person who satisfies the foregoing definition except for being (or having been) the independent director or independent manager of a “special purpose entity” affiliated with Borrower (provided such Affiliate does not or did not own a direct or indirect equity interest in Borrower) shall not be disqualified from serving as an independent manager, provided that such natural Person satisfies all other criteria set forth above and that the fees such individual earns from serving as independent director or independent manager of Affiliates of Borrower or in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year. A natural Person who satisfies the foregoing definition other than subparagraph (a)(ii) shall not be disqualified from serving as an independent manager if such individual is a Professional Independent Director and such individual complies with the requirements of the previous sentence.
“Insurance Account” – shall have the meaning set forth in Section 3.10 hereof.
“Insurance Payment Date” – means, with respect to any applicable insurance policy required to be maintained by Borrower pursuant to the terms of this Agreement, the date the applicable Insurance Premiums associated therewith are due and payable.
“Insurance Premiums” – means the costs of any premiums for any policy of insurance required to be maintained pursuant to the terms of this Agreement.
“Insurance Proceeds” – shall have the meaning set forth in Section 5.3(b) hereof.
“Intercreditor Agreement” – means that certain Intercreditor Agreement dated as of the Effective Date between Lender and Mezzanine Lender, as the same may be amended or otherwise modified from time to time.
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“Interest Rate Cap Agreement” – means an interest rate cap agreement (a) in form and substance reasonably acceptable to Lender, and (b) issued by a provider maintaining a long-term unsecured debt or counter-party rating of at least “A-” from S&P, or “A3” from Moody’s or the equivalent from any other Rating Agency.
“Lease” and “Leases” – means any and all present and future leases of the Property or any portion thereof, all licenses and all other agreements of any kind relating to the use or occupancy of the Property, including any guarantees, extensions, renewals, modifications or amendments thereof and all additional remainders, reversions and other rights and estates appurtenant thereunder.
“Lease Termination Payments” – means (i) all fees, penalties, commissions or other payments made to Borrower in connection with or relating to the rejection, buy-out, termination, amendment, modification, surrender or cancellation of any Lease (including in connection with any bankruptcy proceeding), (ii) any security deposits or proceeds of letters of credit held by Borrower in lieu of cash security deposits, which Borrower actually retains for itself and does not return to the applicable Tenant pursuant to the applicable provisions of any Lease (except to the extent applied to rent arrears or rent currently due and payable by such residential Tenant) and (iii) any payments made to Borrower relating to unamortized tenant improvements and leasing commissions under any Lease.
“Leasing Commissions” – means leasing commissions incurred by Borrower in connection with the execution or extension of an Approved Lease for retail space at the Property, provided that such Leasing Commissions are (i) consistent with then-prevailing market terms and conditions, or (ii) are otherwise approved by Lender in its reasonable discretion.
“Legal Requirements” – means all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees, demands and injunctions of any Governmental Authority affecting the Loan, any Secondary Market Transaction with respect to the Loan, Borrower, Guarantor or the Property or any part thereof or the ownership, construction, alteration, use, management or operation of the Property or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the ADA, the Live Local Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Dodd-Frank Wall Street Reform and Consumer Protection Act, zoning and land use laws and the rules and regulations promulgated pursuant to any of the foregoing, and all permits, licenses and authorizations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting Borrower, Guarantor or the Property or any part thereof, including, without limitation, any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof or (ii) in any way limit the use and enjoyment thereof.
“Lender” – shall have the meaning ascribed to such term in the preamble hereto.
“Lien” – means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights-of-way, zoning restrictions and the like), lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including without limitation any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement or document having similar effect (other than a financing statement filed by a “true” lessor pursuant to Section 9-505 (or a successor section) of the Uniform Commercial Code) naming the owner of the asset to which such Lien relates as debtor, under the Uniform Commercial Code or other comparable law of any jurisdiction.
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“Limited Guaranty” – means that certain Limited Guaranty dated as of the Effective Date executed and delivered by Guarantor to Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Limited Payment Guaranty” – means that certain Limited Payment Guaranty dated as of the Effective Date executed and delivered by Guarantor to Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Liquid Assets” – means the following assets: (a) unrestricted and unencumbered cash; (b) unrestricted and unencumbered cash equivalents; (c) unrestricted and unencumbered readily marketable securities (valued, in the case of securities at the then prevailing market price listed on NYSE or NASDAQ, or other “over the counter” markets or public exchange, as of any applicable date of determination); (d) liquid debt instruments that have a readily ascertainable value and are regularly traded in a recognized financial market; and (e) such other assets or properties as Lender may (in its sole discretion) deem acceptable as evidenced by Lender’s written confirmation, excluding any and all retirement accounts and deferred profit sharing accounts.
“Live Local Act” means the amendments to §196.1978, Florida Statutes, enacted by Senate Bill 102 (Chapter 2023-17, Laws of Florida), as amended by Senate Bill 328 (Chapter 2024-188, Laws of Florida) and House Bill 7073 (Chapter 2024-158, Laws of Florida), and any subsequent amendments, modifications, or successor statutes thereto.
“Live Local Covenant” means the restrictive covenant recorded against the Property in favor of the local jurisdiction and/or the Florida Housing Finance Corporation (FHFC) maintaining the affordability of the LLA Qualifying Units for a minimum duration of at least three (3) years.
“LLA Qualifying Units” means the minimum of (i) 70 residential units at the Property required to be rented to individuals or families whose total annual household income does not exceed 120% of the Area Median Income (AMI), and (ii) 2 residential units at the Property required to be rented to individuals or families whose total annual household income does not exceed 80% of the Area Median Income (AMI).
“Loan” – means an amount up to Sixty-Nine Million and No/100 Dollars ($69,000,000.00) that Lender agrees to lend and Borrower agrees to borrow subject to and expressly upon the terms and conditions of this Agreement.
“Loan Documents” – means those documents properly executed and in recordable form, if necessary, listed in Exhibit B as Loan Documents, and any other document now or hereafter evidencing or securing the Loan, as each may hereafter be amended, supplemented, replaced or modified.
“Loan-to-Value Percentage” – shall have the meaning given in Section 2.13.
“Management Agreement” – means that certain Property Management Agreement dated as of August 1, 2021, by and among Block 40 and Property Manager, pursuant to which Property Manager is to provide management and other services with respect to the Property, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time pursuant to the terms of the Loan Documents. The Management Agreement has been assigned from Block 40 to Borrower pursuant to an assignment of management agreement dated on or about the Effective Date.
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“Material Agreements” - means (x) each contract and agreement entered into (or assumed) by Borrower, in each case, relating to the Property, or otherwise imposing obligations on Borrower, (i) pursuant to which Borrower would have the obligation to pay more than $250,000.00 per annum, (ii) which cannot be terminated by Borrower without cause upon sixty (60) days’ or less notice without payment by Borrower of a termination fee, or (iii) which is with an Affiliate of Borrower, (y) the Developer Agreement, and (z) any reciprocal easement agreement, declaration of covenants, condominium documents, ground lease (i.e., with Borrower as tenant thereunder), or, parking agreement; provided, however, the defined term Material Agreements shall not include the Loan Documents, Leases, or the Management Agreement.
“Maturity Date” – means August 7, 2028, as may be amended, extended, or otherwise modified from time to time pursuant to the terms of this Agreement.
“Mezzanine Borrower” means BLOCK 40 HOLDCO LLC, a Delaware limited liability company.
“Mezzanine Event of Default” - shall have the meaning assigned to the term “Event of Default” in the Mezzanine Loan Agreement.
“Mezzanine Lender” - means 1818 MEZZ LENDER LLC, a Delaware limited liability company, and its permitted successors and assigns pursuant to the Intercreditor Agreement.
“Mezzanine Loan” - means the loan evidenced by the Mezzanine Loan Documents.
“Mezzanine Loan Agreement” - means that certain Mezzanine Loan Agreement, dated as of the date hereof, between Mezzanine Lender and Mezzanine Borrower.
“Mezzanine Loan Documents” - shall have the meaning assigned to the term “Loan Documents” in the Mezzanine Loan Agreement.
“Monthly Operating Report” – shall have the meaning ascribed to such term in Section 11.2 hereof.
“Monthly Payment Date” – means each regularly scheduled monthly payment date pursuant to the Note, which shall occur on the 7th day of each calendar during the term of the Loan.
“Moody’s” – means Moody’s Investors Service, Inc.
“Net Proceeds” – shall have the meaning set forth in Section 5.3(b) hereof.
“Note” - means that certain Amended and Restated Promissory Note dated as of the Effective Date, in the maximum principal amount of the Loan, executed by Borrower and payable to the order of Lender, as the same may be amended, modified, supplemented or replaced from time to time.
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“OFAC” means the United States Treasury Department Office of Foreign Assets Control and any successor thereto.
“Operating Expenses” - means, for any period, the actual out-of-pocket expenses paid during such period, or reasonably allocable to such period, computed in accordance with an Approved Accounting Method consistently applied, for: (i) Taxes to the extent that such Taxes are required to be paid by Borrower and are actually paid or reserved for by Borrower; (ii) intentionally omitted; (iii) insurance premiums for casualty insurance (including, without limitation, earthquake) and liability insurance carried in connection with the Property, provided, however, if any, insurance is maintained as part of a blanket policy covering the Property and other properties, the insurance premium included in this subparagraph shall be the premium fairly allocable to the Property; and (iv) other operating expenses and costs actually incurred by Borrower or the Property Manager (to be paid by Borrower) for the management, operation, cleaning, leasing, maintenance and repair of the Property. Operating Expenses shall not include (a) any Debt Service or other interest or principal payments on the Loan, (b) any allowance for depreciation and amortization, (c) Capital Expenditures, (d) deposits or contributions into the Reserves, and (e) any payment or expense for which Borrower was or is to be reimbursed from proceeds of the Loan or is actually reimbursed by insurance or pursuant to a written agreement by any third party.
“Original Maturity Date” – means August 7, 2028.
“Patriot Act” - means the USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto, as amended, modified or supplemented from time to time.
“Permitted Easements” means (x) any and all easements in effect and recorded against the Property as of the Effective Date (as included on the Title Policy), (y) customary utility easements or other similar non-material easements granted by Borrower in favor of a municipality or public utility company on a customary and reasonable form, and (z) easements, rights-of-way, or other similar non-monetary encumbrances arising in the ordinary course of Borrower’s business, which are approved by Lender, not to be unreasonably withheld, conditioned or delayed, or which shall (i) not materially impair the value, marketability, or usability of the Property or Borrower’s ability to repay the Loan, (ii) not materially and adversely interfere with the permitted use of the Property, (iii) not underlie any existing or contemplated building improvements on the Property (except to the extent that such easement shall not impact or affect the existing or contemplated building improvements on the Property or the use thereof), (iv) not adversely affect access to or from the Property, (v) not be blanket in nature, (vi) not impose any ongoing material cost on Borrower or any successor owner of such Property, (vii) not obligate the grantee to restore any damage or disturbance to the Property due to the existence of the easement, (viii) not violate any Lease, (ix) not violate any Legal Requirement, and (A) either (1) not include any obligation, requirement or request on the part of Borrower or the grantee for Lender to enter into a non-disturbance agreement or any similar document or agreement with respect to such easement or other matter or (2) include an obligation for all such parties to enter into a non-disturbance agreement or any similar document or agreement with respect to such easement or other matter on the condition that the consent of all parties thereto shall not be unreasonably withheld and that the form of such agreement shall be on commercially reasonable terms.
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“Permitted Encumbrances” – means (i) the encumbrances approved by Lender on the Title Policy, (ii) the Liens and other security interests created by the Loan Documents, (iii) Liens for taxes and assessments imposed by any Governmental Authority not yet delinquent or which are being contested by Borrower in accordance with this Agreement, (iv) the Leases, (v) Permitted Easements, (vi) Liens contested in accordance with this Agreement, (vii) equipment financing for equipment used in the ordinary course of business at the Property, provided that the same is secured solely by a loan on the equipment that is the subject of such financing and otherwise complies with Section 7.1(b)(iii)(B) of this Agreement, (viii) such other matters as Lender has approved in writing or may from time to time approve in writing in its reasonable discretion, and/or (ix) the Liens and other security interests created by the Mezzanine Loan Documents.
“Permitted Operating Expenses” – means, for any period, projected amounts to be paid or reasonably allocated as Operating Expenses for such period as set forth in the Approved Annual Budget or otherwise approved by Lender.
“Permitted Transfers” – means:
(i) any Approved Lease entered into in accordance with the Loan Documents,
(ii) any sale, disposal and replacement of personal property at the Property in the Borrower’s normal course of business as permitted pursuant to the Loan Documents;
(iii) a Permitted Encumbrance;
(iv) a Transfer of a direct or indirect interest in Borrower to any Person provided that:
(1) such Transfer shall not cause the transferee, together with its Affiliates, to (x) acquire a Controlling Interest in Borrower or (y) increase its direct or indirect interest in Borrower from an amount that is less than fifty percent (50%) to an amount which, in the aggregate, equals or exceeds fifty percent (50%);
(2) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion;
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(3) if such Transfer would cause a change in the Controlling Interest in Borrower or the transferee to increase its direct or indirect interest in Borrower from, in the aggregate, an amount less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount, in the aggregate, which equals or exceeds twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), Borrower shall give Lender notice of such Transfer not less than twenty (20) days prior to such Transfer and shall deliver copies of all instruments effecting such Transfer upon request of Lender (or drafts thereof); and
(4) the single purpose nature and bankruptcy remoteness of Borrower after such Transfer, shall satisfy Lender’s then current applicable underwriting criteria and requirements;
(5) notwithstanding the foregoing, a Transfer occurring solely by reason of the death of any one (but not more than one) of Glen Steward, Shaun Quin, or Vincent Napolitano (each, a “Stewards Key Person”) shall not constitute a prohibited Transfer under this clause (vi), provided that (A) the two (2) surviving Stewards Key Persons collectively continue to Control Stewards, Inc. immediately following such death, (B) Borrower shall give Lender written notice of such death and the resulting Transfer within thirty (30) days following such death, together with reasonable documentation evidencing that the surviving Stewards Key Persons continue to Control Stewards, Inc., and (C) if such Transfer would fall under sub-clause (2) above, Borrower and such transferee shall comply with the requirements set forth therein;
(v) a Transfer of any indirect interest in Borrower related to or in connection with the estate planning of such transferor to (1) an immediate family member of such interest holder (or to partnerships, limited liability companies, or other Persons (including estate planning vehicles) that one or more of such family members shall maintain a Controlling Interest) or (2) a trust or other entity established for the benefit of such immediate family member, provided that:
(1) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion;
(2) Borrower shall give Lender notice of such Transfer within thirty (30) days following such Transfer and shall deliver copies of all instruments effecting such Transfer upon written request of Lender (other than a Transfer as described in clause (v)(1) above, when Borrower shall give Lender notice of such Transfer at least twenty (20) days prior to such Transfer);
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(3) such Transfer shall not result in a change in the Controlling Interest of Borrower; and
(4) the single purpose nature and bankruptcy remoteness of Borrower after such Transfer, shall satisfy Lender’s current applicable underwriting criteria and requirements;
(vi) a Transfer of any indirect interest in Borrower that occurs by devise or bequest or by operation of law upon the death, disability or incapacity of a natural person that was the holder of such interest, provided that:
(1) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion;
(2) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer (if requested by Lender) as soon as practicable thereafter but in no event more than ninety (90) days after the date of such Transfer; and
(3) if such Transfer results in a change in the Controlling Interest of Borrower, such Transfer is approved by Lender in writing within thirty (30) days after Lender receives written notice of such Transfer;
(vii) the Transfer of one or more portions of the Property to any federal, state or local government or any political subdivision thereof in connection with involuntary takings or condemnation proceedings of any portion of the real property for dedication or public use;
(viii) any Transfer pursuant to the foreclosure, acceptance of a deed-in-lieu of foreclosure or other exercise of remedies by Lender with respect to the Loan;
(ix) the sale, transfer or issuance of shares of common stock or preferred stock in the holder of any direct or indirect ownership interest in Borrower that is a publicly traded entity; provided that:
(1) such shares of common stock or preferred stock are listed on the New York Stock Exchange, Nasdaq, over the counter market or another nationally recognized stock exchange;
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(2) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion; and
(3) such Transfer shall not result in a change in the Controlling Interest of Borrower;
(x) any transfer (including a pledge), sale, or issuance of shares of preferred or common stock that is a publicly registered non-listed real estate investment trust to third party investors through licensed U.S. broker-dealers in accordance with Legal Requirements; provided that:
(1) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion; and
(2) such Transfer shall not result in a change in the Controlling Interest of Borrower;
(xi) a Transfer of any interest (the “Token Subsidiary Interest”) in Stewards Real Estate LLC or another direct or indirect subsidiary of Stewards, Inc. (other than Borrower, Mezzanine Borrower, Block 40 Investment Holdings, LLC, a Florida limited liability company, or Block 40) (the “Token Sponsor”) of not more than forty nine percent (49%) of the indirect interest in the Borrower that occurs by the creation, issuance and registration by Token Sponsor of digital tokens, digital securities, blockchain-based interests or similar instruments (collectively, “Tokens”) through Securitize.io, as custodian, or any similar platform performing substantially similar functions in connection with a financing transaction with Stewards, Inc., in which such Tokens, either individually, or as part of a pool of assets, are all or a part of the collateral on such platform or any permitted connected blockchain-base platform, in exchange for a contractual right of repayment for the lender has a contractual right of repayment; provided that:
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(1) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion; and
(2) such Transfer shall not result in a change in the Controlling Interest of Borrower;
(xii) a sale by Borrower of the Property, the proceeds of which are used to pay off the Loan in full; and/or
(xiii) a Transfer resulting from a foreclosure by Mezzanine Lender of any equity interests in Borrower (direct or indirect) or a transfer-in-lieu to Mezzanine Lender or its designee of the equity interests in Borrower (direct or indirect).
For purposes of clause (v) above, “immediate family member” shall mean a sibling, family trust, family limited partnership, parent, spouse, child (or step-child), grandchild or other lineal descendant of the interest holder.
“Person” or “person” – means any individual, company, trust or other legal entity of any kind whatsoever, or other organization, whether or not a legal entity. With respect to any Sanctioned Person, “Person” shall also include any group, sector, territory or country.
“Policies” – shall have the meaning set forth in Section 5.2(a) hereof.
“Prepayment Fee” – shall have the meaning set forth in Section 2.6 hereof.
“Principal Balance” – shall have the meaning ascribed to such term in the Note.
“Proceeds” – shall have the meaning set forth in Section 5.3(a) hereof.
“Property” – shall have the meaning ascribed to such term in the Recitals above.
“Property Manager” – means: (i) Castle Residential Management, Inc., a Florida corporation, or (ii) a replacement property manager acceptable to Lender in its discretion engaged pursuant to the terms of this Agreement.
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“Qualified Survey” – means a current land survey of the Property prepared by a reputable, registered land surveyor, certified and prepared in form and substance reasonably satisfactory to Lender and the Title Company and other interested parties and otherwise complying with the latest version of “Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys,” including Accuracy Standards, as adopted by the American Land Title Association and National Society of Professional Surveyors, and shall include Table A items required by Lender, and certifying the description of the Property (including the appurtenant easements), showing all encroachments onto or from the Property, showing access rights, easements, or utilities, rights of way affecting the Property, showing all setback requirements upon the Property, showing any existing Improvements, showing matters affecting title, and such other items as Lender may reasonably request.
“Regional Center” – means a regional center designated by USCIS to participate in the EB-5 Program, together with its successors and assigns, as applicable for the Property and Borrower.
“Rating Agencies” – means each of S&P, Moody’s, Fitch Ratings Inc., DBRS, Inc. and Morningstar Credit Ratings, LLC or any other nationally-recognized statistical rating agency which has been designated by Lender (each a “Rating Agency”) and, after the final Securitization of the Loan, shall mean any of the foregoing that have rated any of the Securities.
“Rent Roll” – means the rent roll for the Property delivered by Borrower to Lender as of the Effective Date, or any updated rent roll from time to time delivered to Lender, in each case in substantially similar form as the form of rent rolls delivered as of the Effective Date.
“Replacement Guarantor” – means any Person that satisfies or otherwise complies with the following conditions (any of which may be waived by Lender in its sole discretion): (a) such Person owns (directly or indirectly) an equity interest in Borrower or is under common control with a Person which controls the Controlling Interest in Borrower, (b) such Person (together with the remaining and/or additional Guarantors, if applicable) has Tangible Net Worth of at least $75,000,000.00 at the time of such replacement, (c) such Person has Liquid Assets (together with the remaining and/or additional Guarantors, if applicable) of at least $1,500,000.00 at the time of such replacement, (d) such Person has not been the subject of a voluntary or involuntary bankruptcy proceeding in the previous seven (7) years, (e) if such Person is an individual, such Person has never been (i) indicted or convicted of, or pled guilty or no contest to, a violation of the Patriot Act, (ii) found by a court of competent jurisdiction to have committed, or been under indictment, a felony, fraud or crime of moral turpitude under any applicable law; or (iii) found by a Governmental Authority to have violated, or is then being investigated by a Governmental Authority, for a violation of, any federal or state securities laws or regulations, (f) such Person has not been a current or past litigant, opposing Lender, in any lawsuit brought against or by Lender within the past ten (10) years pertaining to any mortgage loan made by Lender and/or any of its Affiliates or other commercial investment in which Lender or any of its Affiliates is or was the lender or counterparty (other than any consensual foreclosure or similar proceeding approved by Lender in its sole discretion), (g) such Person executes replacement guaranties and a replacement environmental indemnity agreement in substantially the form of the Guaranty and the Hazardous Materials Indemnity, in each case, in its capacity as guarantor or indemnitor, as applicable, as well as any other standard, reasonable and customary agreement reasonably requested by Lender to document the replacement of any Guarantor with such Replacement Guarantor (the “Replacement Guaranties”), (h) such Person
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delivers to Lender, at Borrower’s expense, opinion(s) of legal counsel in form and content satisfactory to Lender to the effect that: (A) upon due authorization, and execution, each of the Replacement Guaranties shall be legal, valid and binding instruments, enforceable against the makers thereof in accordance with their respective terms; (B) such Replacement Guarantor is duly formed and has all requisite authority to enter into the Replacement Guaranties; and (C) as to such other matters, incident to the transactions contemplated hereby, as Lender may reasonably request, (i) (X) Borrower shall have delivered to Lender, at Borrower’s sole cost and expenses, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such Replacement Guarantor as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (Y) Borrower shall be provided such customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion, and (j) such Person is otherwise acceptable to Lender in its reasonable discretion.
“Reserve Accounts” – means the Tax Account, the Insurance Account, the Capital Expenditures Reserve Account, the Excess Cash Flow Account, Leasing Reserve Account, the Interest and Carry Reserve Account, and any other reserve account established by this Agreement or the other Loan Documents (but specifically excluding the Cash Management Account and the Restricted Account).
“Reserves” – means the Tax and Insurance Funds, the Capital Expenditures Reserve Funds, the Leasing Reserve Funds, the Interest and Carry Reserve Funds, the Excess Cash Flow Funds, and any other reserve funds established by this Agreement or the other Loan Documents.
“Restoration” – shall have the meaning set forth in Section 5.3(b) hereof.
“Restricted Account” – shall have the meaning given in Section 4.1(a).
“S&P” - means Standard & Poor’s Ratings Group, a division of the McGraw-Hill Companies.
“Sanction” or “Sanctions” - means individually and collectively, respectively, any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the OFAC, the U.S. State Department, the U.S. Department of Commerce, or through any existing or future Executive Order, or (b) any other Governmental Authority with jurisdiction over any Person within the Borrowing Group.
“Sanctioned Person” - means any Person that is a target of Sanctions, including without limitation, a Person that is: (a) listed on OFAC’s Specially Designated Nationals and Blocked Persons List; (b) listed on OFAC’s Consolidated Non-Specially Designated Nationals List; (c) a legal entity that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Peron(s); or (d) a Person that is a Sanctions target pursuant to any territorial or country-based Sanctions program.
“Second Extended Maturity Date” – means August 7, 2030.
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“Second Option to Extend” - means Borrower’s option, subject to the terms and conditions of Section 2.14 hereof, to extend the term of the Loan from the First Extended Maturity Date to the Second Extended Maturity Date.
“Security Instrument” - means that certain Amended and Restated Mortgage, Security Agreement, Assignment of Leases and Rents, Fixture Financing Statement and Notice of Future Advance dated as of the Effective Date, executed by Borrower, in favor of Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Separateness Provisions” - shall have the meaning ascribed to such term in Section 7.1 hereof.
“Servicer” – shall have the meaning set forth in Section 13.34(a) hereof.
“Servicing Agreement” – shall have the meaning set forth in Section 13.34(a) hereof.
“Tangible Net Worth” – means on any date of determination, the following with respect to Guarantor: (a) the sum of the total assets (excluding any equity value in the Property) less the total liabilities (exclusive of contingent liabilities, including, without limitation, any contingent liabilities created by the Loan Documents or the Mezzanine Loan Documents) minus (b) intangibles, as determined by Lender in its reasonable discretion.
“Tax Account” – shall have the meaning set forth in Section 3.10 hereof.
“Tax and Insurance Funds” – shall have the meaning set forth in Section 3.10 hereof.
“Taxes” – means all taxes, assessments, and other governmental impositions, now or hereafter levied or assessed or imposed against the Property or any part thereof.
“Tax Payment Date” – means, with respect to any applicable Taxes, the date occurring ten (10) days prior to the date the same are due and payable.
“Tenant” – means any Person leasing or occupying space in the Property pursuant to a Lease.
“Tenant Improvements” – means tenant construction work which Borrower is required to construct (or cause to be constructed) under any Approved Lease for retail space at the Property or an allowance for tenant construction work Borrower is obligated to pay or otherwise provide to a Tenant under any Approved Lease for retail space at the Property, in either case, in amounts, if not expressly set forth and approved by Lender in the Approved Annual Budget or such Approved Lease, approved by Lender in its reasonable discretion.
“Term SOFR Rate” – shall have the meaning ascribed to such term in the Note.
“Third Extended Maturity Date” – means August 7, 2031.
“Third Option to Extend” - means Borrower’s option, subject to the terms and conditions of Section 2.15 hereof, to extend the term of the Loan from the First Extended Maturity Date to the Second Extended Maturity Date.
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“TI Leasing Costs” – means any allowable (in accordance with the terms of this Agreement) Tenant Improvements and Leasing Commissions.
“USCIS” – means the United States Citizenship and Immigration Services, a component of the United States Department of Homeland Security, and any successor agency thereto.
“Title Company” – means First American Title Insurance Company.
“Title Policy” – means an ALTA extended coverage loan policy of title insurance in form and substance reasonably satisfactory to Lender, insuring Lender in the principal amount of the Loan, of the validity and priority of the lien of the Security Instrument on the Property, subject only to Permitted Encumbrances.
“Transfer” - means any sale, installment sale, exchange, mortgage, pledge, hypothecation, assignment, encumbrance or other transfer, conveyance or disposition, whether voluntarily, involuntarily or by operation of law or otherwise.
“UCC” or “Uniform Commercial Code” - means the Uniform Commercial Code in effect from time to time in the state where Borrower is organized and where the Property is located, as applicable, as now or hereafter amended or modified.
“Underwriting Adjustments (Commercial)” - means commercially reasonable adjustments made by Lender in its calculation of Underwritten Net Operating Income (Commercial) and the components thereof, in each case, based upon Lender’s standard underwriting criteria for transactions comparable to the Loan, which such adjustments shall include, without limitation, adjustments:
(A) for (i) items of a non-recurring nature, (ii) a credit/loss vacancy allowance equal to the greater of (a) actual vacancy, or (b) 5%, (iii) imminent increases or decreases in liabilities and expenses (including Taxes and/or Insurance Premiums), (iv) management fees in excess of commercially reasonable fees and expenses, and (v) insufficient replacement reserves;
(B) to include (i) rental income with respect to Leases that are in full force and effect under which the Tenant has taken occupancy and commenced rent payment, (ii) rental income (based on a pro-rata calculation for the next successive twelve month period) for all executed Leases where Tenants have not yet commenced rent payments if rent commencement is scheduled to occur within the next 12 months from the date of calculation pursuant to the terms of the Lease; and (iii) scheduled rent increases if such rent increases are scheduled to occur within 12 months from the date of calculation. To the extent such rent increases are scheduled to occur within 6 months from the date of calculation, the increases will be calculated as if applicable as of the date of calculation. To the extent such rent increases are scheduled to occur between 7-12 months from the date of calculation, the rent increases will be included for the applicable forward-looking period (but not as of the date of calculation); and
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(C) to exclude rental income attributable to any Tenant under any Lease (i) in bankruptcy to the extent that the Tenant under the Lease has rejected the Lease in the applicable bankruptcy proceeding pursuant to a final, non-appealable order of a court of competent jurisdiction; (ii) not paying base rent under its Lease or otherwise in material monetary default under its Lease, in each case beyond any applicable notice, grace and cure periods; (iii) pursuant to which a material, non-monetary default has occurred and is continuing beyond any applicable notice, grace and cure periods; (iv) that has notified Borrower in writing that it will terminate, cancel, reject and/or not renew its applicable Lease or “go dark” or vacate all or substantially all of its leased space within the successive 12 month period, unless such Tenant is an investment-grade Tenant, in which case rental income shall be included calculated on a pro-rata basis based on the actual rental payments remaining for the next successive 12 month period pursuant to the applicable Lease; (v) whose Lease is not in full force and effect; (vi) whose tenancy at the Retail Space is month-to-month, unless such month-to-month Tenant has demonstrated to the reasonable satisfaction of Lender that they intend to continue such Lease; and (vii) which expires within 90 days or less of the applicable date of calculation hereunder, and either (1) there is no exercisable option contained in the terms thereof or (2) the tenant has not yet given notice of its exercise of any exercisable option contained therein, unless Lender determines in its reasonable discretion that such Tenant intends to extend such Lease.
“Underwriting Adjustments (Multifamily)” - shall mean adjustments made by Lender in its calculation of Underwritten Net Operating Income (Multifamily) and the components thereof, in each case, based upon Lender standard underwriting criteria for transactions comparable to the Loan, which such adjustments shall include, without limitation, adjustments for (i) items of a non-recurring nature; (ii) a credit/loss vacancy and collection loss allowance equal to the greater of: (a) actual vacancy, and (b) 5% (the stabilized market vacancy underwritten by Lender as of the Effective Date based on market vacancy rates), (iii) imminent increases or decreases in liabilities and expenses (including Taxes and/or Insurance Premiums), (iv) management fees in excess of commercially reasonable fees and expenses, (v) insufficient replacement reserves, (vi) rental income attributable to any Tenant under any residential Lease not paying rent under its Lease when due or otherwise in material default under its Lease beyond any applicable notice and cure periods, and (vii) for future residential lease term commencement dates and rent concessions.
“Underwritten Net Operating Income” – means the sum of Underwritten Net Operating Income (Commercial) plus Underwritten Net Operating Income (Multifamily).
“Underwritten Net Operating Income (Commercial)” - means the amount calculated by Lender on a monthly basis by which (a) Gross Income for any commercial portion of the Property for the immediately succeeding twelve (12) calendar month period, exceeds (b) the greater of (i) actual Operating Expenses incurred for the preceding twelve (12) calendar month period for such portion of the Property, or (ii) Permitted Operating Expenses shown on the Approved Annual Budget for the immediately succeeding twelve (12) calendar month period for such portion of the Property, all of which shall be subject to the application of the Underwriting Adjustments (Commercial) by Lender in its reasonable discretion. Lender’s monthly calculation of Underwritten Net Operating Income (Commercial) (including determination of items that do not qualify as Gross Income or Operating Expenses such portion of the Property) shall be calculated by Lender in good faith and shall be final absent manifest error.
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“Underwritten Net Operating Income (Multifamily)” – means the amount calculated by Lender on a monthly basis by which: (a) Gross Income for the residential portion of the Property for the immediately succeeding twelve (12) calendar month period, exceeds (b) the greater of: (i) actual Operating Expenses for the residential portion of the Property incurred for the preceding twelve (12) calendar month period, or (ii) Permitted Operating Expenses shown on the Approved Annual Budget for the immediately succeeding twelve (12) calendar month period for the residential portion of the Property, all of which shall be subject to the application of the Underwriting Adjustments (Multifamily) by Lender in its reasonable discretion. Lender’s monthly calculation of Underwritten Net Operating Income (Multifamily) (including determination of items that do not qualify as Gross Income or Operating Expenses for such portion of the Property) shall be calculated by Lender in good faith and shall be final absent manifest error.
“Work” – means any work performed and to be paid from the disbursement from the Reserves.
Article 2. LOAN
2.1 LOAN(a).
(a) Borrower is currently indebted to BREDS V US INVESTMENTS 2 L.L.C., a Delaware limited liability company (“Original Lender”) in the original principal amount of $84,000,000.00 (the “Original Lender Debt”). The Original Lender Debt is evidenced by that certain Amended and Restated Promissory Note dated June 1, 2022, in the original principal amount of $84,000,000.00 (the “Original Lender Note”), executed by Borrower in favor of DEUTSCHE BANK AG, NEW YORK BRANCH (“Deutsche”), as such Original Lender Note was assigned to Original Lender, and has been secured by, inter alia, an Amended and Restated Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing executed by Borrower in favor of Deutsche, dated June 1, 2022, recorded as Instrument No. 118200871, in the Official Records of Broward County, Florida, as assigned by Deutsche to Original Lender pursuant to that certain Assignment of Mortgage dated November 18, 2024, and recorded as Instrument No. 119913684, in the Official Records of Broward County, Florida (collectively, the “Original Lender Mortgage”).
(b) Subject to the terms of this Agreement, Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender the principal sum of up to Sixty-Nine Million and No/100 Dollars ($69,000,000.00); said sum to be evidenced by the Note. This Loan is not a revolving credit line, and no payments or credits shall increase the maximum amount of advances available from the Loan.
(c) Borrower represents and warrants to Lender that (i) as of the Effective Date, Borrower owes principal of $73,625,000.00 on the Original Lender Debt; (ii) Borrower has no defenses, counterclaims or setoffs, or any rights therefor, to its obligations to pay the Original Lender Debt or to perform pursuant to the terms of the Original Lender Note and the Original Lender Mortgage; (iii) the Original Lender Note and the Original Lender Mortgage are legal, valid and binding obligations of Borrower which have been enforceable by Original Lender (and, after being amended and restated, will be enforceable by Lender) against Borrower in accordance
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with their terms and the Original Lender Mortgage constitutes a first-priority lien on the Property. Borrower hereby irrevocably waives any defense, counterclaim or setoff, or any rights therefor, that it may have had to its obligations to pay the Original Lender Debt or to perform pursuant to the terms of the Original Lender Note and the Original Lender Mortgage and agrees that Lender shall have, with respect to the Original Lender Note (notwithstanding any possible deficiency in its assignment by Original Lender to Lender), all the rights of the holder in due course under Article 3 of Florida's Uniform Commercial Code. Borrower acknowledges and recognizes Lender as the owner and holder of the Original Lender Note and the Original Lender Mortgage and the Original Lender Debt (irrespective of any possible defect in any assignment thereof to Lender.
2.2 PURPOSE. Amounts disbursed to or on behalf of Borrower pursuant to the Note shall be used for the refinance of the Property and the payment of related costs and expenses and for such other purposes and uses as may be permitted under this Agreement and the other Loan Documents.
2.3 INTEREST RATE AND DEFAULT RATE. The Principal Balance of the Note outstanding at the close of each day shall bear interest at the Contract Rate or the Default Rate (as each term is defined in the Note), as applicable, and in accordance with all terms and conditions set forth therein.
2.4 TERMS OF PAYMENT. The Loan shall be repaid in accordance with the terms of this Agreement and the Note.
2.5 EXIT FEE. Borrower shall be obligated to pay an exit fee to Lender (the “Exit Fee”) upon repayment in full of the Note or the acceleration or maturity thereof in accordance with the terms of any of the Loan Documents, in an amount equal to $690,000.00 (1.00%) of the total amount of the Loan, whether disbursed or undisbursed). In furtherance of the foregoing, Borrower expressly acknowledges and agrees that (i) Lender shall have no obligation to accept any payment in full of the Note unless and until Borrower shall have complied with this Section 2.5, and (ii) Lender shall have no obligation to release any Loan Document upon payment of the Note unless and until Lender shall have received the Exit Fee then due and payable. Borrower expressly acknowledges and agrees that the Exit Fee shall constitute additional consideration for the Loan. Notwithstanding the foregoing, Lender hereby agrees that the Exit Fee shall be waived and no longer due and payable if the source of payment for the Debt is a new Loan made by Lender (or an Affiliate thereof).
2.6 PREPAYMENT. The Principal Balance of the Note may be prepaid, in whole or in part (in increments of not less than $100,000.00, unless the remaining Principal Balance is less than $100,000.00), upon the satisfaction of the following: (i) Borrower shall deliver not less than ten (10) days prior written notice to Lender (or such shorter period of time as may be permitted by Lender) specifying the date on which prepayment is to be made (the “Prepayment Date”); provided that Borrower may revoke such notice in its discretion; (ii) Borrower shall make payment of accrued interest to and including the Prepayment Date; (iii) in the event the Prepayment Date occurs on or before July 24, 2028 (the period of time from the Effective Date through such date being the “Prepayment Period”), which prepayment occurring during the Prepayment Period may be in whole or in part, Borrower shall make payment to Lender of the applicable Prepayment Fee (as defined below); provided that no Prepayment Fee shall be due by Borrower for prepayment of the Loan in connection with application of casualty insurance or condemnation proceeds by or with the consent of Lender in reduction of the Loan; and (iv) Borrower shall make payment of all other sums then due under this Note, the
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Security Instrument and the other Loan Documents to the extent then payable. If any such notice of prepayment is given, the principal amount set forth in such notice and the other sums required under this paragraph shall be due and payable on the Prepayment Date; provided, however, that Borrower may revoke any such prepayment election on or before the Prepayment Date by written notice to Lender. As used herein, the “Prepayment Fee”, being calculated as a percentage of either the then outstanding Principal Balance of the Loan (for prepayments in full) or the amount prepaid (for prepayments in part) at the time of prepayment (in either case, the “Prepayment Amount”) in accordance with the following calculation: the Contract Rate in effect for the month in which the Prepayment Date occurs divided by 12 months, divided by 30 days (i.e. to obtain a per diem rate of interest), multiplied by the remaining days in the Prepayment Period following the Prepayment Date, multiplied by the Prepayment Amount, equals the Prepayment Fee, without duplication for any interest previously paid.
2.7 GRANT OF SECURITY INTEREST IN REAL PROPERTY. The Note shall be secured, in part, by the Security Instrument encumbering the Property and improvements as described therein.
2.8 GRANT OF SECURITY INTEREST IN ACCOUNTS AND RESERVES; APPLICATIONS OF FUNDS. As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all Borrower’s right, title and interest in and to all Reserves, the Restricted Account, the Cash Management Account, the Reserve Accounts and all other Accounts. Borrower shall not, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in any of the Reserves, the Restricted Account, the Cash Management Account, the Reserve Accounts any other Accounts, or permit any lien to attach thereto, or any levy to be made thereon, or any UCC Financing Statements to be filed thereon, except those naming Lender as the secured party, to be filed with respect thereto, except as may be expressly provided in the Mezzanine Loan Documents. This Agreement is, among other things, intended by the parties to be a security agreement for purposes of the UCC. If an Event of Default has occurred and continues beyond any applicable cure periods, Lender may apply all or any part of the Reserves and/or other Account Funds against the amounts outstanding under the Loan in any order and in any manner as Lender shall elect in Lender’s sole discretion without seeking the appointment of a receiver and without adversely affecting the rights of Lender to foreclose the liens and security interests securing the Loan or exercise its other rights under the Loan Documents. The Reserves and other Account Funds shall not constitute trust funds and may be commingled with other monies held by Lender. All interest which accrues on the Reserves and other Account Funds shall be at a rate established by Lender or the institution that is acting as depository with respect to the Account, which may or may not be the highest rate then available, shall accrue for the benefit of Borrower and shall be taxable to Borrower and shall be added to and disbursed in the same manner and under the same conditions as the principal sum on which said interest accrued. Upon satisfaction and repayment in full of Borrower’s obligations under the Loan Documents (including, without limitation, payment of any applicable Exit Fee and Prepayment Fee), all remaining funds held in the Accounts, all remaining Reserves and other Account Funds, if any, shall be (i) delivered to Mezzanine Lender if any portion of the Mezzanine Loan remains outstanding, and (ii) if the Mezzanine Loan has been repaid in full, shall be disbursed to Borrower within ten (10) Business Days unless such amounts have been credited (at Lender’s reasonable discretion) to the satisfaction of Borrower’s obligations under the Loan Documents.
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2.9 DEPOSITS; FEES.
(a) Prior to the Effective Date, Borrower has paid to Lender a good faith deposit in immediately available funds in the amount of $80,000.00 (the “Good Faith Deposit”), consisting of: (i) a fully earned, non-refundable underwriting fee in the aggregate amount of $20,000.00 and (ii) a costs and expenses deposit in the aggregate amount of $60,000.00. Lender is authorized to utilize the Good Faith Deposit to pay for all reasonable due diligence expenses, third-party reports, including but not limited to engineer, environmental, and appraisals, as well as reasonable out-of-pocket legal fees and expenses, underwriting costs, and to apply any remaining portion of the Good Faith Deposit against the Origination Fee (as defined below) as of the closing of the Loan.
(b) On the Effective Date and as a condition precedent to the effectiveness of this Agreement, Borrower shall pay to Lender a fully earned, non-refundable origination fee in immediately available funds in the amount of $690,000.00 (1.00% of the total Loan) (the “Origination Fee”).
2.10 LOAN DOCUMENTS. Borrower shall deliver to Lender concurrently with this Agreement each of the documents, each properly executed and in recordable form, as applicable, described in Exhibit B as Loan Documents.
2.11 EFFECTIVE DATE. The Loan Documents shall become effective on the Effective Date.
2.12 FULL REPAYMENT AND RECONVEYANCE, SATISFACTION OR RELEASE. Upon receipt of all sums owing and outstanding under the Loan Documents (including, without limitation, payment of any applicable Exit Fee and Prepayment Fee), and the full performance of all other obligations secured by the Security Instrument, Lender shall reconvey, satisfy or release the Property from the Lien of the Security Instrument and terminate any assignment of leases and rents or UCC financing statements related to the Collateral; provided, however, that all of the following conditions shall be satisfied at the time of, and with respect to, such reconveyance, satisfaction or release: Lender shall have received all escrow, closing and recording costs, the costs of preparing and delivering such reconveyance, satisfaction or release, the payment of any and all sums then due and payable under the Loan Documents, and the full payment and performance of all other obligations secured by the Security Instrument, including, without limitation, those set forth in the Note and the Security Instrument. Lender’s obligation to make further disbursements under the Loan shall terminate as to any portion of the Loan undisbursed as of the date of issuance of such reconveyance, satisfaction or release, and any commitment of Lender to lend any undisbursed portion of the Loan shall be cancelled. Upon request from Borrower, at Borrower’s sole cost and expense, Lender agrees to assign the Note and the Security Instrument to any future lender of Borrower’s choosing upon repayment of the Debt.
2.13 FIRST OPTION TO EXTEND. Borrower shall have the option to extend (“First Option to Extend”) the term of the Loan from the Original Maturity Date to the First Extended Maturity Date, upon satisfaction of each and every one of the following conditions precedent (unless otherwise waived by Lender in its sole discretion):
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(a) Borrower shall provide Lender with written notice of Borrower’s request to exercise the First Option to Extend substantially in the form attached hereto as Exhibit C not less than sixty (60) days prior to the Original Maturity Date.
(b) As of the date of Borrower’s delivery of notice of request to exercise the First Option to Extend, and as of the Original Maturity Date, no Event of Default or Mezzanine Event of Default shall have occurred and be continuing beyond any applicable cure periods and Borrower shall so certify in writing if requested by Lender.
(c) Borrower shall execute or cause the execution of all documents reasonably required by Lender in a form reasonably satisfactory to Borrower and Lender to exercise the First Option to Extend.
(d) Lender shall have received evidence that, to the extent the Mezzanine Loan is then outstanding, the Mezzanine Loan is paid off (if permitted under the terms hereof and thereof) or shall have been or will simultaneously be extended to a date that is no earlier than the First Extended Maturity Date.
(e) If requested by Lender, at Borrower’s sole cost and expense, the issuance by the Title Company to Lender (or the receipt of Title Company’s irrevocable written commitment to issue to Lender) of any title endorsement reasonably deemed necessary by Lender for attachment to the Title Policy insuring the priority and validity of the Security Instrument (to the extent available in the State of Florida).
(f) Lender shall have determined that the outstanding Principal Balance of the Loan and Mezzanine Loan (in the aggregate) as a percentage of the as-is fair market value of the Property (“Loan-to-Value Percentage”) as of the Original Maturity Date does not exceed 80.00%. To the extent Lender determines that the Loan-to-Value Percentage exceeds 80.00% as of the Original Maturity Date, Lender may or, at the request of Borrower, shall order, at Borrower’s expense, a written appraisal prepared by an M.A.I. appraiser approved by Lender in its reasonable discretion in conformance with the requirements of FIRREA, as well as any other applicable rules and/or regulations from any and any applicable Governmental Authority (“Approved Appraisal”), confirming to the reasonable satisfaction of Lender that the Loan-to-Value Percentage does not exceed 80.00%. Provided, however, in the event such fair market value is not adequate to meet the required Loan-to-Value Percentage of 80.00%, then Borrower may pay down the outstanding Principal Balance of the Loan and Mezzanine Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) by an amount such that said Loan-to-Value Percentage requirement may be met. The valuation date of any Approved Appraisal delivered in connection with the First Option to Extend shall be within ninety (90) days of the Original Maturity Date.
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(g) Borrower shall have entered into an (or extended the then-existing) Interest Rate Cap Agreement (or Substitute IRPA pursuant to the terms and conditions of Section 9.21 below, if applicable) which such Interest Rate Cap Agreement shall cap the Term SOFR Rate at a strike price equal to or less than 4.50% (unless a higher strike price is approved by Lender in its sole discretion) during the period from the Original Maturity Date through the First Extended Maturity Date. As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all Borrower’s right, title and interest in and to any Interest Rate Cap Agreement and agrees to enter into any documentation or take such other action reasonably requested by Lender to establish, protect, perfect or enforce any such security interest granted to Lender pursuant to this Section.
(h) Borrower shall have delivered evidence satisfactory to Lender that as of the Original Maturity Date the Property has achieved a Debt Yield Ratio of at least 6.75%, as reasonably calculated by Lender; provided, however, in the event such required minimum Debt Yield Ratio is not achieved, then Borrower may pay down the outstanding Principal Balance of the Loan and Mezzanine Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) such that said minimum Debt Yield Ratio is met as calculated by Lender in Lender’s reasonable discretion (unless otherwise waived by Lender in its sole discretion).
(i) On or before the Original Maturity Date, Borrower shall pay to Lender an extension fee in the amount of $172,500.00 (0.25% of the total Loan amount).
2.14 SECOND OPTION TO EXTEND. If Borrower shall have exercised the First Option to Extend and the Original Maturity Date of the Note shall have been extended in accordance with the terms and provisions of this Agreement, Borrower shall have the option to further extend the term of the Loan (“Second Option to Extend”) from the First Extended Maturity Date to the Second Extended Maturity Date, upon satisfaction of each and every one of the following conditions precedent (unless otherwise waived by Lender in its discretion):
(a) Borrower shall provide Lender with written notice of Borrower’s request to exercise the Second Option to Extend substantially in the form attached hereto as Exhibit C not less than sixty (60) days prior to the First Extended Maturity Date.
(b) As of the date of Borrower’s delivery of notice of request to exercise the Second Option to Extend, and as of the First Extended Maturity Date, no Event of Default or Mezzanine Event of Default shall have occurred and be continuing beyond any applicable cure periods and Borrower shall so certify in writing if requested by Lender.
(c) Borrower shall execute or cause the execution of all documents reasonably required by Lender in a form reasonably satisfactory to Borrower and Lender to exercise the Second Option to Extend.
(d) Lender shall have received evidence that, to the extent the Mezzanine Loan is then outstanding, the Mezzanine Loan is paid off (if permitted under the terms hereof and thereof) or shall have been or will simultaneously be extended to a date that is no earlier than the Second Extended Maturity Date.
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(e) If requested by Lender, at Borrower’s sole cost and expense, the issuance by the Title Company to Lender (or the receipt of Title Company’s irrevocable written commitment to issue to Lender) of any title endorsement reasonably deemed necessary by Lender for attachment to the Title Policy insuring the priority and validity of the Security Instrument (to the extent available in the State of Florida).
(f) Lender shall have determined that Loan-to-Value Percentage as of the First Extended Maturity Date does not exceed 75.00%. To the extent Lender determines that the Loan-to-Value Percentage exceeds 75.00% as of the First Extended Maturity Date, Borrower may deliver to Lender at Borrower’s expense an Approved Appraisal confirming to the reasonable satisfaction of Lender that the Loan-to-Value Percentage does not exceed 75.00%. Provided, however, in the event such fair market value is not adequate to meet the required Loan-to-Value Percentage, then Borrower may pay down the outstanding Principal Balance of the Loan and Mezzanine Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) by an amount such that said Loan-to-Value Percentage requirement may be met. The valuation date of any Approved Appraisal delivered in connection with the Second Option to Extend shall be within ninety (90) days of the First Extended Maturity Date.
(g) Borrower shall have entered into an (or extended the then-existing) Interest Rate Cap Agreement (or Substitute IRPA pursuant to the terms and conditions of Section 9.21 below, if applicable) which such Interest Rate Cap Agreement shall cap the Term SOFR Rate at a strike price equal to or less than 4.50% (unless a higher strike price is approved by Lender in its sole discretion) during the period from the First Extended Maturity Date through the Second Extended Maturity Date. As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all Borrower’s right, title and interest in and to any Interest Rate Cap Agreement and agrees to enter into any documentation or take such other action reasonably requested by Lender to establish, protect, perfect or enforce any such security interest granted to Lender pursuant to this Section.
(h) Borrower shall have delivered evidence satisfactory to Lender that as of the First Extended Maturity Date the Property has achieved a Debt Yield Ratio of at least 7.00%, as reasonably calculated by Lender; provided, however, in the event such required minimum Debt Yield Ratio is not achieved, then Borrower may pay down the outstanding Principal Balance of the Loan and Mezzanine Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) such that said minimum Debt Yield Ratio is met as calculated by Lender in Lender’s reasonable discretion (unless otherwise waived by Lender in its sole discretion).
(i) On or before the First Extended Maturity Date, Borrower shall pay to Lender an extension fee in the amount of $172,500.00 (0.25% of the total Loan amount).
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2.15 THIRD OPTION TO EXTEND. If Borrower shall have exercised the Second Option to Extend and the First Extended Maturity Date of the Note shall have been extended in accordance with the terms and provisions of this Agreement, Borrower shall have the option to further extend the term of the Loan (“Third Option to Extend”) from the Second Extended Maturity Date to the Third Extended Maturity Date, upon satisfaction of each and every one of the following conditions precedent (unless otherwise waived by Lender in its discretion):
(a) Borrower shall provide Lender with written notice of Borrower’s request to exercise the Third Option to Extend substantially in the form attached hereto as Exhibit C not less than sixty (60) days prior to the Second Extended Maturity Date.
(b) As of the date of Borrower’s delivery of notice of request to exercise the Third Option to Extend, and as of the Second Extended Maturity Date, no Event of Default or Mezzanine Event of Default shall have occurred and be continuing beyond any applicable cure periods and Borrower shall so certify in writing if requested by Lender.
(c) Borrower shall execute or cause the execution of all documents reasonably required by Lender in a form reasonably satisfactory to Borrower and Lender to exercise the Third Option to Extend.
(d) Lender shall have received evidence that, to the extent the Mezzanine Loan is then outstanding, the Mezzanine Loan is paid off (if permitted under the terms hereof and thereof) or shall have been or will simultaneously be extended to a date that is no earlier than the Third Extended Maturity Date.
(e) If requested by Lender, at Borrower’s sole cost and expense, the issuance by the Title Company to Lender (or the receipt of Title Company’s irrevocable written commitment to issue to Lender) of any title endorsement reasonably deemed necessary by Lender for attachment to the Title Policy insuring the priority and validity of the Security Instrument (to the extent available in the State of Florida).
(f) Lender shall have determined that Loan-to-Value Percentage as of the Second Extended Maturity Date does not exceed 70.00%. To the extent Lender determines that the Loan-to-Value Percentage exceeds 70.00% as of the Second Extended Maturity Date, Borrower may deliver to Lender at Borrower’s expense an Approved Appraisal confirming to the reasonable satisfaction of Lender that the Loan-to-Value Percentage does not exceed 70.00%. Provided, however, in the event such fair market value is not adequate to meet the required Loan-to-Value Percentage, then Borrower may pay down the outstanding Principal Balance of the Loan and Mezzanine Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) by an amount such that said Loan-to-Value Percentage requirement may be met. The valuation date of any Approved Appraisal delivered in connection with the Third Option to Extend shall be within ninety (90) days of the Second Extended Maturity Date.
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(g) Borrower shall have entered into an (or extended the then-existing) Interest Rate Cap Agreement (or Substitute IRPA pursuant to the terms and conditions of Section 9.21 below, if applicable) which such Interest Rate Cap Agreement shall cap the Term SOFR Rate at a strike price equal to or less than 4.50% (unless a higher strike price is approved by Lender in its sole discretion) during the period from the Second Extended Maturity Date through the Third Extended Maturity Date. As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all Borrower’s right, title and interest in and to any Interest Rate Cap Agreement and agrees to enter into any documentation or take such other action reasonably requested by Lender to establish, protect, perfect or enforce any such security interest granted to Lender pursuant to this Section.
(h) Borrower shall have delivered evidence satisfactory to Lender that as of the Second Extended Maturity Date the Property has achieved a Debt Yield Ratio of at least 7.25%, as reasonably calculated by Lender; provided, however, in the event such required minimum Debt Yield Ratio is not achieved, then Borrower may pay down the outstanding Principal Balance of the Loan and Mezzanine Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) such that said minimum Debt Yield Ratio is met as calculated by Lender in Lender’s reasonable discretion (unless otherwise waived by Lender in its sole discretion).
(i) On or before the Second Extended Maturity Date, Borrower shall pay to Lender an extension fee in the amount of $172,500.00 (0.25% of the total Loan amount).
Article 3. DISBURSEMENT and reserves
3.1 CONDITIONS PRECEDENT.
(a) Lender’s obligation to make the Loan on the Effective Date shall be subject at all times to the satisfaction or waiver of each and every one of the following conditions precedent on or prior to the Effective Date:
(i) No Defaults. There shall exist no Event of Default shall occur upon Lender’s making of the Loan.
(ii) Documents. Receipt and approval by Lender of an executed original of this Agreement, each of the Loan Documents, and any and all other documents, instruments, policies and forms of evidence or other materials which are required pursuant to this Agreement or any of the other Loan Documents, each in form and content reasonably acceptable to Lender.
(iii) Security Instrument. The Security Instrument is (or will be upon the proper recording thereof by the Title Company) a valid lien upon the Property and is prior and superior to all other liens and encumbrances thereon except the Permitted Encumbrances.
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(iv) Representations and Warranties. The representations and warranties contained in this Agreement are true and correct in all material respects.
(v) Borrower Cost Basis. Borrower represents and warrants to Lender as of the Effective Date that Borrower’s cost-basis in the Property is equal to or greater than $158,000,000.00 as of the Effective Date.
(vi) Underwritten Net Operating Income. Borrower represents and warrants to Lender as of the Effective Date that Borrower has calculated the Underwritten Net Operating Income of the Property to be equal to or greater than $4,150,000.00 in accordance with the terms and conditions of this Agreement.
(vii) Organizational Documents; Good Standing. Lender shall have received: (a) copies of all the organizational documents for Borrower and any other related entity reasonably requested by Lender, (b) a resolution authorizing the Loan and execution and delivery of the Loan Documents, in form and substance reasonably acceptable to Lender, and (c) evidence that Borrower and any other entity reasonably required by Lender, is in good standing in its state of formation and states where it conducts business.
(viii) Leases; Material Agreements. Lender shall have received true, correct and complete copies of all commercial Leases (if any) and all Material Agreements within Borrower’s possession and control.
(ix) Lien Search Reports and Know Your Customer Information. Lender shall have received satisfactory reports of Uniform Commercial Code, tax lien, bankruptcy and judgment searches and any additional required know-you-customer information/reports conducted by a search firm acceptable to Lender with respect to the Property, Borrower and Guarantor (including Borrower’s immediate predecessor, if any), and any additional related Persons, such searches to be conducted in such locations as Lender shall have requested.
(x) Transaction Costs. Borrower shall have paid all transaction costs (or provided for the direct payment of such transaction costs by Lender from the proceeds of the Loan).
(xi) Insurance. Lender shall have received certificates of insurance for casualty insurance demonstrating insurance coverage in respect of the Property of types, in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in this Agreement.
(xii) Title. Lender shall have received a marked, signed commitment to issue, or a pro-forma version of, a Title Policy in respect of the Property, listing only Permitted Encumbrances. If the Title Policy is to be issued by, or if disbursement of the proceeds of the Loan are to be made through, an agent of the actual insurer under the Title Policy (as opposed to the insurer itself), the actual insurer shall have issued to Lender for Lender’s benefit a so-called “Insured Closing Letter.”
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(xiii) Qualified Survey. Lender shall have received a Qualified Survey with respect to the Property.
(xiv) Zoning. Lender shall have received evidence satisfactory to Lender that the Property is in compliance with all applicable zoning requirements, or if not in compliance, is considered to be legal, non-conforming (including a zoning report, a zoning endorsement if obtainable and a letter from the applicable municipality if obtainable). To the extent the Property is considered to be legal, non-conforming, Borrower shall have delivered evidence of ordinance and law insurance coverage for the Property reasonably satisfactory to Lender and to the extent available to Borrower at commercially reasonable rates.
(xv) Permits; Certificate of Occupancy. Lender shall have received a copy of all permits necessary for the use and operation of the Property and any existing certificate(s) of occupancy, if required, for the Property.
(xvi) Environmental Report. Lender shall have received the Environmental Report with respect to the Property in form and substance reasonably satisfactory to Lender which have been prepared within the six (6) months prior to the Effective Date, and that disclose no material environmental conditions with respect to the Property.
(xvii) Flood Certifications. Lender shall have received flood certifications and evidence of flood insurance with respect to the Property, if it is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the United States Federal Reserve System, in form and substance satisfactory to Lender.
(xviii) Consents, Licenses, Approvals, etc. Lender shall have received copies of all consents, licenses and approvals, if any, required in connection with the execution, delivery and performance by Borrower, and the validity and enforceability, of the Loan Documents, and such consents, licenses and approvals shall be in full force and effect.
(xix) Financial Information. Lender shall have received financial information relating to Borrower, Guarantor and the Property that accurately reflects the financial positions of Borrower, Guarantor and the Property in all material respects.
(xx) Opinions. Borrower has delivered to Lender, at Borrower’s expense, the opinions of legal counsel required by Lender in its reasonable discretion.
(xxi) Additional Matters. Lender shall have received such other certificates, documents and instruments relating to the Loan as may have been reasonably requested by Lender. All corporate and other proceedings, all other documents (including all documents referred to in this Agreement and not appearing as exhibits to this Agreement) and all legal matters in connection with the Loan shall be reasonably satisfactory in form and substance to Lender.
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(xxii) Stub Interest. Borrower shall make a payment to Lender of any stub interest required pursuant to the terms of the Note.
(xxiii) Mezzanine Loan. Borrower shall have delivered to Lender true, correct and complete copies of all of the Mezzanine Loan Documents.
3.2 PLEDGE AND ASSIGNMENT AND DISBURSEMENT AUTHORIZATION. The proceeds of the Loan, when qualified for disbursement, shall be disbursed to or for the benefit or account of Borrower in accordance with the Loan Documents. As additional security for Borrower’s performance under the Loan Documents, Borrower hereby irrevocably pledges and assigns to Lender all monies at any time deposited in the Reserves and other Account Funds.
3.3 DISBURSEMENTS. Borrower hereby authorizes Lender to disburse the proceeds of the Loan made by Lender or its Affiliate, and if applicable, funds in any Reserves, in accordance with the terms of the Loan Documents.
3.4 INTENTIONALLY OMITTED.
3.5 INTENTIONALLY OMITTED.
3.6 INTEREST AND CARRY RESERVE. Upon closing of the Loan, a total of $500,000.00 (the “Initial Carry Reserve Deposit”) shall be deposited into an Eligible Account held by Lender or Servicer as a reserve for the payment of Debt Service, Capital Expenditures Reserve Monthly Deposits, Monthly Tax Deposits, Monthly Insurance Deposits, and/or Operating Expenses (collectively, the “Interest and Carry Reserve Account”). Amounts deposited into the Interest and Carry Reserve Account pursuant to this Section 3.6 are referred to herein as the “Interest and Carry Reserve Funds”.
(a) Provided (i) no Event of Default has occurred and is continuing, and (ii) no Cash Sweep Period then exists, the Borrower may request on a monthly basis that a disbursement be made from the Interest and Carry Reserve Account for the difference between (A) the total of the Debt Service payments on the Loan (net of any payments made to Borrower pursuant to any “in-the-money” Interest Rate Cap Agreement), Capital Expenditures Reserve Monthly Deposits, Monthly Tax Deposit, Monthly Insurance Deposit, and actual Operating Expenses paid by the Borrower in the immediately preceding month, and (B) the total revenue from the Property for the immediately preceding month as detailed in the applicable Monthly Operating Report delivered to Lender by Borrower for the applicable month (“Carry Cost Payment Deficiency”). Provided Borrower delivers documentation reasonably satisfactory to Lender to evidence any such Carry Cost Payment Deficiency, Lender shall promptly disburse to Borrower the applicable Carry Cost Payment Deficiency. For the sake of clarity, a Cash Sweep Period shall be in effect as of the Effective Date.
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(b) Provided (i) no Event of Default has occurred and is continuing, but (ii) a Cash Sweep Period then exists, then Lender shall disburse directly to Lender any Interest and Carry Reserve Funds on deposit in the Interest and Carry Reserve Account on each Monthly Payment Date as necessary to satisfy any applicable Debt Service payments on the Loan, Capital Expenditures Reserve Monthly Deposits, Monthly Tax Deposits, and Monthly Insurance Deposits or to fund any Permitted Operating Expenses that are not otherwise funded from the Cash Management Account, in each case in the priority set forth in Section 4.1(c).
(c) If at any time Lender reasonably determines that the amounts on deposit in the Interest and Carry Reserve Account are insufficient to cover the projected Carry Cost Payment Deficiency for the next successive six (6) calendar months, as calculated by Lender in its reasonable discretion, then Borrower shall deposit an amount reasonably determined by Lender to be sufficient to restore such six (6) calendar months buffer into the Interest and Carry Reserve Account not more than fifteen (15) Business Days after Borrower’s receipt of Lender’s written demand thereof (such amount, the “Interest and Carry Reserve Replenishment Deposit”). The failure of Borrower to deposit such funds as required pursuant to the preceding sentence shall constitute an Event of Default hereunder. Notwithstanding the foregoing, Borrower shall have no obligation to make any Interest and Carry Reserve Replenishment Deposit prior to the earlier of the following: (i) February 7, 2027, and (ii) the date that the Replenishment Deposit is made by Borrower pursuant to the terms of Section 3.8(a) below.
(d) The Borrower hereby acknowledges and agrees that, except as expressly provided herein, the Borrower shall not have access to the funds in the Interest and Carry Reserve Account. Upon the occurrence and during the continuance of an Event of Default, Lender may disburse any amounts in the Interest and Carry Reserve Account in its sole discretion to the payment of the Loan.
3.7 CAPITAL EXPENDITURES RESERVE. Upon closing of the Loan, a total of $0.00 shall be deposited into an Eligible Account held by Lender or Servicer (the “Capital Expenditures Reserve Account”) to pay for Capital Expenditures. Lender shall not be required to disburse Capital Expenditure Reserve Funds (as hereinafter defined) more frequently than once per calendar month (unless otherwise approved in Lender’s discretion) and in an amount less than $50,000 (unless otherwise approved in Lender’s reasonable discretion):
(a) On each regularly scheduled Monthly Payment Date commencing on September 7, 2026, Borrower shall deposit into the Capital Expenditures Reserve Account an amount equal to $5,688.00 (each a “Capital Expenditures Reserve Monthly Deposit”) for payment of Capital Expenditures. Amounts deposited pursuant to this Section 3.7 are referred to herein as the “Capital Expenditure Reserve Funds”.
(b) Lender shall disburse Capital Expenditure Reserve Funds only for Capital Expenditures and in accordance with the following terms and conditions (unless otherwise waived by Lender in its sole discretion):
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(i) Borrower shall submit a request for payment to Lender at least ten (10) Business Days prior to the date on which Borrower requests such payment be made and specify the Capital Expenditures to be paid;
(ii) On the date such request is received by Lender and on the date such payment is to be made, no Event of Default or Mezzanine Event of Default shall exist;
(iii) Lender shall have received and approved (unless otherwise waived by Lender in its sole discretion) the following:
(A) if (1) such Capital Expenditures are not included in the Approved Annual Budget, (2) if requested by Lender and (3) not otherwise required to be provided to Lender by Borrower, an updated budget for any such Capital Expenditures;
(B) if requested by Lender, with respect to any Capital Improvements involving an aggregate budgeted cost of more than $250,000.00, copies of any construction contract and any plans and specifications for the Work related to any such Capital Improvements within Borrower’s possession and control, if and to the extent such exist;
(C) if requested by Lender, copies of all building permits and other authorizations (if any) from all applicable government agencies as required for the completion of the Work related to any such Capital Improvements;
(D) if required by Lender, for any Capital Improvements project involving an aggregate budgeted cost of at least $500,000.00, an inspection report issued by an inspector selected and retained by Lender, the cost of which shall be paid by Borrower, evidencing that all Work to date covered by the requested disbursement has been substantially completed in a workmanlike manner and materially in accordance with applicable building codes;
(E) if required by Lender, a title bring-down report issued by the Title Company with respect to the Property reasonably acceptable to Lender;
(F) a certificate (in form and substance reasonably acceptable to Lender which may take the form of email correspondence) from Borrower (i) stating that any completed Capital Improvements at the Property to be funded by the requested disbursement of Capital Expenditure Reserve Funds have been, or will be, completed in good and workmanlike manner and in accordance in all material respects with all applicable federal, state and local laws, rules and regulations in all material respects and (ii) stating the Cost Breakdown related to any such Capital Improvements showing all amounts disbursed to date and the amount of proceeds required to complete the Work, (iii) identifying each Person (to the extent known by Borrower at the time such certification is furnished to Lender) that supplied, or will supply, materials or labor in connection with the Capital
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Improvements to be funded by the requested disbursement and (iv) stating that each such Person has been paid in full or will be paid in full upon such disbursement for the amount then due and owing such Person and requested to be funded by such disbursement, such certificate to be accompanied by partial or final lien waivers, as applicable, invoices and/or other evidence of payment reasonably satisfactory to Lender and/or the Title Company which lien waivers may be conditioned on receipt of payment if payment is to be made from the disbursement; and
(G) such other evidence and documentation as Lender shall reasonably request.
(c) Any undisbursed Capital Expenditure Reserve Funds shall be at all times equal to or greater than the amount which Lender from time to time reasonably determines necessary to pay through completion the costs of the Work actually commenced by Borrower and then under construction. If Lender determines in its reasonable discretion at any time during the construction of such Work that the undisbursed Capital Expenditure Reserve Funds are insufficient for said purposes, Borrower will deposit the amount of such deficiency into the Capital Expenditure Reserve Account not more than fifteen (15) Business Days after Borrower’s receipt of Lender’s written demand, and until such deposit is made, Lender shall have no further obligation to make any disbursement from the Capital Expenditures Reserve Account. The failure of Borrower to deposit such funds as required pursuant to the preceding sentence shall constitute an Event of Default hereunder.
(d) Borrower shall permit Lender and Lender’s agents and representatives (including, without limitation, Lender’s engineer, architect, or inspector) or third parties to enter onto the Property during normal business hours and upon reasonable advance notice to Borrower (subject to the rights of Tenants under their Leases) to inspect the progress of any Capital Improvements and all materials being used in connection therewith and examine all plans and shop drawings within Borrower’s possession and control relating to such Capital Improvements. Borrower shall use commercially reasonable efforts to cause all contractors and subcontractors to cooperate with all reasonable requests of Lender or Lender’s representatives or such other Persons described above in connection with inspections described herein.
3.8 LEASING RESERVE ACCOUNT. On the Effective Date, a total of $100,000.00 shall be deposited into an Eligible Account held by Lender or Servicer (the “Leasing Reserve Account”) for TI Leasing Costs approved by Lender in its reasonable discretion. Lender shall not be required to disburse Leasing Reserve Funds (as hereinafter defined) more frequently than once per calendar month (unless otherwise approved in Lender’s discretion) and in an amount less than $50,000 (unless otherwise approved in Lender’s discretion).
(a) On or before the earlier to occur of (i) February 7, 2027, or (ii) the occurrence and continuance of an Event of Default, Borrower shall deposit into the Leasing Reserve Account an amount equal to $475,000.00 (the “Replenishment Deposit”). The failure of Borrower to make the Replenishment Deposit on or before February 7, 2027, shall constitute an Event of Default (such Event of Default shall also be referred to as the “Replenishment Deposit Event of Default”).
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(b) Lender shall disburse Leasing Reserve Funds only for TI Leasing Costs and in accordance with the following terms and conditions (unless otherwise waived by Lender in its sole discretion):
(i) Borrower shall submit a request for payment to Lender at least ten (10) Business Days prior to the date on which Borrower requests such payment be made and specify the TI Leasing Costs to be paid;
(ii) On the date such request is received by Lender and on the date such payment is to be made, no Event of Default or Mezzanine Event of Default shall exist;
(iii) The TI Leasing Costs relate to an Approved Lease for retail space at the Property;
(iv) Lender shall have received and approved the following (unless otherwise waived by Lender in its sole discretion):
(A) if requested by Lender and not otherwise required to be provided to Lender by Borrower, an updated budget for the Tenant Improvements costs to be funded by such Advance to the extent the budget has changed since Lender approved the Lease, and/or a schedule of applicable Leasing Commissions payments, as applicable;
(B) if requested by Lender, with respect to any Tenant Improvements involving an aggregate budgeted cost of more than $250,000.00, copies of any construction contract and any plans and specifications for the Work related to any such Tenant Improvements to be contracted for, and performed by, Borrower, if and to the extent such exist;
(C) if requested by Lender, copies of all building permits and other authorizations from government agencies as required for the completion of the Work related to any such TI Leasing Costs;
(D) if required by Lender, for any Tenant Improvements project involving an aggregate budgeted cost of at least $500,000.00, an inspection report issued by an inspector selected and retained by Lender, the cost of which shall be paid by Borrower, evidencing that all Work to date covered by the requested disbursement has been completed in a workmanlike manner and in accordance with applicable Legal Requirements;
(E) if required by Lender, a title bring-down report issued by the Title Company with respect to the Property reasonably acceptable to Lender;
(F) a certificate (in form and substance reasonably acceptable to Lender which may take the form of email correspondence) from Borrower (i) stating that any completed Tenant Improvements at the Property to be funded by the requested disbursement of Leasing Reserve Funds have been, or will be, completed in
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good and workmanlike manner and in accordance in all material respects with all applicable federal, state and local laws, rules and regulations in all material respects and (ii) stating the Cost Breakdown related to any such Tenant Improvements showing all amounts disbursed to date and the amount of proceeds required to complete the Work, (iii) identifying each Person (to the extent known by Borrower at the time such certification is furnished to Lender) that supplied, or will supply, materials or labor in connection with the Tenant Improvements to be funded by the requested disbursement and (iv) stating that each such Person has been paid in full or will be paid in full upon such disbursement for the amount then due and owing such Person and requested to be funded by such disbursement, such certificate to be accompanied by partial or final lien waivers, as applicable, invoices and/or other evidence of payment reasonably satisfactory to Lender and/or the Title Company which lien waivers may be conditioned on receipt of payment if payment is to be made from the disbursement; and
(v) such other evidence and documentation as Lender shall reasonably request related to any such TI Leasing Costs.
(c) Any undisbursed funds in the Leasing Reserve Account shall be at all times equal to or greater than the amount which Lender reasonably determines is necessary to be funded by Lender to pay through completion the costs of the Work for Tenant Improvements then actually commenced by Borrower and then under construction or otherwise reasonably necessary to complete any previously approved Tenant Improvements not yet under construction but required pursuant to an Approved Lease that are to be funded with Leasing Reserve Funds pursuant to this Section 3.8. If Lender reasonably determines at any time that the balance of the Leasing Reserve Account is insufficient for said purposes, Borrower will deposit the amount of such deficiency into the Leasing Reserve Account not more than fifteen (15) Business days after Lender’s written demand, and until such deposit is made, Lender shall have no further obligation to make any disbursement from the Leasing Reserve Account. The failure of Borrower to deposit such funds as required pursuant to the preceding sentence shall constitute an Event of Default hereunder.
(d) Borrower shall permit Lender and Lender’s agents and representatives (including, without limitation, Lender’s engineer, architect, or inspector) or third parties to enter onto the Property during normal business hours and upon reasonable advance notice to Borrower (subject to the rights of Tenants under their Leases) and following reasonable prior notice to Borrower to inspect the progress of any Tenant Improvements and all materials being used in connection therewith and examine all plans and shop drawings relating to such Tenant Improvements to the extent in Borrower’s possession and control. Borrower shall use commercially reasonable efforts to cause all contractors and subcontractors to cooperate with Lender or Lender’s representatives or such other Persons described above in connection with inspections described in this Section.
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3.9 INTENTIONALLY OMITTED.
3.10 TAX AND INSURANCE RESERVE. On the Effective Date, a deposit in an amount reasonably required by Lender shall be deposited in an Eligible Accounts held by Lender or Servicer and hereinafter referred to as the “Tax Account” and the “Insurance Account” to pay for Taxes and Insurance Premiums, respectively. In addition, Borrower shall pay (or cause to be paid) to Lender on each Monthly Payment Date (a) one-twelfth of an amount which would be sufficient (together with Borrower’s initial deposit for Taxes, to the extent not previously expended) to pay the Taxes payable, or reasonably estimated by Lender to be payable, during the next ensuing twelve (12) months assuming that said Taxes are to be paid in full on the Tax Payment Date (the “Monthly Tax Deposit”), each of which such deposits shall be held in the Tax Account, and (b) one-twelfth of an amount which would be sufficient to pay the Insurance Premiums due for the renewal of the coverage afforded by the policies of insurance required to be maintained by Borrower pursuant to the terms of this Agreement on the Insurance Payment Date (the “Monthly Insurance Deposit”), each of which such deposits shall be held in the Insurance Account (amounts held in the Tax Account and the Insurance Account are collectively herein referred to as the “Tax and Insurance Funds”). If, at any time, Lender reasonably determines that amounts on deposit or scheduled to be deposited in (i) the Tax Account will be insufficient to pay all applicable Taxes in full on the Tax Payment Date and/or (ii) the Insurance Account will be insufficient to pay all applicable Insurance Premiums in full on the Insurance Payment Date, Borrower shall make a Balancing Payment into the applicable Reserve Accounts in an amount which will be sufficient to make up such insufficiency, as reasonably determined by Lender. Borrower agrees to notify Lender promptly of any changes to the amounts, schedules and instructions for payment of any Taxes and Insurance Premiums of which it has or obtains knowledge and authorizes Lender or its agent to obtain the bills for Taxes directly from the appropriate taxing authority. Provided there are sufficient amounts in the Tax Account and Insurance Account, respectively, and no Event of Default exists and is continuing, Lender shall be obligated to pay the Taxes and Insurance Premiums as they become due on their respective due dates on behalf of Borrower by applying the Tax and Insurance Funds to the payment of such Taxes and Insurance Premiums. Notwithstanding the foregoing, Borrower shall have no obligation to make any deposit into the Insurance Account (including any Monthly Insurance Deposit) if Borrower has delivered evidence reasonably acceptable to Lender that insurance required for the Property as detailed in Article 5 below are satisfied by blanket insurance policies each approved by Lender in its sole discretion.
3.11 GENERAL.
(a) Borrower shall pay to Lender all reasonable, out-of-pocket fees, costs and expenses actually paid or incurred by Lender from time to time in connection with any request of Borrower for a disbursement of funds from the Reserves. Borrower authorizes Lender to disburse directly to Lender, from the applicable Reserves or from funds to be disbursed to Borrower from the Reserves, such sums as may be necessary, at any time and from time to time, to pay all such fees, costs and expenses. Nothing in this Article 3 shall (a) make Lender responsible for making or completing any Capital Expenditures, Capital Improvements or Tenant Improvements; (b) make Lender responsible for paying any Leasing Commissions; (c) require Lender to expend funds in addition to the funds in the applicable Reserve to complete any Capital Improvements or Tenant Improvements; (d) obligate Lender to proceed with the Capital Improvements or Tenant Improvements; or (e) obligate Lender to demand from Borrower additional sums to complete any Capital Improvements.
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(b) In the event Lender waives the requirement for Borrower to maintain any of the Reserve Accounts, Lender consents to Borrower permitting the Mezzanine Borrower to establish and maintain (as applicable) such reserve accounts, as the case may be, that would operate as provided in herein. In connection with the foregoing, Borrower further consents to Lender transferring any available balances in the applicable Accounts to Mezzanine Lender. Borrower further (i) agrees that Lender shall be entitled to conclusively rely on Mezzanine Lender’s assertion that it is entitled to such available balances and (ii) hereby releases Lender and indemnifies Lender against any losses that may be incurred by Lender as a result of any Person claiming that Lender improperly remitted such available balances to Mezzanine Lender.
(c) Borrower and Lender hereby agree and acknowledge that if (A) the Loan has been paid in full, (B) there are funds remaining in any of the Reserve Accounts, and (C) the Mezzanine Loan (or any portion thereof) is outstanding, then Lender will not pay (or direct to be paid) any such remaining funds to Borrower, but rather shall deliver such funds (or direct the same to be delivered, as applicable), and Borrower hereby directs Lender to so deliver or cause to be delivered such funds, as a distribution permitted in accordance with applicable law, within ten (10) days after the Loan has been paid in full, to Mezzanine Lender to be held and/or applied in accordance with the terms of the Mezzanine Loan Documents.
Article 4. cash management PROVISIONS
4.1 CASH MANAGEMENT ACCOUNT.
(a) Establishment of Certain Accounts:
(i) As of the Effective Date, Borrower established an Eligible Account with the Depository Bank pursuant to the DACA-Restricted Account Agreement (the “Restricted Account”) in the name of Borrower for the sole and exclusive benefit of Lender into which Borrower shall thereafter deposit, or cause to be deposited, any and all revenues received by Borrower (or any third party) related to the Property or any additional Collateral (including, for the sake of clarity, any payments made from any “in-the-money” Interest Rate Cap Agreement). Pursuant to the DACA-Restricted Account Agreement, during the continuance of a Cash Sweep Period, funds on deposit in the Restricted Account shall be transferred on each Business Day from the Restricted Account to the Cash Management Account.
(ii) Lender, on Borrower’s behalf, shall establish (i) an Eligible Account for the sole and exclusive benefit of Lender (the “Cash Management Account”) and (ii) an Eligible Account into which amounts from the Cash Management Account shall be deposited in accordance with Section 4.1(c)(iii) and (iv) below (the “Debt Service Account”).
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(b) Deposits into and Maintenance of Restricted Account.
(i) Borrower covenants that from and after the date of the opening of the Restricted Account with the Depository Bank: (i) Borrower shall, or shall cause Property Manager to, promptly deposit all revenue derived from the Property (or any additional Collateral, including any payments on any Interest Rate Cap Agreement) received by Borrower or Property Manager, as the case may be, into the Restricted Account; (ii) Borrower shall instruct Property Manager to promptly deposit (A) all revenue derived from the Property collected by Property Manager, if any, pursuant to the Management Agreement (or otherwise) into the Restricted Account and (B) all funds otherwise payable to Borrower by Property Manager pursuant to the Management Agreement (or otherwise in connection with the Property) into the Restricted Account; and (iii) at Lender’s request, neither Borrower nor any other Person shall open any other such account with respect to the direct deposit of income in connection with the Property. Until deposited into the Restricted Account, any rents and other revenues from the Property held by Borrower shall be deemed to be collateral and shall be held in trust by it for the benefit, and as the property, of Lender pursuant to the Security Instrument and shall not be commingled with any other funds or property of Borrower. Borrower warrants and covenants that it shall not rescind, withdraw or change any notices or instructions required to be sent by it pursuant to this Section 4.1 without Lender’s prior written consent (not to be unreasonably withheld, conditioned or delayed).
(ii) Borrower hereby grants to Lender a first-priority security interest in the Restricted Account and all deposits at any time contained therein and the proceeds thereof and will take all actions necessary to maintain in favor of Lender a perfected first priority security interest in the Restricted Account. Borrower hereby authorizes Lender to file UCC Financing Statements and continuations thereof to perfect Lender’s security interest in the Restricted Account and all deposits at any time contained therein and the proceeds thereof. All costs and expenses for establishing and maintaining the Restricted Account (or any successor thereto) shall be paid by Borrower. All monies now or hereafter deposited into the Restricted Account shall be deemed additional security for the Loan. Borrower shall pay all sums due under and otherwise comply with the DACA-Restricted Account Agreement. Borrower shall not alter or modify either the Restricted Account or the DACA-Restricted Account Agreement, in each case without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed. The DACA-Restricted Account Agreement shall provide (and Borrower shall provide) Lender online access to bank and other financial statements relating to the Restricted Account (including, without limitation, a listing of the receipts being collected therein). In connection with any Secondary Market Transaction, Lender shall have the right to cause the Restricted Account to be entitled with such other designation as Lender may select to reflect an assignment or transfer of Lender’s rights and/or interests with respect to the Restricted Account. Lender shall provide Borrower with prompt written notice of any such renaming of the Restricted Account. Borrower shall not further pledge, assign or grant any security interest in the Restricted Account or
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the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto. The Restricted Account (i) shall be an Eligible Account and (ii) shall not be commingled with other monies held by Borrower. Upon (A) Depository Bank ceasing to be an Eligible Institution, (B) the Restricted Account ceasing to be an Eligible Account, (C) any resignation by Depository Bank or termination of the DACA-Restricted Account Agreement by Depository Bank or Lender and/or (D) the occurrence and during the continuance of an Event of Default, Borrower shall, within thirty (30) days of Lender’s request, (1) terminate the existing DACA-Restricted Account Agreement, (2) appoint a new Depository Bank (which such bank shall (I) be an Eligible Institution, and (II) be approved by Lender in its reasonable discretion, (3) cause such bank to open a new Restricted Account (which such account shall be an Eligible Account) and enter into a new DACA-Restricted Account Agreement with Lender on substantially the same terms and conditions as the previous DACA-Restricted Account Agreement and (4) send notices required pursuant to the terms hereof relating to such new DACA-Restricted Account Agreement and Restricted Account. Upon the occurrence and during the continuance of an Event of Default, Borrower constitutes and appoints Lender its true and lawful attorney-in-fact with full power of substitution to complete or undertake any action required of Borrower under this Section 4.1 in the name of Borrower in the event Borrower fails to do the same. Such power of attorney shall be deemed to be a power coupled with an interest and cannot be revoked.
(c) Disbursements from the Cash Management Account. On each regular Monthly Payment Date during the existence of a Cash Sweep Period, Lender or Servicer, as applicable, shall allocate all funds, if any, on deposit in the Cash Management Account and disburse such funds in the following amounts and order of priority:
(i) First, funds sufficient to pay the Monthly Tax Deposit due for the then applicable Monthly Payment Date, if any, shall be deposited in the Tax Account as required under Section 3.10;
(ii) Then, funds sufficient to pay the Monthly Insurance Deposit due for the then applicable Monthly Payment Date, if any, shall be deposited in the Insurance Account as required under Section 3.10;
(iii) Then, funds sufficient to pay any interest accruing at the Default Rate, if applicable, and late payment charges, if any, shall be deposited into the Debt Service Account;
(iv) Then, funds sufficient to pay the Debt Service due for the then applicable Monthly Payment Date, shall be deposited in the Debt Service Account (and to the extent not applicable to funds deposited in item (iii) above);
(v) Then, funds sufficient to pay any other amounts due and owing to Lender and/or Servicer pursuant to the terms hereof and/or of the other Loan Documents, if any, shall be deposited with or as directed by Lender;
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(vi) Then, funds to the Borrower (or Property Manager) to fund the payment of reasonable and necessary Operating Expenses for the next month pursuant to the Approved Annual Budget or Approved Extraordinary Expenses;
(vii) Then, funds sufficient to pay the Capital Expenditures Reserve Monthly Deposit due for the then applicable Monthly Payment Date, if any, shall be deposited in the Capital Expenditures Reserve Account as required under Section 3.7;
(viii) Then, funds sufficient to make any Interest and Carry Reserve Replenishment Deposit then due as required pursuant to Section 3.6(c), if any, shall be deposited in the Interest and Carry Reserve Account;
(ix) Then, funds sufficient to make any deposit then due into the Leasing Reserve Account as required pursuant to Section 3.8(c), if any, shall be deposited in the Leasing Reserve Account;
(x) Then, to the extent the aggregate funds disbursed to the Borrower (or Property Manager) for Operating Expenses pursuant to Section 4.1(c)(vi) above for any six (6) consecutive month period is less than or greater than the actual Operating Expenses for the Property for such six (6) month period (as calculated by Lender in its reasonable discretion based on the Monthly Operating Reports), (A) funds to the Borrower (or Property Manager) equal to any such deficiency, or (B) a reduction of funds to be disbursed to Borrower pursuant to Section 4.1(c)(vi) for the then applicable Monthly Payment Date equal to any such excess; and;
(xi) Then, unless an Event of Default shall have occurred and be continuing, funds sufficient to pay required debt service due and owing to the Mezzanine Lender under the Mezzanine Loan Documents; and
(xii) Lastly, all amounts remaining in the Cash Management Account after deposits and disbursements for items (i) through (xi) above (“Excess Cash Flow”) shall, be deposited into an Eligible Account with Lender or Servicer (the “Excess Cash Flow Account”) (the amounts on deposit in the Excess Cash Flow Account being herein referred to as the “Excess Cash Flow Funds”). Provided no Event of Default or Mezzanine Event of Default has occurred and is continuing, any Excess Cash Flow Funds remaining in the Excess Cash Flow Account shall be disbursed directly to Borrower upon the earlier of (A) the expiration of all Cash Sweep Periods or (B) satisfaction and repayment in full of Borrower’s obligations under the Loan Documents.
(d) Waterfall Shortfall. All funds in the Cash Management Account shall be calculated by Lender three (3) Business Days prior to the applicable Monthly Payment Date (the “Waterfall Calculation Date”) in order for Lender to determine whether there are sufficient funds in the Cash Management Account to make each of Borrower’s monthly payment obligations under Section 4.1(c)(i)-(x) hereof, or whether the funds on deposit in the Cash Management Account (plus any funds held in the Reserve Accounts available for disbursement pursuant to the terms
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of this Agreement) are insufficient funds to make such payments (the amount of any such deficiency being referred to as a “Waterfall Shortfall”). If Lender reasonably determines that a Waterfall Shortfall exists, Lender shall notify Borrower of the amount of such Waterfall Shortfall, and (i) Lender shall apply Excess Cash Flow Funds to cover such Waterfall Shortfall or (ii) if, after application of Excess Cash Flow Funds as provided in clause (i), there still exists a Waterfall Shortfall, Borrower shall deposit funds via wire transfer into the Cash Management Account on or prior to the applicable Monthly Payment Date to cover such Waterfall Shortfall. All funds in the Cash Management Account shall be applied to the payment obligations on the Monthly Payment Date (as required pursuant to the terms of the Loan Agreement). Any amounts which are remitted into the Cash Management Account on or after the Waterfall Calculation Date shall remain on deposit in the Cash Management Account and shall be applied on the immediately succeeding Monthly Payment Date. For the sake of clarity, to the extent funds are not available for the payment of the debt service on the Mezzanine Loan pursuant to Section 4.1(c)(xi) above, the payment of such debt service by Mezzanine Borrower shall be governed by the terms and conditions of the Mezzanine Loan Documents.
(e) Failure to Make Payments. The failure of Borrower to fund the Waterfall Shortfall pursuant to Section 4.1(d) (including, but not limited to, payment of all Operating Expenses, as evidenced by documentation delivered by Borrower that is reasonably satisfactory to Lender) in full on each Monthly Payment Date (subject to the five (5) Business Day cure period set forth in Section 12.1(a)) shall constitute an Event of Default under this Agreement.
(f) Notwithstanding anything in this Article 4 to the contrary, no provision of this Article 4 shall limit in any way Lender’s rights and remedies upon the occurrence and during the continuance of an Event of Default under the Loan Documents, including, but not limited to, the right to (i) accelerate the Loan, (ii) seek the appointment of a receiver, (iii) foreclose on the Collateral, and (iv) apply any revenues collected from the Property to the outstanding obligations due under the terms of the Loan Documents in the reasonable discretion of Lender.
(g) Additional Mezzanine Provisions.
(i) In the event Lender waives the requirement for Borrower to maintain the Restricted Account or the Cash Management Account, Lender consents to Borrower permitting the Mezzanine Borrower to establish and maintain (as applicable) a lockbox account and/or cash management account, as the case may be, that would operate as provided in herein. In connection with the foregoing, Borrower further consents to Lender transferring any available balances in the applicable Accounts to Mezzanine Lender. Borrower further (i) agrees that Lender shall be entitled to conclusively rely on Mezzanine Lender’s assertion that it is entitled to such available balances and (ii) hereby releases Lender and indemnifies Lender against any losses that may be incurred by Lender as a result of any Person claiming that Lender improperly remitted such available balances to Mezzanine Lender.
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(ii) Borrower and Lender hereby agree and acknowledge that if (A) the Loan has been paid in full, (B) there are funds remaining in the Restricted Account or the Cash Management Account, and (C) the Mezzanine Loan (or any portion thereof) is outstanding, then Lender will not pay (or direct to be paid) any such remaining funds to Borrower, but rather shall deliver such funds (or direct the same to be delivered, as applicable), and Borrower hereby directs Lender to so deliver or cause to be delivered such funds, as a distribution permitted in accordance with applicable law, within ten (10) days after the Loan has been paid in full, to Mezzanine Lender to be held and/or applied in accordance with the terms of the Mezzanine Loan Documents.
Article 5. INSURANCE
5.1 REQUIRED INSURANCE. Borrower shall, while any portion of the Loan remains unpaid (unless Lender, or its Affiliate, has obtained title to the Property by foreclosure, deed-in-lieu thereof, or otherwise), maintain at Borrower’s sole expense, with eligible insurers approved by Lender, the following policies of insurance in form and substance satisfactory to Lender (unless otherwise waived by Lender in its reasonable discretion):
(a) Property Insurance. Insurance against loss or damage by standard perils included within the classification Special Form Cause of Loss (including coverage for damage caused by wind and hail). Such insurance shall (A) be in an amount equal to the full replacement cost of the Property and fixtures (without deduction for physical depreciation) and personal property; (B) be paid annually in advance; (C) contain Replacement Cost coverage with a waiver of depreciation: (D) have no coinsurance provision or if a coinsurance provision is present, contain an “Agreed Value Endorsement” waiving any such coinsurance provisions; (E) include an ordinance or law coverage endorsement containing Coverage A: “Loss Due to Operation of Law” (with a limit equal to replacement cost), Coverage B: “Demolition Cost” and Coverage C: “Increased Cost of Construction” coverages each with limits of no less than 10% of replacement cost or such lesser amounts as Lender may require in its sole discretion; and (F) intentionally deleted. If such insurance excludes mold, then Borrower shall implement a mold prevention program satisfactory to Lender.
(b) Flood Hazard Insurance. Flood insurance in an amount equal to the limit available under the National Flood Insurance Program if any part of the Improvements upon the Property are located within a special flood hazard area as indicated by the current FEMA map overlay (including Zones A and V). Such policy or policies shall not have a deductible in excess of $50,000;
(c) Liability Insurance. Commercial general liability insurance, including broad form coverage of property damage, blanket contractual liability and personal injury (including death resulting therefrom), to be written on an occurrence form containing minimum limits per occurrence of not less than $1,000,000 with not less than a $2,000,000 general aggregate for any policy year. In addition, excess and/or umbrella liability insurance shall be obtained and maintained for any and all claims, including all legal liability imposed upon Borrower and all related court costs and attorneys’ fees and disbursements in an amount reasonably acceptable to Lender. If during any period of repair, restoration, or renovation, Borrower is obligated to place Builder’s Risk in accordance with 5.1(g), and the terms and conditions of the Liability Insurance described herein are not met, the Liability Insurance shall be replaced with such coverage intended for such risks. In addition, Borrower shall maintain an Owners and Contractors Protective Liability policy during this period of repair, restoration or renovation;
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(d) Business Interruption/Loss of Rents. Loss of Rents and/or business interruption insurance covering all risks required to be covered by the insurance provided for herein and covering the 18-month period commencing on the date of any casualty or condemnation, and containing an extended period of indemnity endorsement covering the 12-month period commencing on the date on which the Property has been restored, as reasonably determined by the applicable insurer (even if the policy will expire prior to the end of such period). The amount of such insurance shall be reviewed on an annual basis and increased when the Gross Income from the Property increases or is projected to increase prior to the next renewal of this insurance. Where such coverage is placed in accordance with Section 5.1(g), coverage shall be sufficient to cover delayed opening;
(e) Worker’s Compensation. To the extent required by applicable law, Worker’s compensation insurance with respect to all employees of Borrower as and having limits equal to or greater than those required by any Governmental Authority or Legal Requirements;
(f) Employer’s Liability. Where worker’s compensation is required by Section 5.1(e) above, employer’s liability coverage of at least $1,000,000 each accident; $1,000,000 disease – each employee; and $1,000,000 disease – policy limit;
(g) Builder’s Risk. During any period of repair or restoration, and only if the property coverage form obligated by Section 5.1(a) does not otherwise apply, Builder’s Risk coverage shall be placed. The insurance provided for in this Section shall (1) be written in a completed value form or equivalent, including coverage for 100% of the total costs of construction on a non-reporting basis and against all risks insured against pursuant to Sections 5.1(a), 5.1(b), 5.1(c), 5.1(d), and 5.1(h)-(j), if not otherwise covered under those policies (2) shall include permission to occupy the Property, and (3) shall not contain a co-insurance provision;
(h) Earthquake. If the Property is located in seismic zone 3 or 4, Lender reserves the right to require earthquake insurance (A) with minimum coverage equivalent to the greater of 1.0x SUL (scenario upper loss) and 1.5x SEL (scenario expected loss) multiplied by the full replacement cost of the building plus business income, (B) having a deductible approved by Lender (but in any event not to exceed the lesser of $25,000 or 5% of the total insurable value of the Property), and (C) if the Property is legally nonconforming under applicable zoning ordinances and codes, containing ordinance of law coverage in amounts as required by Lender;
(i) Named Windstorm. Borrower shall maintain coverage for named windstorm in an amount not less than the total insurable value of the Property (including twelve months of business interruption coverage). The deductible for such coverage shall not exceed 5% of the total insurable value of the Property.
(j) Terrorism. So long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (“TRIPRA”) or a similar or subsequent statute is in effect, terrorism insurance for Certified and Non-Certified acts (as such terms are defined in TRIPRA or similar or subsequent statute) in an amount equal to the full replacement cost of the Property (plus twelve months of business interruption coverage). If TRIPRA or a similar or subsequent statute is not in effect, then provided that terrorism insurance is commercially available, Borrower shall be required to carry
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terrorism insurance throughout the term of the Loan as required by the preceding sentence, but in such event Borrower shall not be required to spend on terrorism insurance coverage more than two times the amount of the insurance premium that is payable at such time in respect of the Special Causes of Loss property (including wind) and business interruption/rental loss insurance required hereunder (without giving effect to the cost of terrorism and earthquake components of such casualty and business interruption/rental loss insurance), and if the cost of terrorism insurance exceeds such amount, Borrower shall purchase the maximum amount of terrorism insurance available with funds equal to such amount;
(k) Dram Shop. If liquor is sold on the Property, Liquor Liability Coverage (“Dram Shop” coverage) in the minimum amount of (i) $10,000,000 or (ii) amounts as may be statutorily required.
(l) Other Coverage. Such other insurance as may from time to time be reasonably required by Lender consistent with customary practices of lenders making similar loans secured by property similar to the Property.
5.2 POLICY REQUIREMENTS.
(a) All policies of insurance (the “Policies”) required pursuant to this Article shall be issued by one or more primary insurers eligible to do business in the state in which the Property is located and having a claims paying ability rating of “A-” or better by A.M. Best or S&P or Fitch, or “A2” by Moody’s and an insurance financial strength rating of at least “VIII” by A.M. Best.
(b) All Policies required pursuant to this Article:
(i) shall be maintained throughout the term of the Loan without cost to Lender and shall name Borrower as the named insured;
(ii) with respect to property insurance policies, shall contain a standard noncontributory mortgagee and lenders loss payable clause naming Lender and its successors and assigns as their interests may appear as first mortgagee and lender’s loss payable;
(iii) with respect to general liability and umbrella liability policies, shall name Lender and its successors and assigns as their interests may appear as additional insureds;
(iv) With respect to loss of rents or business interruption insurance policies, shall name Lender and its successors and/or assigns as their interests may appear as lender’s loss payable;
(v) shall contain an endorsement providing that Lender shall receive at least thirty (30) days’ prior written notice of any nonrenewal, modification, reduction or cancellation thereof, except in the case of cancellation due to nonpayment of premium, for which ten (10) days’ prior written notice is acceptable;
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(vi) the property policy shall contain an endorsement providing that no act or negligence of Borrower or any foreclosure or other proceeding or notice of sale relating to the Property shall affect the validity or enforceability of the insurance insofar as a mortgagee is concerned;
(vii) shall not contain a provision that Lender shall be liable for any insurance premiums thereon or subject to any assessments thereunder;
(viii) Borrower shall, on its own behalf and behalf of all parties claiming by and through Borrower, including but not limited to its insurers shall waive all rights of subrogation against Lender including applicable deductibles and/or self-insured retentions;
(ix) shall contain deductibles that, in addition to complying with any other requirements expressly set forth in Section 5.1, are acceptable to Lender and are no larger than is customary for similar policies covering similar properties in the geographic market in which the Property is located and in any event no larger than $50,000 or as otherwise stated herein;
(x) may be in the form of a blanket policy, provided that Borrower shall provide evidence satisfactory to Lender that the insurance premiums for the Property are separately allocated under such Policy to the Property and that (i) payment of such allocated amount shall maintain the effectiveness of such Policy as to the Property notwithstanding the failure of payment of any other portion of premiums, and (ii) overall insurance limits will under no circumstance limit the amount that will be paid in respect of the Property, and provided further that any such blanket policy shall specifically allocate to the Property the amount of coverage from time to time required hereunder or shall otherwise provide the same protection as would a separate Policy in Lender’s reasonable discretion, subject to review and approval by Lender based on the schedule of locations and values; and
(xi) shall otherwise be reasonably satisfactory in form and substance to Lender and shall contain such other provisions as Lender deems reasonably necessary or desirable to protect its interests.
(c) Borrower shall pay, or Lender shall cause to be paid from the Insurance Account pursuant to the terms and conditions of this Agreement, the premiums for all Policies as the same become due and payable without financing. Certificates of insurance and/or copies of such Policies, certified as true, correct and complete by Borrower, shall be delivered to Lender promptly upon request. Not later than three (3) days after the expiration date of each Policy, Borrower shall deliver to Lender evidence, reasonably satisfactory to Lender, of its renewal on the most recently published versions of Acord 28 (Property) and Acord 25 (Liability) forms. Renewed versions of any endorsements as obligated herein shall also be delivered as soon as practicable after each policy renewal date. Borrower shall promptly forward to Lender a copy of each written notice received by Borrower of any modification, reduction or cancellation of any of the Policies or of any of the coverages afforded under any of the Policies. Within thirty (30) days after request by Lender, Borrower shall obtain such increases in the amounts of coverage required hereunder as may be reasonably requested by Lender, taking into consideration changes in the value of money over time, changes in liability laws and changes in prudent customs and practices in order for Lender to protect its interests.
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(d) Borrower shall not procure any other insurance coverage that would be on the same level of payment as the Policies or would adversely impact in any way the ability of Lender or Borrower to collect any proceeds under any of the Policies. If at any time Lender is not in receipt of written evidence that all Policies are in full force and effect when and as required hereunder, Lender shall have the right to take such action as Lender deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate (but limited to the coverages and amounts required hereunder). All premiums incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender within five (5) days of written demand and, until paid, and shall bear interest at the Default Rate (which shall have the meaning given to it in the Note).
(e) In the event of foreclosure of the Security Instrument or other transfer of title to the Property in extinguishment in whole or in part of the Loan, all right, title and interest of Borrower in and to the Policies then in force with respect to the Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or in Lender or other transferee in the event of such other transfer of title.
5.3 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
(a) The following (whether now existing or hereafter arising) are all collaterally assigned by Borrower to Lender and, shall, unless otherwise set forth in this Agreement, be paid directly to Lender to be held and applied in accordance with this Section 5.3: (i) all awards of damages and all other compensation payable directly or indirectly by reason of a condemnation or proposed condemnation for public or private use affecting all or any part of, or any interest in, the Property or Collateral; (ii) all other claims and awards for damages to, or decrease in value of, all or any part of, or any interest in, the Property or Collateral; (iii) all proceeds of any insurance policies (whether or not expressly required by Lender to be maintained by Borrower, including, but not limited to, earthquake insurance and terrorism insurance, if any) payable by reason of loss sustained to all or any part of the Property or Collateral; and (iv) all interest which may accrue on any of the foregoing ((i) through (iv), collectively, the “Proceeds”). Subject to the provisions of this Section 5.3, Lender may at its discretion apply all or any of the Proceeds it receives (x) to (1) its expenses in settling, prosecuting or defending any claim in connection with a casualty or condemnation, and (2) the balance to the obligations of Borrower pursuant to the Loan Documents (including repayment of the Note) in such order and amounts as Lender in its sole discretion may choose, and/or (y) Lender may release all or any part of the Proceeds to Borrower upon the conditions set forth in this Agreement. Upon the occurrence and during the continuance of an Event of Default, Lender may commence, appear in, defend or prosecute any assigned claim or action and may adjust, compromise, settle and collect all claims and awards assigned to Lender; provided, however, in no event shall Lender be responsible for any failure to collect any claim or award, regardless of the cause of the failure, except to the extent caused by the gross negligence or willful misconduct of Lender or any of Lender’s agents.
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(b) The term “Net Proceeds” for purposes of this Section 5.3 shall mean: (i) the net amount of all insurance proceeds received by Lender pursuant to Section 5.3(a) as a result of such damage or destruction, after deduction of its reasonable, out of pocket costs and expenses (including, but not limited to, reasonable, out of pocket counsel fees), if any, actually incurred in collecting the same (“Insurance Proceeds”), or (ii) the net amount of any award or proceeds received by Lender in connection with any condemnation proceeding pursuant to Section 5.3(a) above, after deduction of its reasonable, out of pocket costs and expenses (including, but not limited to, reasonable, out of pocket counsel fees), if any, actually incurred in collecting same (“Condemnation Proceeds”), whichever the case may be. Any reasonable expense actually incurred by the Lender in the adjustment and collection of Net Proceeds (including the out-of-pocket cost of any independent appraisal of the loss or damage on behalf of Lender) shall be reimbursed to Lender first out of any Net Proceeds. The term “Restoration” shall mean the repair and restoration of the Property after a casualty or condemnation substantially to the condition the Property was in immediately prior to such casualty or condemnation, with such alterations as may be reasonably approved by Lender and/or as may required to in order comply with applicable law.
(c) If the Net Proceeds shall be less than three percent (3.00%) of the outstanding Principal Balance of the Loan (the “Restoration Threshold”) and the costs of completing the Restoration shall be less than the Restoration Threshold, the Net Proceeds may be disbursed directly to Borrower or will be disbursed by Lender to Borrower upon receipt, provided that no Event of Default has occurred and is continuing, and Borrower delivers to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of the Security Instrument.
(d) If the Net Proceeds are equal to or greater than the Restoration Threshold or the costs of completing the Restoration is equal to or greater than the Restoration Threshold, the Net Proceeds will be held by Lender and Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of Section 5.3(e) below.
(e) The Net Proceeds, if equal to or greater than the Restoration Threshold or if the costs of completion of the Restoration are equal to or greater than the Restoration Threshold, shall be made available to Borrower for Restoration subject to the following conditions:
(i) no Event of Default shall have occurred and be continuing;
(ii) the loss is in an aggregate amount less than thirty percent (30%) of the outstanding Principal Balance of the Loan;
(iii) (1) in the event the Net Proceeds are Insurance Proceeds, less than forty percent (40%) of the total floor area of the Improvements on the Property has been damaged, destroyed or rendered unusable as a result of such casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than forty percent (40%) of the land constituting the Property is taken, and such land is located along the perimeter or periphery of the Property, and no portion of the Improvements is located on such land;
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(iv) Borrower shall commence the Restoration as soon as reasonably practicable (but in no event later than one hundred twenty (120) days after such casualty or condemnation (subject to reasonable extensions so long as Borrower is proceeding in good faith), whichever the case may be, occurs, it being understood that “commence” means initial clean-up, initial solicitation of bids from contractors, engineers, architects, and contractors, commencing architectural and engineering drawings, or application for permits) and shall diligently pursue the same to satisfactory completion;
(v) Lender shall be reasonably satisfied that any operating deficits, including all scheduled payments of interest under the Note, which will be incurred as a result of the occurrence of any such casualty or condemnation, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) business interruption insurance, if applicable, or (3) revenue generated by the Property, and/or (4) by other funds of Borrower;
(vi) Lender shall be reasonably satisfied that the Restoration will be completed on or before the earliest to occur of (1) the date three (3) months prior to the Maturity Date of the Loan (including if such Maturity Date is extended pursuant to the terms of this Agreement), or (2) such time as may be required under all applicable laws, rules and regulations;
(vii) the Property and the use thereof after the Restoration will be in compliance in all material respects with and permitted under all applicable Legal Requirements;
(viii) the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion and in compliance in all material respects with all applicable Legal Requirements;
(ix) such casualty or condemnation, as applicable, following Restoration, will not result in the complete and permanent loss of access to the Property or the related Improvements;
(x) Borrower shall deliver, or cause to be delivered, to Lender a budget stating the estimated entire cost of completing the Restoration, which budget shall be in a form reasonably acceptable to Lender (which approval shall not be unreasonably withheld, conditioned or delayed); and
(xi) the Net Proceeds together with any cash or cash equivalent deposited by Borrower with Lender are sufficient in Lender’s reasonable discretion to cover the cost of the Restoration.
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(f) The Net Proceeds held by Lender pursuant to Section 5.3(d) shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence reasonably satisfactory to Lender that (A) all materials installed and work and labor performed in connection with the Restoration (or the applicable portion thereof) prior to such disbursement have been paid for in full (except to the extent that they are to be paid for out of the requested disbursement and subject to Borrower’s right to contest any payment under this Agreement), and (B) there exist no recorded notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property, other than Permitted Encumbrances, which have not either been fully bonded to the satisfaction of Lender and discharged of record or, in the alternative, fully insured to the reasonable satisfaction of Lender by a title company reasonably acceptable to Lender.
(g) In connection with a Restoration, if the Net Proceeds are equal to or greater than the Restoration Threshold or if the costs of completion of the Restoration are equal to or greater than the Restoration Threshold, all plans and specifications required in connection with the Restoration shall be subject to the reasonable approval of Lender in consultation with an independent consulting engineer selected by Lender (the “Casualty Consultant”). To the extent permitted by applicable law and applicable agreements, Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration. The identity of the main contractors, engaged in the Restoration, as well as any Material Agreements under which they have been engaged, shall be subject to the approval of Lender, which approval shall not be unreasonably withheld, conditioned or delayed. All reasonable out of pocket costs and expenses actually incurred by Lender in connection with recovering, holding and advancing the Net Proceeds for the Restoration including, without limitation, reasonable attorneys’ fees and disbursements and the Casualty Consultant’s fees and disbursements, shall be paid by Borrower.
(h) In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, less the Casualty Retainage. The term “Casualty Retainage” shall mean, to the extent permitted by law, as to each contractor, subcontractor or materialman engaged in the Restoration, an amount equal to five percent (5%) of the costs actually incurred for work in place as part of the Restoration (unless such percentage thresholds are lowered by Lender in its reasonable discretion or unless the applicable contract includes a lower retainage amount), until the Restoration has been completed. The Casualty Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this Section 5.3, be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. Except as described below, the Casualty Retainage shall not be released until the Restoration has been completed in accordance with the provisions of this Section 5.3 (subject to punch list items) and that all approvals necessary for the re-occupancy and use of the Property have been obtained from all applicable governmental authorities, and Lender receives evidence reasonably satisfactory to Lender that the costs of the Restoration
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have been paid in full or will be paid in full out of the Casualty Retainage, except to the extent being contested by Borrower in accordance with the terms of this Agreement; provided, however, that Lender will release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which (i) such contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of such contractor’s, subcontractor’s or materialman’s contract, (ii) with respect to any contract with a contract price in excess of $250,000, the contractor, subcontractor or materialman delivers partial or final lien waivers (together with evidence of payment in full or conditioned upon such payment in full) as may be reasonably requested by Lender or by a title company reasonably acceptable to Lender, and (iii) Lender receives a title search confirming the priority of the lien of the Security Instrument, subject to Permitted Encumbrances. If reasonably required by Lender, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.
(i) Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.
(j) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the reasonable opinion of Lender be sufficient to pay in full the balance of the costs which are reasonably estimated by Lender to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section 5.3 shall constitute additional security for the Secured Obligations.
(k) The excess, if any, of the Net Proceeds (less any that are required to be returned to the insurance company, which shall be remitted to the insurance company) and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Restoration has been completed in accordance with the provisions of this Section 5.3, and the receipt by Lender of evidence reasonably satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be disbursed to Borrower.
(l) Borrower hereby specifically, unconditionally and irrevocably waives to the extent permitted under applicable law all rights it may have under any state where any of the Property is located and/or statutory law, heretofore or hereafter in effect, which provides that a lender on a debt secured by improved real property must demonstrate that its security has been impaired as a result of a casualty before requiring that any or all insurance proceeds be used to reduce the debt.
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Article 6. REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender’s entry into this Agreement, Borrower represents and warrants to Lender as of the Effective Date that:
6.1 AUTHORITY/ENFORCEABILITY. Borrower is in compliance with all Legal Requirements applicable to its organization, existence and transaction of business in all material respects and has all necessary rights and powers to borrow and own, improve and operate the Property as contemplated by the Loan Documents.
6.2 BINDING OBLIGATIONS. Borrower is authorized to execute, deliver and perform its obligations under the Loan Documents, to which it is a party, and such obligations shall be valid and binding obligations of Borrower.
6.3 ORGANIZATION. Borrower is duly organized, validly existing and in good standing under the laws of the State of Delaware and is in good standing in each other jurisdiction where ownership of its properties or the conduct of its business requires it to be so, and Borrower has all power and authority under such laws and its organizational documents and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. The organizational chart contained in Exhibit E is true, correct and complete as of the Effective Date.
6.4 FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has delivered to Lender all of the relevant formation and organizational documents of Borrower, the partners, members, managers or joint venturers of Borrower (if any), and all guarantors of the Loan (if any). Borrower hereby certifies that: (i) the above documents are all of the relevant formation and organizational documents of Borrower; (ii) they remain in full force and effect; and (iii) they have not been amended or modified since they were delivered to Lender. Borrower shall promptly provide Lender with copies of any future amendments or modifications of the formation or organizational documents if requested by Lender.
6.5 NO VIOLATION. Borrower’s execution, delivery, and performance under the Loan Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other organizational document; (b) violate any Legal Requirements applicable to Borrower or the Property; (c) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower or the Property is bound or regulated; or (d) violate any other statute, law, regulation or ordinance, or any order of any Governmental Authority.
6.6 COMPLIANCE WITH LAWS; USE. Borrower has obtained all permits, licenses, exemptions, and approvals required to occupy, operate and market the Property in accordance with applicable Legal Requirements, and is in compliance, in all material respects, with all Legal Requirements applicable to the Property and all other applicable statutes, laws, regulations and ordinances necessary for the lawful transaction of its business. The Property is one or more separate legal parcels and separate tax parcels lawfully created in compliance and conformity in all material respects with all subdivision laws and ordinances, and is properly zoned for the stated use of the Property as disclosed to Lender as of the Effective Date. Borrower shall not initiate a zoning change of the Property without prior notice to, and prior written consent from, Lender (not to be unreasonably withheld, conditioned or delayed). Furthermore, Borrower shall not allow changes in the use of the Property for residential, retail and other commercial uses from that disclosed to Lender at the time of execution hereof without prior notice to, and prior written consent from, Lender (not to be unreasonably withheld, conditioned or delayed).
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6.7 LITIGATION. Except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or to Borrower’s knowledge, threatened in writing against Borrower or any Guarantor or affecting the Property.
6.8 FINANCIAL CONDITION. All financial statements and information heretofore and hereafter delivered to Lender by Borrower, including, without limitation, information relating to the financial condition of the Property, the Borrower and/or the Guarantor fairly and accurately represent the financial condition of the subject thereof in all material respects and have been prepared (except as noted therein) in accordance with the Approved Accounting Method, and do not contain any intentional misrepresentation.
6.9 NO MATERIAL ADVERSE CHANGE. There has been no material adverse change in the financial condition of Borrower or Guarantor since the dates of the latest financial statements furnished to Lender, which would be reasonably likely to affect Borrower’s or Guarantor’s ability to perform its obligations under the Loan Documents, and, except as otherwise disclosed to Lender in writing, Borrower has not entered into any material transaction which is not disclosed in such financial statements.
6.10 ACCURACY. All reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan or security for the Loan or required by the Loan Documents are, to Borrower’s knowledge, accurate, and correct and sufficiently complete in all material respect to give Lender true and accurate knowledge of their subject matter, and do not contain any material misrepresentation or omission.
6.11 UTILITIES. All utility services, including, without limitation, gas, water, sewage, electrical and telephone, necessary for the lawful occupancy of the Property are available at or within the boundaries of the Property.
6.12 AMERICANS WITH DISABILITIES ACT COMPLIANCE. Borrower represents and warrants to Lender that the Property is in material compliance with the requirements and regulations of the ADA. Borrower shall be solely responsible for complying with the requirements and regulations of the ADA and all costs related thereto.
6.13 TAX LIABILITY. Borrower has filed all required federal, state, county and municipal tax returns and has paid all Taxes owed and payable, and Borrower has no knowledge of any basis for any additional payment with respect to any such Taxes.
6.14 BUSINESS LOAN. The Loan is a business loan transaction in the stated amount solely for the purpose of carrying on the business of Borrower and none of the proceeds of the Loan will be used for the personal, family or agricultural purposes of the Borrower. No portion of the Property is used or will be used as a dwelling occupied by any individual Person with a direct ownership interest in the Borrower.
6.15 FULL FORCE AND EFFECT. The Note and other Loan Documents are in full force and effect without any defense, counterclaim, right or claim of set-off; all necessary action to authorize the execution and delivery of this Agreement by Borrower has been taken.
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6.16 ENFORCEABLE OBLIGATIONS. This Agreement and the other Loan Documents have been duly executed and delivered by Borrower and constitute Borrower’s legal, valid and binding obligations, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower, including the defense of usury.
6.17 NO DEFAULT. No Event of Default will exist immediately following the making of the Loan.
6.18 ERISA. Neither Borrower nor any ERISA Affiliate of Borrower has incurred or could be subjected to any liability under Title IV or Section 302 of ERISA or Section 412 of the Code or maintains or contributes to, or is or has been required to maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code. The consummation of the transactions contemplated by this Agreement will not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or substantially similar provisions under federal, state or local laws, rules or regulations.
6.19 INVESTMENT COMPANY ACT. Borrower is not an “investment company”, or a company “controlled” by an “investment company”, registered or required to be registered under the Investment Company Act of 1940, as amended.
6.20 NO BANKRUPTCY FILING. Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property. Borrower does not have knowledge of any Person contemplating the filing of any such petition against it. During the ten (10) year period preceding the Effective Date, no petition in bankruptcy has been filed by or against Borrower or Guarantor.
6.21 LEASES; MATERIAL AGREEMENTS.
(a) Borrower has delivered to Lender true, correct and complete copies of all the existing commercial Leases. Except as set forth in the Permitted Encumbrances, no Person, other than Borrower, has any possessory interest in the Property or contractual right to occupy the same except under and pursuant to the provisions of the Leases. To Borrower’s knowledge, the Rent Roll is true, correct and complete in all material respects as of the Effective Date. Except as indicated on the Rent Roll (or other documentation provided to Lender prior to the Effective Date), (i) no security deposits are being held by Borrower, (ii) no Tenant has any extension, renewal or termination options, no Tenant or other party has any option, right of first refusal or similar preferential right to purchase all or any portion of the Property (other than extension, renewal or termination rights expressly stated in any Lease), and (iii) no fixed rent has been paid more than thirty (30) days in advance of its due date, except as otherwise disclosed to Lender or for the first and last months’ rent and security deposits, collect any of the rents thereunder more than one month in advance.
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(b) (i) Borrower is the sole owner of the entire lessor’s interest in the Leases, subject to the Liens and other security interests created by the Loan Documents, (ii) the existing Leases are in full force and effect, (iii) all of the Leases are arm’s length agreements with bona fide, independent third parties (other than any superintendents apartment for an employee or independent contractor of the Property Manager), (iv) except as disclosed in the Rent Roll, all revenues due to Borrower under Leases have been paid in full as of the date of the Rent Roll, (v) the terms of all alterations, modifications and amendments to the Leases are reflected in the written documents delivered to Lender prior to the date hereof, and (vi) none of the revenues reserved in the Leases have been assigned or otherwise pledged or hypothecated by the Borrower (except for such pledge or hypothecation that will be fully terminated and released in connection with the filing and recordation of the Security Instrument and except for the Liens contemplated pursuant to the Loan Documents).
(c) Except as expressly detailed on the Rent Roll or otherwise disclosed to Lender in writing, (i) no party under any Lease is in default in any material respect beyond applicable notice and cure periods, (ii) there exist no offsets or defenses to the payment of any portion of the revenues generated from any Lease, (iii) other than as set forth on Schedule 6.21(c) hereof, all work to be performed by the landlord under the Leases has been substantially performed, all Tenants have accepted possession of their respective premises under the Leases, all contributions to be made by the landlord to the Tenants thereunder have been made, all other conditions to each Tenant’s obligations thereunder have been satisfied, no Tenant has the right to require Borrower to perform or finance tenant improvements or material alterations and no leasing commissions are owed or would be owed upon the exercise of any Tenant’s existing renewal or expansion options, and Borrower has no other monetary obligation to any Tenant under any Lease, and (iv) Borrower has received no notice from any Tenant challenging the validity or enforceability of any Lease.
(d) There are no Material Agreements in effect as of the Effective Date except as described in Schedule 1 and any other Permitted Encumbrances. Borrower has made available to Lender true, correct and complete copies of all Material Agreements. Each Material Agreement has been entered into at arm’s length in the ordinary course of business by or on behalf of Borrower (or its predecessors in ownership of the Property).
(e) The Leases and the Material Agreements are in full force and effect. Borrower is not in default in any material respect beyond any applicable notice and/or cure period in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Leases and Material Agreements.
6.22 NOT FOREIGN PERSON. Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code.
6.23 LABOR MATTERS. Borrower is not a party to any collective bargaining agreements.
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6.24 TITLE. Borrower owns good, marketable and indefeasible title to the Property and good and marketable title to the related personal property and to any other Collateral, in each case free and clear of all Liens whatsoever except the Permitted Encumbrances. The Security Instrument, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a valid, perfected first priority Lien on the Property and the rents therefrom, enforceable as such against creditors of and purchasers from Borrower and subject only to Permitted Encumbrances, and (ii) perfected Liens (pursuant to the Uniform Commercial Code of the State of Florida and Delaware) in and to all personalty, all in accordance with the terms thereof, in each case subject only to any applicable Permitted Encumbrances. The Permitted Encumbrances do not and will not materially and adversely affect or interfere with the current or contemplated use or operation of the Property, or the security intended to be provided by the Security Instrument or Borrower’s ability to repay the Loan in accordance with the terms of the Loan Documents. Except as insured over by a Title Policy, there are no claims for payment for work, labor or materials affecting the Property that are or may become a Lien prior to, or of equal priority with, the Liens created by the Loan Documents. No creditor of Borrower other than Lender has in its possession any goods that constitute or evidence the Collateral.
6.25 NO ENCROACHMENTS. Except as shown on the Qualified Survey, all of the Improvements on the Property lie wholly within the boundaries and building restriction lines of the Property, and no Improvements on adjoining property encroach upon the Property, and no easements or other encumbrances upon the Property encroach upon any of the Improvements, so as, in either case, to adversely affect the value or marketability of the Property, except for Permitted Encumbrances.
6.26 PHYSICAL CONDITION. Except as expressly described in the Property Condition Report,
(a) To Borrower’s knowledge, the Property (including sidewalks, storm drainage system, roof, plumbing system, HVAC system, fire protection system, electrical system, equipment, elevators, exterior sidings and doors, irrigation system and all structural components) is in good condition, order and repair (ordinary wear and tear excepted) in all respects material to its use, operation or value.
(b) To Borrower’s knowledge, there are no material structural or other material defect or damages in the Property, whether latent or otherwise.
(c) Borrower has not received any written notice from any insurance company or bonding company of any defects or inadequacies in the Property that would, alone or in the aggregate, adversely affect in any material respect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.
6.27 FRAUDULENT CONVEYANCE. Borrower has not entered into the Loan or any of the Loan Documents with the actual intent to hinder, delay or defraud any creditor. Borrower has received reasonably equivalent value in exchange for its obligations under the Loan Documents. On the Effective Date, the fair salable value of Borrower’s aggregate assets is and will, immediately following the making of the Loan and the use and disbursement of the proceeds thereof, be greater than Borrower’s probable aggregate liabilities (including subordinated, unliquidated, disputed and contingent obligations). Borrower’s aggregate assets do not and, immediately following the making of the Loan and the use and disbursement of the proceeds thereof will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, incur debts and liabilities (including contingent obligations and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of Borrower).
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6.28 MANAGEMENT. Except for the Management Agreement and Asset Management Agreement, no property or asset management agreements are in effect with respect to the Property. The Management Agreement and Asset Management Agreement are in full force and effect and, to Borrower’s knowledge, there is no event of default thereunder by any party thereto and no event has occurred that, with the passage of time and/or the giving of notice would constitute an event of default thereunder.
6.29 CONDEMNATION. Borrower has not received any written notice that condemnation has been commenced or, to Borrower’s knowledge, is contemplated in writing with respect to all or any material portion of the Property or for the relocation of roadways providing access to the Property.
6.30 ASSESSMENTS. There are no pending or, to Borrower’s knowledge, proposed in writing special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated Improvements to the Property that may result in such special or other assessments. No extension of time for assessment or payment by Borrower of any federal, state or local tax is in effect.
6.31 NO JOINT ASSESSMENT. Borrower has not suffered, permitted or initiated the joint assessment of the Property (i) with any other real property constituting a separate tax lot, or (ii) with any personal property, or any other procedure whereby the Lien of any Taxes that may be levied against such other real property or personal property shall be assessed or levied or charged to the Property as a single Lien.
6.32 SECURITIES COMPLIANCE. To Borrower’s knowledge, all equity investments made directly or indirectly in the Borrower have been completed in accordance with all applicable federal and/or state securities laws.
6.33 EB-5 PROGRAM. Borrower represents and warrants to Lender as of the Effective Date as follows:
(a) The EB-5 Program, including all EB-5 Offering Documents, has been conducted and offered in compliance with all applicable federal securities laws, state securities laws, and immigration laws, including the Immigration and Nationality Act, as amended, and all rules and regulations promulgated thereunder by USCIS.
(b) True, correct and complete copies of all EB-5 Offering Documents have been delivered to Lender prior to the Effective Date, and such EB-5 Offering Documents have not been amended or modified since delivery to Lender except as otherwise disclosed to Lender in writing.
(c) The Regional Center is a regional center designated by USCIS to participate in the EB-5 Program, such designation is in full force and effect, and to Borrower’s knowledge, no action has been taken or threatened by USCIS or any other Governmental Authority to terminate, suspend, revoke or adversely modify the Regional Center’s designation.
(d) All EB-5 Capital Contributions have been or will be made in accordance with the EB-5 Offering Documents and have been or will be properly escrowed, released and applied solely for the uses described in the EB-5 Offering Documents and the Job Creation Plan.
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(e) No EB-5 Investor has (i) withdrawn or attempted to withdraw any EB-5 Capital Contribution, (ii) made any claim for rescission, return, or refund of any EB-5 Capital Contribution, (iii) asserted any material claim or commenced any litigation against Borrower, any Affiliate of Borrower, or the Regional Center arising out of or relating to the EB-5 Program, or (iv) received a denial of any I-526, I-526E, or I-829 petition from USCIS, in each case except as disclosed in writing to Lender.
(f) The Job Creation Plan accurately reflects the jobs to be created by the investment of the EB-5 Capital Contributions, and Borrower reasonably believes that such jobs will be created within the time periods required by applicable immigration laws and USCIS regulations.
(g) No event has occurred and no condition exists that would reasonably be expected to result in a material adverse effect on the ability of Borrower, Block 40 or Mezzanine Borrower to perform their respective obligations under the EB-5 Offering Documents.
Article 7. SPECIAL PURPOSE ENTITY STATUS
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING SPECIAL PURPOSE ENTITY STATUS; FUTURE AND PAST ACTIVITIES. Borrower hereby represents, warrants and covenants to Lender, with regard to Borrower, as follows:
(a) Limited Purpose. The sole purpose to be conducted or promoted by Borrower since its organization is to engage in the following activities: (i) to acquire, own, hold, lease, operate, manage, maintain, develop and improve the Property; (ii) to enter into and perform its obligations under the Loan Documents and its obligations under any prior loan received by Borrower; (iii) to sell, transfer, service, convey, dispose of, pledge, assign, borrow money against, finance, refinance or otherwise deal with the Property to the extent permitted under the Loan Documents or any other loan documents for any prior loans received by Borrower; and (iv) to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies organized under the laws of Delaware that are related or incidental to and necessary, convenient or advisable for the accomplishment of the above mentioned purposes.
(b) Limitations on Debt, Actions. Notwithstanding anything to the contrary in the Loan Documents or the Mezzanine Loan Documents or in any other document governing the formation, management or operation of Borrower, Borrower shall not, without the prior written consent of Lender, (i) guarantee any obligation of any Person, including any Affiliate, or become obligated for the debts of any other Person or hold out its credit as being available to pay the obligations of any Person; (ii) engage, directly or indirectly, in any business other than as required or permitted to be performed under this Section; (iii) incur, create or assume any indebtedness other than (A) the Loan, (B) unsecured operational debt or trade payables incurred in the ordinary course of its business that are related to the ownership and operation of the Property, not to exceed two percent (2%) of the amount of the Loan, which are not evidenced by a note, and must be paid within sixty (60) days of invoice, unless contested in accordance with this Agreement or otherwise permitted pursuant to the terms hereof, (C) payment/performance obligations pursuant to construction contracts related to Capital
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Improvements or Tenant Improvements permitted pursuant to this Agreement, and (D) additional indebtedness from the Lender or an Affiliate of Lender approved by Lender in its reasonable discretion; (iv) make or permit to remain outstanding any loan to, or own or acquire any stock or securities of, any Person, except that Borrower may invest in those investments permitted under the Loan Documents; (v) to the fullest extent permitted by law, (A) engage in any dissolution, liquidation, consolidation, or merger, except as permitted under the Loan Documents, (B) divide the Borrower or enter into any plan of division pursuant to any applicable law, except as permitted under the Loan Documents, or (C) engage in any sale or other transfer of any of its assets outside the ordinary course of Borrower’s business; (vi) buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities); (vii) form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity, except as permitted under the Loan Documents; or (viii) own any asset or property other than the Property and incidental personal property necessary for the ownership or operation of the Property.
(c) Separateness Covenants. In order to maintain its status as a separate entity and to avoid any confusion or potential consolidation with any Affiliate, Borrower represents and warrants that in the conduct of its operations since its organization will continue to observe the following covenants (collectively, the “Separateness Provisions”): (i) maintain books and records and bank accounts separate from those of any other Person except that Borrower’s assets may be included in a consolidated financial statement of its Affiliate so long as appropriate notation is made on such consolidated financial statements to indicate the separateness of Borrower from such Affiliate and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person; (ii) maintain its assets in such a manner that it is not costly or difficult to segregate, identify or ascertain such assets; (iii) comply with all organizational formalities necessary to maintain its separate existence; (iv) hold itself out to creditors and the public as a legal entity separate and distinct from any other entity; (v) maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person and not have its assets listed on any financial statement of any other Person except that Borrower’s assets may be included in a consolidated financial statement of its Affiliate so long as appropriate notation is made on such consolidated financial statements to indicate the separateness of Borrower from such Affiliate and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person; (vi) prepare and file its own tax returns separate from those of any Person to the extent required by applicable law, and pay any taxes required to be paid by applicable law except in the event that Borrower is a disregarded entity for federal income tax purposes; (vii) allocate and charge fairly and reasonably any common employee or overhead shared expenses with Affiliates (including, without limitation, shared office space); (viii) not enter into any transaction with any Affiliate, except in the ordinary course of business and on an arm’s-length basis on terms which are intrinsically fair, commercially reasonable and substantially similar to those that would be available for unaffiliated third parties, and pursuant to written, enforceable agreements; (ix) conduct business solely in its own name, and use separate invoices and checks bearing its own name; (x) hold all of its assets solely in its own name; (xi) not commingle its assets or funds with those of any other Person; (xii) not assume, guarantee or pay the debts or obligations of any other Person; (xiii) correct any known misunderstanding as to its separate identity; (xiv) not identify itself or any of its Affiliates as a division or part of the other;
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(xv) not permit any Affiliate to guarantee or pay its obligations (other than pursuant to the Loan Documents or the Mezzanine Loan Documents); (xvi) not make loans or advances to any other Person other than to Tenants of Approved Leases for Tenant Improvements in accordance with the terms and conditions of this Agreement; (xvii) pay its liabilities and expenses solely out of and to the extent of its own funds; provided, however, that the foregoing shall not require any owner of a direct or indirection ownership interest in the Borrower to make additional capital contributions to Borrower; (xviii) maintain a sufficient number of employees, if any, in light of its contemplated business purpose and pay the salaries of its own employees, if any, only from its own funds; (xix) intend to maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, that the foregoing shall not require any equity owner to make additional capital contributions to Borrower; (xx) cause the managers, officers, employees, agents and other representatives of Borrower to act at all times with respect to Borrower consistently and in furtherance of the foregoing and in the best interests of Borrower; (xxi) not acquire obligations or securities of its managers, partners, members or Affiliates, as applicable; (xxii) not fail to provide in its organizational documents that for so long as the Loan is outstanding pursuant to the Loan Documents, it shall not, without the unanimous written consent of all of its partners, members, shareholders and/or directors (including, without limitation the Independent Manager), as applicable: (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable state or federal insolvency, bankruptcy, liquidation or reorganization laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any action that might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors; and (xxiii) not fail at any time to have at least one (1) Independent Manager; (xxiv) without the prior unanimous written consent of all of its members, as applicable, and the consent of the Independent Manager, Borrower has not and shall not: (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any state or federal bankruptcy or insolvency laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any action that might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors; (xxv) not fail to have a limited liability company agreement of Borrower (the “LLC Agreement”) or resolution for and on behalf of the Borrower which directly or indirectly provides or requires that (A) upon the occurrence of any event that causes the last remaining member of Borrower (“Member”) to cease to be the Member of Borrower, any person executing the LLC Agreement as a “Special Member” shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower, automatically be admitted to Borrower (“Special Member”) and shall continue Borrower without dissolution and (B) Special Member may not resign from Borrower or transfer its rights as Special Member unless a successor Special Member has been admitted to Borrower as Special Member in accordance with requirements of Delaware law; and (xxvi) Borrower covenants and agrees that prior, and as a condition precedent, to the removal of an Independent Manager, Borrower shall provide Lender with written notice of such proposed removal no later than thirty (30) days’ prior to such removal, which notice shall include the identity and address of such replacement Independent Manager and an officer’s certificate certifying that such replacement Independent Manager complies with the definition of Independent Manager contained herein.
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Failure of Borrower to comply with any of the covenants contained in this Section or any other covenants contained in this Agreement shall not affect the status of Borrower as a separate legal entity.
7.2 SPE COVENANTS IN BORROWER ORGANIZATIONAL DOCUMENTS. Borrower covenants and agrees to incorporate the provisions contained in Sections 7.1(a)-(c) above into Borrower’s organizational documents and Borrower agrees not to amend, modify or otherwise change its organizational documents with respect to such provisions without the prior written consent of Lender for so long as the Loan or any portion thereof remains unpaid (not to be unreasonably withheld, conditioned or delayed).
7.3 PAST ACTIVITIES. Borrower hereby represents and warrants to Lender that from the date of its formation to the Effective Date, Borrower:
(a) is and always has been duly formed, validly existing, and in good standing in the state of its formation and in all other jurisdictions where it is qualified to do business, except where the failure to do so has not had a material adverse effect on Borrower and has been cured;
(b) has no tax judgments or tax liens of any nature against it that have not been paid except for tax liens not yet due;
(c) other than in connection with a tax appeal in connection with which all taxes have already been paid, is not currently involved in any dispute with any taxing authority except as disclosed to Lender in writing prior to the Effective Date;
(d) has paid all income and other material taxes which it owes, except such taxes Borrower is contesting in accordance with this Agreement;
(e) has never owned any real property other than the Property and personal property necessary or incidental to its ownership or operation of the Property and has never engaged in any business other than or in connection with the ownership and operation of the Property;
(f) except as set forth on Schedule 7.3 hereof, is not now party to any lawsuit, arbitration, summons, or legal proceeding that is still pending as of the Effective Date, which is reasonably likely to have a material adverse effect on Borrower and not covered by insurance, or that resulted in a judgment against it that has not been paid in full;
(g) has not entered into any contract or agreement with any of its Affiliates, except upon terms and conditions that are no less favorable to it than those available in an arm’s-length transaction with an unrelated party;
(h) has paid all of its debts and liabilities that are due from its assets (including, without limitation, the Property) or from capital contributions from its equity owners;
(i) has done or caused to be done all material things necessary to observe all organizational formalities applicable to it and to preserve its existence;
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(j) has maintained all of its books, records, financial statements and bank accounts separate from those of any other Person; provided, however, that the Borrower’s assets may have been included in a consolidated financial statement of its Affiliates provided that (A) appropriate notation was made on such consolidated financial statements to indicate the separateness of the Borrower and such Affiliates and to indicate that the Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (B) such assets shall be listed on Borrower’s Affiliate’s own separate balance sheet;
(k) intentionally omitted;
(l) has filed its own tax returns (except to the extent that it has been a tax-disregarded entity not required to file tax returns under applicable law);
(m) has been, and at all times has held itself out to the public as, a legal entity separate and distinct from any other Person (including any Affiliate);
(n) has corrected any known misunderstanding regarding its status as a separate entity;
(o) has conducted all of its business;
(p) has not identified itself or any of its Affiliates as a division or part of the other;
(q) has maintained and utilized separate stationery, invoices and checks bearing its own name (if such items are used);
(r) has not maintained its assets in such a manner that will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(s) has not commingled its assets with those of any other Person;
(t) has not guaranteed or become obligated for the debts of any other Person other than in connection with any tenant improvement allowance under an Approved Lease;
(u) has not held itself out as being responsible for the debts or obligations of any other Person other than in connection with any tenant improvement allowance under an Approved Lease;
(v) except in connection will indebtedness discharged on or prior to the Effective Date, has not pledged its assets to secure the obligations of any other Person and no such pledge remains outstanding except in connection with the Loan;
(w) has intended to maintain adequate capital in light of its contemplated business operations;
(x) has maintained a sufficient number of employees (if any) in light of its contemplated business operations (taking into account then applicable circumstances) and has paid the salaries of its own employees (if any) from its own funds, in each case to the extent sufficient cash flow from the Property was available to the Borrower; provided that the foregoing did not require the member or any other direct or indirect member of the Borrower to make any additional capital contributions to the Borrower;
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(y) has not owned any subsidiary or any equity interest in any other entity;
(z) has not acquired obligations or securities of its managers, members or Affiliates, as applicable; and
(aa) has not had any of its obligations guaranteed by an Affiliate, except for guarantees that have been either released or discharged (or that will be discharged as a result of the closing of the Loan).
Article 8. HAZARDOUS MATERIALS
8.1 SPECIAL REPRESENTATIONS AND WARRANTIES, COVENANTS AND INDEMNITY. The terms and conditions of Section 1.1 through 1.7 of the Hazardous Materials Indemnity are incorporated herein as if fully set forth herein (“Environmental Covenants and Representations”). Borrower hereby covenants and agrees to perform all of its obligations under the Environmental Covenants and Representations and represents and warrants as to all matters detailed in the Environmental Covenants and Representations. Borrower’s obligations pursuant to this Article 8 are separate from Borrower’s obligations pursuant to the terms of the Hazardous Material Indemnity.
Article 9. COVENANTS OF BORROWER
9.1 EXPENSES. Borrower shall promptly pay Lender upon demand all reasonable, out of pocket costs and expenses incurred by Lender in connection with: (a) the drafting, negotiation and administration of this Agreement, the other Loan Documents, and any other documents required by Lender for the term of the Loan (including in connection with any extension of the Maturity Date); and (b) the enforcement or satisfaction by Lender of any of Borrower’s or Guarantor’s obligations under this Agreement, the Guaranty, or the other Loan Documents. For all purposes of this Agreement, Lender’s costs and expenses shall include, without limitation, all reasonable, out-of-pocket appraisal fees, cost engineering and inspection fees, legal fees and expenses, environmental consultant fees, auditor fees, recording and filing fees, UCC filing fees and/or UCC vendor fees, flood certification vendor fees, tax service vendor fees, and the cost to Lender of any title insurance premiums, title surveys, mortgage registration taxes (if applicable), release, reconveyance, satisfaction and notary fees.
9.2 ERISA COMPLIANCE.
(a) Borrower shall not maintain or contribute to, or agree to maintain or contribute to, or permit any ERISA Affiliate of Borrower to maintain or contribute to or agree to maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code.
(b) Borrower shall not engage in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code, or substantially similar provisions under federal, state or local laws, rules or regulations or in any transaction that would cause any obligation or action taken or to be taken hereunder (or the exercise by Lender of any of its rights under the Note, this Agreement, the Security Instrument or any other Loan Document) to be a non-exempt prohibited transaction under such provisions.
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(c) Borrower will do, or cause to be done, all things necessary to ensure that it will not be deemed to hold Plan Assets at any time.
9.3 LEASING. Borrower shall use its best commercially reasonable efforts to maintain all leasable space in the Property leased at economic terms substantially similar to those currently being offered.
9.4 LEASE COVENANTS.
(a) All commercial Leases (and for the sake of clarity, excepting therefrom any Leases for residential Tenants executed in the normal course of business) of all or any part of the Property shall: (A) be upon terms and with tenants approved by Lender prior to the execution of any such Lease, which approval shall not be unreasonably withheld, conditioned or delayed; and (B) include estoppels, subordination, attornment and mortgagee protection provisions reasonably satisfactory to Lender. All standard lease forms (if any) and any material deviation from any form of commercial lease shall be approved by Lender prior to execution of any such commercial Lease using such form. Upon request by Lender, Borrower shall deliver (i) such additional subordination agreements (or subordination, attornment and non-disturbance agreements) executed by Borrower and any Tenant under any commercial Lease in form and substance reasonably acceptable to Lender, and (ii) within thirty (30) days after written request by Lender, estoppel certificates executed by Borrower and by each of the requested Tenants under commercial Leases, certifying to certain matters in form and substance reasonably acceptable to Lender. Lender’s failure to object to any request for approval of any commercial Lease and/or requests to amend any commercial Lease within fifteen (15) Business Days of written request from Borrower shall be deemed approval by Lender.
(b) Borrower shall (i) observe and punctually perform all the material obligations imposed upon the lessor under the Leases; (ii) enforce in a commercially reasonable manner all of the material terms, covenants and conditions contained in the Leases on the part of the Tenant thereunder to be observed or performed, short of termination thereof, except that Borrower may terminate any Lease following a material default thereunder by the respective Tenant; (iii) not materially amend or modify any commercial Lease in any material respect without the prior written consent of Lender (which consent shall not be unreasonably withheld, conditioned, or delayed); (iv) except for the first and last months’ rent and security deposits, collect any of the rents thereunder more than one month in advance excluding any residential Leases for which Borrower may collect more than one month in advance; (v) not execute any assignment of lessor’s interest in the Leases or associated rents other than pursuant to the Loan Documents; (vi) not cancel or terminate any guarantee of any of the commercial Leases without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed; and (vii) not permit any subletting of any space covered by a Lease or an assignment of the Tenant’s rights under a Lease, except in strict accordance with the terms of such Lease. Without in any way limiting the requirement of Lender’s consent hereunder, any Lease Termination Payments in excess of $25,000 shall be (i) applied to reduce the outstanding balance of the Loan in the sole discretion of Lender if an Event of Default or Mezzanine Event of Default then exists, (ii) if a Cash Sweep Period then exists and is continuing, deposited in the Restricted Account and disbursed pursuant to the terms and conditions of Article 4 hereof, or (iii) so long as no Cash Sweep Period then exists and is continuing, at Borrower’s option, to reduce the outstanding balance of the Loan or be deposited in the Capital Expenditures Reserve Account, and any such sums received by Borrower shall be deposited promptly upon receipt thereof.
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(c) Security deposits of Tenants under all Leases, whether held in cash or any other form, shall not be commingled with any other funds of Borrower and, if cash, shall be deposited by Borrower in an account under Borrower's control at such commercial or savings bank as may be reasonably satisfactory to Lender, which account is hereby pledged to Lender.
(d) Borrower shall not cancel or terminate any Affiliate Lease without the prior written consent of Lender.
9.5 NO LIENS ON CONTROLLING INTEREST IN BORROWER. Other than Permitted Transfers, Borrower shall not permit the holder of any Controlling Interest in Borrower to suffer or permit any Lien on any such Controlling Interest.
9.6 NO TRANSFER AND FURTHER ENCUMBRANCE. Other than Permitted Transfers (and subject to the terms and conditions of Section 9.11 below), Borrower shall not permit the Property or any part thereof or any interest therein, or in Borrower (directly or indirectly), to be sold, transferred (including, without limitation, through sale or transfer of the corporate stock or partnership interests, limited liability company or membership interests of Borrower to any other Person, including any other member or partner), mortgaged, assigned, pledged, further encumbered or leased, whether directly or indirectly, whether voluntarily, involuntarily or by operation of law, without the prior written consent of Lender. Additionally, subject to the rights of Borrower pursuant to Section 9.11 below, Borrower shall not permit any Lien on the Property or any part thereof other than Permitted Encumbrances. Notwithstanding anything to the contrary contained in this Section 9.6 or in any other provision of this Agreement or the other Loan Documents to the contrary, restrictions on Transfers set forth herein or in any other provision of this Agreement or the other Loan Documents shall not apply to the pledge by Mezzanine Borrower of its direct and/or indirect ownership interests in Borrower as security for the Mezzanine Loan pursuant to the Mezzanine Loan Documents nor to any Transfer made in accordance with the terms and conditions of the Mezzanine Loan Documents.
9.7 NO MERGER, CONSOLIDATION AND TRANSFER OF ASSETS. Other than Permitted Transfers, Borrower shall not, without the prior written consent of Lender: (a) merge or consolidate with, or acquire any stock, obligations or securities of, or any other interest in, any other entity; (b) make any substantial change in the nature of Borrower’s business or structure; (c) acquire all or substantially all of the assets of any other entity; (d) divide or enter into a plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws); or (e) sell, lease, assign, encumber, pledge, hypothecate, mortgage or transfer or otherwise dispose of a material part of Borrower’s assets, except for Permitted Transfers or otherwise in the ordinary course of Borrower’s business.
9.8 NO CHANGE IN STRUCTURE OR MANAGEMENT; SINGLE PURPOSE ENTITY. Borrower will preserve its existence, and not make any material change in the nature or manner of its business activities. Without the prior consent of Lender (not to be unreasonably withheld, conditioned or delayed): (i) except for Permitted Transfers, Borrower shall not dissolve or liquidate, or merge or consolidate with or into any other entity, or turn over the management or operation of its property, assets or business to any other Person, nor shall any member or partner of Borrower voluntarily or involuntarily sell, transfer, pledge or encumber its membership or partnership interest in Borrower to any other person, including any other member or partner; and (ii) Borrower shall not own or acquire assets other than the Property and other assets incidental to the normal operation of the Property, such as bank accounts relating thereto.
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9.9 NO ADDITIONAL DEBT AND NO SEPARATE GUARANTY. Except as expressly set forth in Section 7.1(b), Borrower shall not, without the prior written consent of Lender (i) incur any additional indebtedness or other material obligation; or (ii) directly or indirectly guaranty the obligations of any other Person.
9.10 EXISTENCE. If other than a natural Person, Borrower shall preserve and maintain its existence and all of its rights, privileges and franchises and conduct its business in an orderly, efficient, and regular manner in compliance with all Legal Requirements.
9.11 TAXES AND OTHER LIABILITIES. Subject to its right to contest same as set forth below, Borrower shall pay and discharge when due and prior to being delinquent any and all indebtedness, obligations (including all Operating Expenses), charges, assessments and Taxes, both real and personal, owed by or relating to Borrower and Borrower’s properties (including federal and state income taxes). At Lender’s request, Borrower will deliver to Lender receipts for payment or other evidence reasonably satisfactory to Lender that any such Taxes and other charges have been so paid or are not then delinquent; provided, however, Borrower is not required to furnish such receipts for payment of Taxes in the event that such Taxes have been paid by Lender or been paid from funds in the Tax Account or Borrower has complied with its obligations hereunder to make deposits into the Tax Account. Subject to its right to contest same as set forth below, Borrower shall not suffer and shall promptly cause to be paid and discharged or fully bonded to the reasonable satisfaction of Lender any Lien or charge whatsoever which may be or become a Lien or charge against the Property, and shall promptly pay for or cause to be paid all utility services provided to the Property. After prior notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any Taxes, Liens or other charges, provided that (a) no Event of Default has occurred and is continuing; (b) such proceeding shall be permitted under, and be conducted in accordance with, the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable Legal Requirements; (c) neither the Property nor any part thereof or interest therein will be reasonably likely to be in danger of being sold, forfeited, terminated, cancelled or lost by reason of the institution or prosecution of such contest; (d) Borrower shall promptly upon final determination thereof pay the amount of any such Taxes, Liens or other charges, together with all costs, interest and penalties which may be payable in connection therewith; (e) such proceeding shall suspend the collection of such contested Taxes, Liens or other charges from the Property (except that if such Taxes, Liens or other charges must be paid sooner in order to avoid being delinquent, then Borrower shall cause the same to be paid (which payment may be made under protest) prior to delinquency, and upon making such payment prior to delinquency Borrower may continue such contest); and (f) Borrower shall furnish such security as may be required in the proceeding, or as may be reasonably requested by Lender, to insure the payment of any such contested Taxes, Liens or other charges, together with all interest and penalties thereon, if any. Lender may pay over any such cash deposit or part thereof held by Lender to the claimant entitled thereto at any time when, in the reasonable judgment of Lender, the entitlement of such claimant is established or the Property (or part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or lost or there shall be any danger of the Lien of the Security Instrument being primed by any related Lien.
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9.12 NOTICE. Borrower shall promptly give notice in writing to Lender of: (a) any known litigation that is pending or threatened in writing against Borrower that is not fully covered by insurance and that is reasonably likely to have a material adverse effect on the Property or Borrower; (b) any change in the name of Borrower, and in the case of a Borrower which is an organization, any change in its identity or organizational structure; (c) material loss to the Property through fire, theft, liability damage, or any other casualty, whether or not insured; (d) any actual or threatened (in writing) condemnation or eminent domain proceedings affecting the Property; (e) any termination or cancellation of any insurance policy which Borrower is required herein to maintain to the extent Lender is not simultaneously notified of the same pursuant to the terms and conditions of such insurance policy; and (f) the occurrence of any Event of Default by Borrower pursuant to the terms of the Loan Documents.
9.13 FACILITIES. Borrower shall keep all of Borrower’s property useful or necessary to Borrower’s business in good repair and condition, ordinary wear and tear excepted, and from time to time make necessary repairs, renewals and replacements thereto so that Borrower’s property shall be fully and efficiently preserved and maintained in good condition and repair.
9.14 MANAGEMENT OF PROPERTY. Without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed, Borrower shall not (i) enter into any agreement providing for the management or operation of the Property other than the Management Agreement and Asset Management Agreement in effect as of the Effective Date, or (ii) materially amend and/or modify the Management Agreement or Asset Management Agreement. Borrower shall cause the Property to be operated, in all material respects, in accordance with any applicable property management agreement. In the event that any applicable property management agreement (including, but not limited to, the Management Agreement) expires or is terminated (without limiting any obligation of Borrower to obtain Lender’s consent to any termination or material modification of the Management Agreement in accordance with the terms and provisions of this Agreement), Borrower shall promptly enter into a replacement Management Agreement with a Property Manager approved by Lender in Lender’s reasonable discretion. Borrower shall: (i) perform and/or observe in all material respects all of the covenants and agreements required to be performed and observed by it under any Management Agreement (and the Asset Management Agreement) and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of the giving of any written notice by Property Manager to Borrower of any material default under any Management Agreement (or any material default under the Asset Management Agreement); (iii) intentionally omitted; (iv) enforce the performance and observance of all of the material covenants and agreements required to be performed and/or observed by Property Manager and/or Asset Manager under any Management Agreement and/or the Asset Management Agreement; and (v) not materially amend or materially modify any Management Agreement or the Asset Management Agreement without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed. Lender shall have the right to require Borrower to replace Property Manager with a replacement manager chosen by Lender which is not affiliated with Borrower to manage the Property pursuant to a management agreement reasonably acceptable to Lender upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default, or (ii) if Property Manager shall be in default under the Management Agreement beyond any applicable notice and cure period, (iii) if Property Manager shall become insolvent or a debtor in any involuntary bankruptcy or insolvency proceeding that is not dismissed within ninety (90) days of the filing thereof, or any voluntary bankruptcy or insolvency proceeding, or (iv) if at any time Property Manager has engaged in gross negligence, fraud or willful misconduct. If at any time Lender consents to the appointment of a replacement Property Manager and/or the execution of a management agreement under this Agreement, such replacement Property Manager and Borrower shall, as a condition of Lender’s consent, execute an assignment of management agreement and/or subordination of management fees substantially in the same form as the assignment of management agreement entered into with Property Manager in connection with the origination of the Loan (or in such other form, in form and substance reasonably satisfactory to Lender).
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9.15 SUBDIVISION MAPS. Prior to recording any final map, plat, parcel map, lot line adjustment or other subdivision map of any kind covering any portion of the Property (“Subdivision Map”), Borrower shall submit such Subdivision Map to Lender for Lender’s review and approval, which approval shall not be unreasonably withheld, conditioned or delayed.
9.16 FURTHER ASSURANCES. Upon Lender’s reasonable request and at Borrower’s sole cost and expense, Borrower shall, and shall cause any Person affiliated with Borrower to, execute, acknowledge and deliver any other instruments, including replacement promissory notes, guaranties or other loan documents, and perform any other acts necessary, as reasonably determined by Lender, to correct clerical errors or omissions in any loan closing documentation, to replace any lost or destroyed loan closing documentation, or to carry out the purposes of this Agreement and the other Loan Documents or to perfect and preserve any liens and security interests created by the Loan Documents so long as such actions shall not (i) modify or amend any economic term of the Loan (except in each instance to a de minimis extent), or (ii) increase the obligations, or decrease the rights, of Borrower or Guarantor under the Loan Documents (except in each instance to a de minimis extent). This obligation shall survive any foreclosure or deed in lieu of foreclosure of the Property.
9.17 NO ASSIGNMENT. Without the prior written consent of Lender, Borrower shall not assign Borrower’s interest under any of the Loan Documents, or in any monies due or to become due thereunder, and any assignment without such consent shall be void.
9.18 SANCTIONS. (a) No Person within the Borrowing Group is or will be a Sanctioned Person; (b) no Person within the Borrowing Group is or will be controlled by or is acting on behalf of a Sanctioned Person; (c) no Person within the Borrowing Group is under investigation for an alleged breach of Sanction(s) by any Governmental Authority that enforces Sanctions; (d) no Person within the Borrowing Group will use any of the Loan proceeds for the purpose of: (i) providing financing to or otherwise making funds directly or indirectly available to any Sanctioned Person; or (ii) providing financing to or otherwise funding any transaction which would be prohibited by Sanctions or would otherwise cause the Lender or any other party to this Agreement, or any entity affiliated with any such party, to be in breach of any Sanction; (e) no Person within the Borrowing Group will fund any repayment of the Loan with proceeds derived from any transaction that would be prohibited by Sanctions or would otherwise cause the Lender or any other party to this Agreement, or any entity affiliated with any such party, to be in breach of any Sanction; (f) Borrower will ensure that appropriate controls and safeguards are in place to fully comply with this Section and the Borrower will notify the Lender in writing not more than two (2) Business Days after becoming aware of any breach of this Section.
9.19 DISTRIBUTIONS TO MEMBERS OF BORROWER. Borrower shall not declare or pay any distributions or dividends or purchase, redeem or otherwise acquire for value any member’s interest in Borrower (i) if any such action would cause an Event of Default, (ii) if any such action would cause Borrower to fail to pay any Permitted Operating Expenses as the same become due and payable or (iii) at any time an Event of Default exists and is continuing.
9.20 INTEREST RATE CAP AGREEMENT. On the Effective Date, Borrower shall purchase an Interest Rate Cap Agreement providing for a cap of the Term SOFR Rate at a strike price equal to or less than 4.50% (or such higher strike price as approved by Lender in its sole discretion) through the Original Maturity Date (August 7, 2028) (the “Initial Rate Cap Agreement”). As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all of Borrower’s right, title and interest in and to any Interest Rate Cap Agreement and agrees to enter into any documentation or take such other action deemed necessary by Lender to establish, protect, perfect or enforce any such security interest granted to Lender pursuant to this Section 9.20 (including but not limited to a collateral assignment in form and substance reasonably acceptable to Lender).
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9.21 INTEREST RATE CAP AGREEMENT COVENANTS. Borrower shall comply with all of its obligations under the terms and provisions of any such Interest Rate Cap Agreement required pursuant to the terms of this Agreement. During the continuation of a Cash Sweep Period, all amounts paid by the provider of any Interest Rate Cap Agreement under the terms of the Interest Rate Cap Agreement to Borrower or Lender shall be deposited immediately into the Restricted Account. Borrower shall take all commercially reasonable actions requested by Lender to enforce Lender’s rights under the Interest Rate Cap Agreement in the event of a default by the provider of the Interest Rate Cap Agreement and shall not waive, amend or otherwise modify any of its rights thereunder without Lender’s prior written consent (not to be unreasonably withheld, conditioned or delayed). In the event of any downgrade, withdrawal or qualification of the rating of the provider of the Interest Rate Cap Agreement by any Ratings Agency such that it is no longer rated at least “A-” by S&P or “A3” by Moody’s, Borrower shall replace the Interest Rate Cap Agreement with a replacement Interest Rate Cap Agreement not later than fifteen (15) Business Days following receipt of written notice from Lender of such downgrade, withdrawal or qualification. In the event that Borrower fails to purchase and deliver to Lender any Interest Rate Cap Agreement within such fifteen (15) Business Day period or fails to otherwise maintain any Interest Rate Cap Agreement in accordance with the terms and provisions of this Agreement, Lender may purchase the Interest Rate Cap Agreement and Borrower shall reimburse Lender for the reasonable, out-of-pocket cost incurred by Lender in purchasing such Interest Rate Cap Agreement within fifteen (15) Business Days after written demand for such amounts is made on Borrower, and if Borrower fails to reimburse Lender within such fifteen (15) Business Day period, interest will accrue thereon at the Default Rate from the date such cost was incurred by Lender until such cost is reimbursed by Borrower to Lender. Notwithstanding anything to the contrary contained in this Section 9.21 or elsewhere in this Agreement, if, at any time, Borrower is unable to obtain and/or maintain the Interest Rate Cap Agreement required pursuant to the terms hereof because such product no longer is commercially available, then:
(a) within 20 days after written notice thereof to Borrower, Borrower shall enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of, a Substitute IRPA; and
(b) in lieu of satisfying the condition described in Section 2.13, Section 2.14, and Section 2.15 with respect to any extension period not then yet commenced, Borrower shall instead enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of a Substitute IRPA on or prior to the first day of such extension period.
(c) As used herein, “Substitute IRPA” means an interest rate protection agreement that satisfies all of the requirements for an Interest Rate Cap Agreement set forth in Section 9.20 and Section 9.21, as well as all of the following requirements:
(i) it has a term expiring no earlier than, in the case of clause (a) above, the then stated Maturity Date and, in the case of clause (b) above, the last day of the requested extension period;
(ii) has a notional amount equal to the then outstanding Principal Balance;
(iii) it provides that the only obligation of Borrower thereunder is the making of a single payment to the counterparty thereunder upon the execution and delivery thereof; and
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(iv) it provides to Lender and Borrower (as determined by Lender in its reasonable discretion), for the term of the Substitute IRPA, a hedge against rising interest rates that is no less beneficial to Borrower and Lender than (A) in the case of clause (a) above, that which was provided by the Interest Rate Cap Agreement being replaced by the Substitute IRPA and (B) in the case of clause (b) above, that which was intended to be provided by the Interest Rate Cap Agreement that, but for the operation of Section 9.21(b), would have been required pursuant to Section 2.13(g), Section 2.14(g), and Section 2.15(g) above as a condition to the requested extension period.
9.22 CONTROLLED SUBSTANCES.
(a) Management of Leases and Property. Borrower shall not engage in any Drug-Related Activities and shall use reasonable efforts to prohibit any use or occupancy of the Property for Drug-Related Activities. Without limiting the generality of the foregoing, Borrower shall (i) not enter into, consent to or permit any Lease which allows Drug-Related Activities at the Property, and (ii) expressly prohibit in all Leases entered into after the Effective Date any Controlled Substances Use and Drug-Related Activities on any portion of the Property. To the extent Borrower should nonetheless become aware has actual knowledge of any Drug-Related Activities occurring at the Property, Borrower shall, within ten (10) days of becoming aware, take all commercially reasonable steps as permitted under the Lease to cease such Drug-Related Activities occurring at the Property.
(b) Payments to Lender. Borrower shall not make any payments to Lender from funds derived from Drug-Related Activities.
(c) Supersedes Local Law. The provisions of this Section are intended and shall apply notwithstanding any state or local law permitting the Controlled Substances Uses or Drug-Related Activities.
9.23 MATERIAL AGREEMENTS. Borrower shall be required to obtain Lender’s prior written approval of any and all new Material Agreements entered into on or after the Effective Date, affecting the Property to which Borrower is a party, which approval shall not be unreasonably withheld, conditioned or delayed. Borrower shall not materially amend any Material Agreement without the prior written consent of Lender, such consent not to be unreasonably withheld, conditioned or delayed. Borrower shall (i) observe and perform all the material obligations imposed upon Borrower under any Material Agreement; (ii) use commercially reasonable efforts to enforce all of the material terms, covenants and conditions contained in any Material Agreement thereunder to be observed or performed in a commercially reasonable manner, short of termination thereof; (iii) not voluntarily terminate any Material Agreement (other than any that are no longer necessary for the operation of the Property or that are replaced with a new agreement on commercially reasonable terms for the same service or in connection with its exercise of remedies thereunder) without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed; (iv) not execute any assignment of Borrower’s interest in any Material Agreement other than pursuant to the Loan Documents; (v) not voluntarily cancel or terminate any guarantee of any Material Agreement (if any) during the term of such Material Agreement without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed; (vi) give Lender prompt written notice of any default (beyond any applicable notice and cure periods) which occurs with respect to any Material Agreement, whether the default be that of Borrower or an additional party and of which Borrower is actually aware; and (vii) deliver to Lender fully executed, counterpart copies of each and every Material Agreement and any material modifications or amendments thereto if requested to do so by Lender in writing.
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9.24 COMPLIANCE WITH LAWS. Borrower shall not initiate or acquiesce to a material zoning change of the Property without prior notice to, and prior written consent from, Lender (not to be unreasonably withheld, conditioned or delayed). Furthermore, Borrower shall not allow material changes in the stated fundamental use of the Property from that disclosed to Lender as of the Effective Date without prior notice to, and prior written consent from, Lender. Borrower further covenants and agrees (a) to keep the Property and Collateral in good condition and repair (ordinary wear and tear excepted); (b) not to remove or demolish the Property or Collateral or any part thereof, subject to Borrower’s right to replace items of personal property with items of comparable utility and value (or to not replace same if such items are deemed to be obsolete); (c) to comply in all material respects with all Legal Requirements applicable to the Property or Collateral; and (d) not to intentionally commit or knowingly permit any waste of the Property or Collateral.
9.25 MEZZANINE LOAN PROVISIONS.
(a) Pledge of Equity. Notwithstanding anything to the contrary contained in this Agreement, the pledge by Mezzanine Borrower of its direct and/or indirect equity interest in Borrower (but not of any direct interest in the Property) (the “Pledged Equity”) to Mezzanine Lender pursuant to the Mezzanine Loan Documents, as security for the Mezzanine Loan shall be permitted and shall not be deemed to be a Transfer.
(b) Notices of Default. Borrower shall deliver to Lender promptly after the receipt or delivery, a copy of any written notice of default received or sent by Mezzanine Borrower with respect to the Mezzanine Loan.
(c) Intercreditor Agreement. Borrower hereby acknowledges and agrees that any intercreditor agreement entered into between Lender and Mezzanine Lender (including the Intercreditor Agreement) will be solely for the benefit of Lender and Mezzanine Lender, and that neither Borrower nor Mezzanine Borrower shall be third-party beneficiaries (intended or otherwise) of any of the provisions therein, have any rights thereunder (except as expressly set forth therein, if any), or be entitled to rely on any of the provisions contained therein. Lender and Mezzanine Lender have no obligation to disclose to Borrower or Mezzanine Borrower the contents of any such intercreditor agreement (including the Intercreditor Agreement). Borrower’s obligations hereunder are and will be independent of any such intercreditor agreement (including the Intercreditor Agreement) and shall remain unmodified by the terms and provisions thereof.
(d) Payments to Mezzanine Lender. Notwithstanding anything to the contrary contained in this Agreement, the Loan Documents, and/or the Mezzanine Loan Documents, the parties hereto acknowledge and agree that, as to any clause or provision contained in this Agreement, the other Loan Documents, and/or the Mezzanine Loan Documents to the effect that payments, distributions, or other similar effect are to be made by Borrower to Mezzanine Lender or applied to the Mezzanine Loan, such clause or provision shall be deemed to mean, and shall be construed as meaning, that Lender shall pay to Borrower, and Borrower shall then immediately distribute to Mezzanine Borrower, its member, pursuant to and in accordance with the organizational documents of Borrower and the organizational documents of Mezzanine Borrower, and applicable law, which distribution shall be immediately payable to Mezzanine Lender, and any such clause or provision shall not be construed as meaning that Borrower and/or Mezzanine Borrower is acting on behalf of, holding out its credit for, or paying the obligations of, Mezzanine Borrower, as applicable, directly or in any other manner that would violate any of the single purpose entity covenants contained in this Agreement or other similar covenants contained in Borrower’s organizational documents or Mezzanine Borrower’s organizational documents, respectively.
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(e) Mezzanine Loan Acquisition. Neither Borrower, nor any Guarantor, nor any Affiliate of any of them, nor any Person acting at any such Person’s request or direction, shall acquire any interest in the Mezzanine Loan, or any portion thereof or any interest therein, or any direct or indirect ownership interest in the holder of the Mezzanine Loan, via purchase, participation, transfer, exchange, operation of law or otherwise, and any breach of this provision that is not cured within ten (10) days of Borrower or any Guarantor obtaining actual knowledge of such breach shall constitute an Event of Default hereunder.
(f) Actions of Lender. If any action, proposed action or other decision is consented to or approved by the Mezzanine Lender, such consent or approval shall not be binding or controlling on the Lender. Borrower hereby acknowledges and agrees that (i) the risks of Mezzanine Lender in making the Mezzanine Loan are different from the risks of the Lender in making the Loan, (ii) in determining whether to grant, deny, withhold or condition any requested consent or approval the Mezzanine Lender and the Lender may reasonably reach different conclusions, and (iii) except as expressly provided in the Loan Documents, the Lender has an absolute independent right to grant, deny or reasonably condition any requested consent or approval in accordance with the Loan Documents based on its own point of view. Further, the denial by the Lender of a requested consent or approval shall not create any liability or other obligation of Lender if the denial of such consent or approval results directly or indirectly in a default under the Mezzanine Loan, and Borrower hereby waives any claim of liability against Lender arising from any such denial.
(g) Mezzanine Loan Amendments. Without obtaining the prior written consent of the Lender, Borrower shall not cause or knowingly permit Mezzanine Borrower or any Guarantor or affiliate of Borrower to (i) amend or modify any of the Mezzanine Loan Documents to (1) increase the interest rate payable or the principal amount of the Mezzanine Loan (other than protective advances made by Mezzanine Lender in accordance with the terms of the Mezzanine Loan Documents or accrued and unpaid interest on the Mezzanine Loan), (2) extend or shorten the scheduled maturity date of the Mezzanine Loan (other than pursuant to the extension conditions set forth in the Mezzanine Loan Documents) or (3) increase in any material respect any monetary obligations of Mezzanine Borrower under the Mezzanine Loan Documents; (ii) grant any additional collateral to, or incur any guaranty, indemnity or other obligation on account of the Mezzanine Loan in favor of, the Mezzanine Lender, except for collateral, guaranties, indemnities and other obligations required to be delivered as of the date hereof; or (iii) refinance or prepay in full or in part the Mezzanine Loan unless such refinancing or prepayment occurs while no Event of Default then exists and such prepayment is derived from Mezzanine Borrower’s own funds (and not from revenue derived from the Property). Subject to the foregoing, Borrower shall deliver to Lender a copy of any amendment or modification to the Mezzanine Loan Documents within five (5) Business Days after the execution thereof.
(h) Mezzanine Loan Prepayment. In the event that Mezzanine Borrower prepays the Mezzanine Loan in full pursuant to the terms and conditions of the Loan Documents and Mezzanine Loan Documents, then Borrower shall not permit or allow Mezzanine Borrower to borrow additional mezzanine debt without Lender’s prior written consent. In making any determination as to whether to approve any such proposed mezzanine loan, Lender shall have approval rights, to be reasonably exercised, over all aspects of the proposed mezzanine loan, including, without limitation, the administrative agent and the lenders a party thereto, the terms and conditions of the mezzanine loan, including, without limitation, the structure, principal amount(s), payment terms, maturity date, interest rate, other fees and charges, guarantees, and collateral, the mezzanine loan documents and the form and content of the intercreditor agreement.
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9.26 ALTERATIONS. Lender’s prior approval shall be required in connection with any material alterations performed by Borrower to the Property or any part thereof (a) the cost of which (including any related alteration, improvement or replacement) is reasonably anticipated to exceed the Alteration Threshold, which approval shall not be unreasonably withheld, conditioned or delayed, and (b) which affects the structural elements of the Property, the roof of the Property, or any building system of the Property, which approval shall not be unreasonably withheld, conditioned or delayed. If the total unpaid amounts incurred and to be incurred with respect to such alterations to the Property shall at any time exceed the Alteration Threshold (unless such Alterations (w) with respect to Tenant Improvements, there are sufficient funds held in the Leasing Reserve, (x) with respect to Capital Expenditures, there are sufficient funds in the Capital Expenditures Reserve, (y) alterations necessitated by a casualty or condemnation and Lender has permitted Proceeds to be used for the purposes of completing such alterations, or (z) unless otherwise waived by Lender in its sole discretion, Borrower shall promptly (i) deliver to Lender as security for the payment of such amounts and as additional security for the Loan any of the following as requested by Lender: (i) cash, (ii) a letter of credit in form and substance reasonably acceptable to Lender, or (iii) a completion bond in form and substance reasonably satisfactory to Lender. Such security shall be in an amount equal to the excess of the total unpaid amounts incurred and to be incurred with respect to such alterations to the Property over the Alteration Threshold.
9.27 LIVE LOCAL ACT. Unless otherwise approved or waived by Lender in its sole discretion, Borrower hereby covenants and agrees: (a) that the Property shall qualify as an affordable multifamily development under the Live Local Act; (b) to operate and lease the Property in compliance with the Live Local Act in all material respects, including but not limited to satisfying all criteria under the Live Local Act such that the LLA Qualifying Units remain qualified for tax exemption pursuant to the Live Local Act; (c) to apply for and secure the ad valorem tax exemption applicable pursuant to the Live Local Act by March 1st of each calendar year and obtain the annual required certification of qualified property from the Florida Housing Finance Corporation (FHFC) (or other applicable Governmental Authority) and timely file such certification with the applicable property appraiser for the Property; (d) to deliver to Lender, within forty-five (45) days following the end of each calendar year, (i) a certified rent roll for the Property explicitly identifying the LLA Qualifying Units, (ii) tenant income certifications verifying eligibility, (iii) a copy of the approved annual FHFC certification, (iv) a copy of the accepted property tax exemption confirmation from the applicable appraiser for the Property, and (v) such additional documentation and information related to the Live Local Act and the Property as requested by Lender in its reasonable discretion; (e) not to amend, terminate, release or otherwise modify any recorded Live Local Covenant (if applicable) or any underlying regulatory agreements related to the Live Local Act and the Property, (f) not to convert any portion of the residential units at the Property to commercial units, short-term rentals, or transient lodging that would result in the Property no longer being in compliance (or eligible for) the Live Local Act and the tax exemption provided thereunder.
9.28 POST-CLOSING OBLIGATIONS. [RESERVED].
9.29 EB-5 PROGRAM COVENANTS. Borrower hereby covenants and agrees as follows:
(a) Maintenance of Regional Center Designation. Borrower shall use commercially reasonable efforts to cause the Regional Center to maintain its designation as a regional center with USCIS throughout the term of the Loan. Borrower shall promptly notify Lender in writing (and in no event later than five (5) Business Days) upon Borrower’s knowledge of (i) the termination, suspension, or revocation of the Regional Center’s designation, (ii) any notice or communication from USCIS indicating an intent to terminate, suspend, or revoke such designation, or (iii) any material adverse change in the Regional Center’s standing with USCIS.
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(b) USCIS Compliance. Borrower shall, and shall cause its Affiliates to, comply in all material respects with all applicable USCIS regulations, policies, and procedures governing the EB-5 Program, including without limitation all filing, reporting, and record-keeping requirements applicable to the Regional Center and any new commercial enterprise or job-creating entity.
(c) EB-5 Investor Reporting. Borrower shall provide or cause to be provided to EB-5 Investors all reports, notices, and other communications required to be delivered to such investors under the EB-5 Offering Documents and applicable law. Upon Lender’s reasonable request (but not more frequently than annually), Borrower shall provide Lender with copies of any annual or periodic reports delivered to EB-5 Investors and a summary of the status of I-526, I-526E, and I-829 petitions filed by EB-5 Investors to the extent such information is within Borrower’s possession or control.
(d) No Unauthorized Modifications. Without the prior written consent of Lender, Borrower shall not, and shall not permit any Affiliate to, (i) amend, modify, supplement, or waive any material provision of the EB-5 Offering Documents, (ii) materially modify the organizational structure of any new commercial enterprise or job-creating entity formed in connection with the EB-5 Program, (iii) materially modify the Job Creation Plan, (iv) change the use of EB-5 Capital Contributions from that contemplated in the EB-5 Offering Documents, or (v) take any action that would reasonably be expected to result in a material adverse effect on the EB-5 Program or the immigration benefits available to EB-5 Investors.
(e) Job Creation. Borrower shall, and shall cause its Affiliates to, use commercially reasonable efforts to create and maintain the jobs described in the Job Creation Plan within the time periods required by applicable immigration laws and USCIS regulations. Borrower shall provide Lender with annual updates on job creation progress upon Lender’s reasonable request.
(f) Notification of EB-5 Matters. Borrower shall promptly notify Lender in writing (and in no event later than ten (10) Business Days after Borrower’s knowledge thereof) of: (i) any withdrawal or attempted withdrawal of any EB-5 Capital Contribution; (ii) any material claim, demand, or litigation asserted by any EB-5 Investor against Borrower, any Affiliate of Borrower, or the Regional Center; (iii) any denial of an I-526, I-526E, or I-829 petition filed by any EB-5 Investor; (iv) any request for return of EB-5 Capital Contributions that has not been satisfied; (v) any material default or breach under the EB-5 Offering Documents; or (vi) any inquiry, investigation, enforcement action, or proceeding by USCIS, the SEC, or any other Governmental Authority relating to the EB-5 Program.
(g) EB-5 Capital Structure. Without the prior written consent of Lender, Borrower shall not, and shall not permit Mezzanine Borrower to, (i) redeem, repurchase, or return any EB-5 Capital Contribution, except as required by the EB-5 Offering Documents upon satisfaction of the applicable sustainment period and completion of the applicable immigration process, (ii) make any distribution or payment to any EB-5 Investor except in accordance with the EB-5 Offering Documents and applicable law, (iii) incur any additional indebtedness, or grant any additional security interests, secured by or payable from EB-5 Capital Contributions, or (iv) permit any EB-5 Investor to obtain any Lien on the Property or any direct or indirect interest in Borrower.
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9.30 CODE VIOLATIONS. Borrower hereby covenants and agrees that on or before the date that is four (4) months following the Effective Date (unless otherwise extended by Lender in its reasonable discretion), Borrower shall have delivered evidence reasonably acceptable to Lender that Borrower has remedied the fire code violations at the Property as described in that certain Zoning Analysis Report dated July 1, 2026, issued by AEI Consultants, as Project No. 531369.
Article 10. reserved
Article 11. FINANCIAL STATEMENTS
11.1 BORROWER AND GUARANTOR FINANCIAL STATEMENTS. Borrower shall deliver to Lender, as soon as available, but in no event later than one hundred twenty (120) days after Borrower’s fiscal year end, a current financial statement (including, without limitation, an income and expense statement and balance sheet) of the Borrower, and a financial statement for each Guarantor in substantially the same form delivered to Lender in connection with Lender’s approval of the Loan, each to be certified as true and correct by the party (or officer with respect thereto) in all material respects providing such statements prepared in accordance with the Approved Accounting Method. Such statements of Borrower shall cover the Property for such fiscal year and contain an income statement for Borrower and the Property and a balance sheet for Borrower. Such statements of Borrower shall set forth the financial condition and the results of operations for the Property for such fiscal year, and shall include, but not be limited to, amounts representing annual Net Operating Income, Gross Income, and Operating Expenses. Borrower's annual financial statements shall be accompanied by (i) a comparison of the budgeted income and expenses and the actual income and expenses for the prior fiscal year and (ii) an Officer's Certificate certifying that each annual financial statement fairly presents the financial condition and the results of operations of Borrower and the Property in all materials respects subject to such reporting, and that such financial statements have been prepared in accordance with the Approved Accounting Method and as of the date thereof whether there exists an event or circumstance which constitutes an Event of Default under the Loan Documents executed and delivered by, or applicable to, Borrower, and if such Event of Default exists, the nature thereof, the period of time it has existed and the action then being taken to remedy the same. The annual financial statement for each Guarantor shall include a certification from each Guarantor detailing the Guarantor’s Tangible Net Worth and Liquid Assets.
11.2 MONTHLY PROPERTY REPORTING. Within thirty (30) days following the end of each calendar month, Borrower shall deliver to Lender an operating report for the Property for the immediately preceding calendar month, which contains the following: (a) a monthly income statement (with trailing 12 month calculation) (detailed for the commercial and residential space); (b) an updated Rent Roll; (c) a statement of Operating Expenses (if not separately detailed in the income statement); (d) a leasing status update (brokerage prospective tenant report); (e) an update on accounts payable for Borrower, (f) property management report describing any planned or in-process Capital Improvements and/or Tenant Improvements at the Property; and (g) an account activity report for the Restricted Account issued by the Depository Bank (if applicable) (“Monthly Operating Reports”).
11.3 BOOKS AND RECORDS. Borrower shall maintain and cause any Property Manager to maintain complete books of account and other records for the Property and for disbursement and use of the proceeds of the Loan and the Reserves, and the same shall be available for inspection by Lender at any time upon five (5) Business Days’ notice to Borrower or Property Manager, as applicable.
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11.4 OTHER INFORMATION. From time to time, upon Lender’s delivery to Borrower and/or Guarantor of at least ten (10) Business Days prior written notice, Borrower shall deliver (or shall cause Guarantor to deliver) to Lender such other information with regard to Borrower, principals of Borrower, Guarantor, or the Property as Lender may reasonably request in writing (including additional financial statements for Guarantor with an updated certification detailing the then applicable Tangible Net Worth and Liquid Assets of Guarantor). If audited financial information is prepared, Borrower shall deliver to Lender copies of the most recent audited financial information within fifteen (15) days after request.
11.5 FORM, WARRANTY. Borrower agrees that all financial statements to be delivered to Lender pursuant to this Article 11 shall, to Borrower’s knowledge: (a) be complete and correct in all materials respects; (b) present fairly the financial condition of the party; (c) disclose all liabilities that are required to be reflected or reserved against under the Approved Accounting Method; and (d) be prepared in accordance with the Approved Accounting Method.
11.6 TAX RETURNS. Borrower shall deliver Borrower’s annual federal income tax return including all schedules for the preceding taxable year as filed with the Internal Revenue Service which shall be delivered to the Lender on or before the 15th day following the date such tax returns were filed with the Internal Revenue Service.
11.7 BUDGET. For the partial year period commencing on the date hereof, and for each fiscal year thereafter, Borrower shall submit to Lender an Annual Budget not later than thirty (30) days prior to the commencement of such fiscal year in form reasonably satisfactory to Lender. Lender shall have the right to approve each Annual Budget (which approval shall not be unreasonably withheld, conditioned or delayed), and each Annual Budget approved by Lender, including the initial Annual Budget, shall hereinafter be referred to as an “Approved Annual Budget”. In the event that Lender objects to a proposed Annual Budget submitted by Borrower which requires the approval of Lender hereunder, Lender shall advise Borrower of such objections within fifteen (15) days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise such Annual Budget and resubmit the same to Lender. Until such time as an Annual Budget is approved for the current year, the previously Approved Annual Budget shall be used with each line item increased by five percent (5%) (except for Taxes and Insurance Premiums which shall be the actual amounts incurred and charged to Borrower) and subject to reasonable adjustments for utility, weather-related expenses, or other non-controllable expenses incurred by Borrower. Lender’s failure to object to any request for approval of any proposed Annual Budget and/or requests to amend any approved Annual Budget within fifteen (15) Business Days of written request from Borrower shall be deemed approval by Lender.
11.8 FINANCIAL STATEMENTS. In the event Borrower fails to furnish any of the foregoing financial statements required pursuant to this Article 11 within thirty (30) days after written notice to Borrower, the same shall be an Event of Default and in addition to any other remedies available to Lender, the Lender may cause an audit to be made of the respective books and records at the sole cost and expense of the Borrower.
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Article 12. DEFAULTS AND REMEDIES
12.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following shall constitute an event of default (each an “Event of Default”) under this Agreement and the other Loan Documents:
(a) Monetary. Borrower’s failure to pay: (i) any sums due and payable on any Monthly Payment Date under the Note or any of the other Loan Documents within five (5) Business Days after any such Monthly Payment Date (except for any sums due and payable on the Maturity Date), (ii) any sums due and payable under the Note or any of the Loan Documents on or prior to the Maturity Date, or (iii) any other sums due and payable under the terms of the Loan Documents when due (subject to any notice and/or cure period expressly set forth in the Loan Documents, if any), or to the extent no notice, grace and/or cure periods are expressly provided, subject to a ten (10) day cure period after receipt of written demand for such sums from Lender.
(b) Performance of Specified Obligations. Any (i) failure to comply with any obligations and/or covenants (after the expiration of any applicable notice and cure periods), or (ii) breach of any representations and/or warranties in any of the following (subject to any notice and/or cure period detailed in any of the following): Sections 9.5 (No Liens on Controlling Interest in Borrower), 9.6 (No Transfer and Further Encumbrance), 9.7 (No Merger, Consolidation and Transfer of Assets), 9.8 (No Change in Structure or Management; Single Purpose Entity), 9.17 (No Assignment), 9.18 (Sanctions), and 9.19 (Distributions to Members of Borrower).
(c) Performance of Obligations. Borrower’s and/or Guarantor’s failure to perform any other obligation, covenant or condition under this Agreement, the Note, the Guaranty or any of the other Loan Documents not otherwise specified in this Section 12.1, whether direct or indirect, absolute or contingent and such breach or failure is not cured within thirty (30) days after written notice of such failure has been provided to Borrower; provided, however, if such breach or failure is of a nature that it cannot be cured within such thirty (30) day period, Borrower shall have up to thirty (30) additional days to cure the same as long as Borrower and/or Guarantor commences the cure within such initial thirty (30) day period and diligently pursues the same; provided, however, that if a different cure period is provided under any Loan Document or under any provision of the Loan Documents for the remedy of such breach or failure, the specific Loan Document or provision controls, and Borrower and/or Guarantor will have no more time to cure the breach or failure than is allowed under the specific Loan Document or provision as to such failure or breach.
(d) Attachment. The sequestration or attachment of, or any levy or execution upon any of the Property, any other collateral provided by Borrower under any of the Loan Documents, or any substantial portion of the other assets of Borrower in violation of the Loan Documents, which sequestration, attachment, levy or execution is not released, expunged or dismissed prior to the earlier of sixty (60) days or the sale of the assets affected thereby.
(e) Representations and Warranties. The failure of any representation or warranty of Borrower in any of the Loan Documents or the Guarantor in the Guaranty to be true and correct in all material respects when made, or the material inaccuracy of any report, certificate, financial statement or other instrument or document at any time furnished to Lender.
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(f) Bankruptcy; Insolvency; Dissolution. (i) The filing by Borrower or Guarantor of a petition for relief under the Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law; (ii) the filing against Borrower or Guarantor of an involuntary proceeding under the Bankruptcy Code or other debtor relief law by a party other than Lender or an Affiliate of Lender and the failure of Borrower or Guarantor to effect a full dismissal of such proceeding within ninety (90) days after the date of filing such proceeding; (iii) a general assignment by Borrower or Guarantor for the benefit of creditors; or (iv) Borrower or any Guarantor, applying for, or the appointment of, a receiver, trustee, custodian or liquidator of Borrower or Guarantor of any of its property.
(g) Death or Incapacity. A Guarantor who is an individual dies or there is a judicial determination of incompetency (an “Exiting Guarantor”), unless: (1) the remaining Guarantor(s) continue to satisfy the Guarantor Financial Covenants; or (2) within sixty (60) days after such death or judicial determination of incompetency, (i) the Exiting Guarantor is replaced by a Replacement Guarantor or Replacement Guarantors, (ii) the remaining Guarantor (if any) delivers evidence reasonably satisfactory to Lender that the Guarantor (including any proposed Replacement Guarantor(s)), in the aggregate, is then in compliance with the Guarantor Financial Covenants, and (iii) the Guarantor (including any proposed Replacement Guarantor(s)) agrees in writing to maintain the Guarantor Financial Covenants when combined with.
(h) Loss of Priority. The failure at any time of the Security Instrument to be a valid first lien upon the Property or any portion thereof, other than as a result of any release or reconveyance of the Security Instrument with respect to all or any portion of the Property pursuant to the terms and conditions of this Agreement.
(i) Other Loan Documents. Any Event of Default shall occur under any of the other Loan Documents, in each case, beyond the expiration of any applicable notice and/or cure period provided in such Loan Document.
(j) Legal Requirements. If Borrower fails to cure any violations of any Legal Requirements, statutes, laws and regulations affecting all or any portion of the Property or Borrower within thirty (30) days after Borrower first receives written notice of any such violations; provided, however, if any such violation is reasonably susceptible of cure, but not within such thirty (30) day period, then Borrower shall be permitted up to an additional sixty (60) days to cure such violation provided that Borrower commences a cure within such initial thirty (30) day period and thereafter diligently and continuously pursues such cure.
(k) Taxes. Subject to the rights of Borrower to contest the same as set forth in Section 9.11 above and the provisions of Section 3.10 above, if any of the Taxes are not paid prior to the date upon which any interest or late charges shall begin to accrue thereon (unless, with respect to Taxes, Borrower is making the required deposits pursuant to Section 3.10 hereof, sufficient funds are in the Tax Account to make such payment and Lender has failed to make such funds available for the payment of such Taxes in violation of the terms and conditions of this Agreement).
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(l) Tangible Net Worth – Guarantor. Guarantor (in the aggregate) fails to maintain at all times Tangible Net Worth of at least $75,000,000.00 (“Net Worth Covenant”), to be tested pursuant to the financial statements and other related financial documents of the Guarantor to be provided to Lender from time to time pursuant to the terms hereof; provided that if there is a failure to satisfy the Net Worth Covenant, such failure shall not be an Event of Default if within thirty (30) days following notice thereof to Borrower, Borrower provides a Replacement Guarantor such that the Guarantor(s) collectively (including the Replacement Guarantor) satisfy the Net Worth Covenant.
(m) Liquid Assets - Guarantor. Guarantor (in the aggregate) fails to maintain at all times Liquid Assets of at least $1,500,000.00 (“Liquid Asset Covenant” and collectively with the Net Worth Covenant, the “Guarantor Financial Covenants”), to be tested pursuant to the financial statements and other related financial documents of the Guarantor to be provided to Lender from time to time pursuant to the terms hereof; provided that if there is a failure to satisfy the Liquid Asset Covenant, such failure shall not be an Event of Default if within thirty (30) days following notice thereof to Borrower, Borrower provides a Replacement Guarantor such that the Guarantor(s) collectively (including the Replacement Guarantor) satisfy the Liquid Asset Covenant.
(n) Judgment Against Borrower or Guarantor. If a final, non-appealable judgment is entered by a court of competent jurisdiction against Borrower or Guarantor for an amount in excess of $1,000,000.00 that in the commercially reasonable discretion of Lender would have a material adverse effect on the ability of Borrower or Guarantor to perform their respective obligations under the Loan Documents and such judgment is not fully covered by insurance to the reasonable satisfaction of Lender or otherwise satisfied within sixty (60) days after the final entry thereof.
(o) Insurance Policies. (i) If the Policies are not kept in full force and effect (unless, with respect to Insurance Premiums, Borrower is making the required deposits pursuant to Section 3.10 hereof, sufficient funds are in the Insurance Account to make such payment and Lender has failed to make such funds available for the payment of such Insurance Premiums in violation of the terms and conditions of this Agreement), or (ii) if the Policies are not delivered to Lender upon request or Borrower has not delivered evidence of the renewal of the Policies at least ten (10) days prior to their expiration as provided in this Agreement.
(p) Guarantor Matters. Guarantor shall be (i) indicted or convicted of, or pled guilty or no contest to, a violation of the Patriot Act, (ii) found by a court of competent jurisdiction to have committed, or been under indictment or have been indicted for, a felony, fraud or crime of moral turpitude under any applicable law; or (iii) found by a Governmental Authority to have violated, or is then being investigated by a Governmental Authority, for a violation of, any federal or state securities laws or regulations.
(q) Live Local Act. Without the prior written consent of Lender, any applicable Governmental Authority shall determine that the Property (and the LLA Qualifying Units) are not eligible or fail to qualify for the Live Local Act tax exemption.
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(r) EB-5 Program. The occurrence of any of the following:
(i) the termination, suspension, or revocation of the Regional Center’s designation by USCIS, or the failure of the Regional Center to maintain its designation as a regional center with USCIS, in each case unless a replacement regional center reasonably acceptable to Lender assumes administration of the EB-5 Program within sixty (60) days;
(ii) a material violation of USCIS regulations, policies, or procedures governing the EB-5 Program by Borrower, any Affiliate of Borrower, or the Regional Center, which violation is not cured within thirty (30) days after written notice thereof from Lender or the earlier occurrence of any enforcement action by USCIS;
(iii) a final determination by USCIS or a court of competent jurisdiction that the EB-5 Program, as structured, fails to satisfy the requirements for job creation under applicable immigration laws and USCIS regulations, and such failure is not cured or remedied within ninety (90) days after such determination;
(iv) a final, non-appealable judgment or arbitration award entered in favor of one or more EB-5 Investors against Borrower, any Affiliate of Borrower, or the Regional Center granting rescission of their investment, return of EB-5 Capital Contributions, or damages in excess of $1,000,000.00 in the aggregate, in each case arising out of litigation or arbitration commenced by such EB-5 Investors, which judgment or award is not vacated, satisfied, stayed pending appeal, or bonded within sixty (60) days after entry thereof;
(v) any amendment, modification, or waiver of the EB-5 Offering Documents, or any material modification to the Job Creation Plan or the organizational structure of any new commercial enterprise or job-creating entity, without the prior written consent of Lender as required under Section 9.24; or
(vi) any redemption, repurchase, or return of any EB-5 Capital Contribution, or any distribution or payment to any EB-5 Investor, in violation of Sections 9.29 and/or 9.19.
12.2 ACCELERATION UPON EVENT OF DEFAULT; REMEDIES. Upon the occurrence and during the continuance of any Event of Default specified in this Article, Lender may, at its sole option, declare all sums owing to Lender under the Note, this Agreement and the other Loan Documents immediately due and payable, after which such sums shall, at Lender’s option, bear interest at the Default Rate (as defined in the Note). Upon such acceleration, (i) Lender may, in addition to all other remedies permitted under the Note, this Agreement and the other Loan Documents and at law or equity, apply any sums in the Cash Management Account, the Restricted Account, the Reserve Account and any other Accounts to the sums owing under the Loan Documents; and (ii) any and all obligations of Lender to fund disbursements under the Loan shall terminate at Lender’s sole option.
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12.3 ACCELERATION UPON LOSS OF SECURITY. If at any time the Security Instrument ceases to be a valid first lien upon the Property, all sums remaining unpaid and owing to Lender under the Note and the other Loan Documents shall, at Lender’s option, be immediately due and payable and Lender’s obligation to disburse the remaining portion of the Loan which is then undisbursed, if any, shall terminate.
12.4 DISBURSEMENTS TO THIRD PARTIES. Upon the occurrence and during the continuance of an Event of Default occasioned by Borrower’s failure to pay money to a third party as required by this Agreement, Lender may but shall not be obligated to make such payment from the Loan proceeds, other funds of Lender or any amounts in deposit accounts maintained by Borrower with Lender. If such payment is made from proceeds of the Loan or from any Account, Borrower shall immediately deposit with Lender upon demand an amount equal to such payment. If such payment is made from funds of Lender, Borrower shall immediately repay such funds upon written demand of Lender. In either case, the Event of Default with respect to which any such payment has been made by Lender shall not be deemed cured until such deposit or repayment (as the case may be) has been made by Borrower to Lender.
12.5 SET OFF. Upon the occurrence and during the continuance of an Event of Default, Lender may set off any and all amounts due by Borrower against any indebtedness or obligation of Lender to Borrower.
12.6 RIGHTS CUMULATIVE; NO WAIVER. All of Lender’s rights and remedies provided in this Agreement, the Guaranty and the other Loan Documents, together with those granted by law or at equity, are cumulative and may be exercised by Lender at any time. Lender’s exercise of any right or remedy shall not constitute a cure of any Event of Default unless all sums then due and payable to Lender under the Loan Documents are repaid and Borrower has cured all other Events of Default. No waiver shall be implied from any failure of Lender to take, or any delay by Lender in taking, action concerning any Event of Default or failure of condition under the Loan Documents, or from any previous waiver of any similar or unrelated Event of Default or failure of condition. Any waiver or approval under any of the Loan Documents must be in writing and shall be limited to its specific terms.
Article 13. MISCELLANEOUS PROVISIONS
13.1 INDEMNITY. Borrower agrees to indemnify and hold harmless, and on demand defend (with counsel REASONABLY acceptable to Lender), any of the Indemnitees for any ACTUAL loss or expense which may arise or be created by the acceptance in good faith by the Lender of instructions for making the Loan or disbursing the proceeds thereof. The Borrower further agrees to defend (with counsel REASONABLY acceptable to Lender), protect, indemnify, and hold harmless any of the Indemnitees from and against any and all ACTUAL liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind, and arising at any time, based on the Loan, the Loan Documents, or the use or intended use of the proceeds of the Loan, the Lender’s performance or administration of the Loan, or otherwise on account of the Loan. The obligations of the Borrower under this Section shall survive any termination of any of the Loan Documents, including this Agreement.
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BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS INDEMNITEES SHALL SURVIVE CANCELLATION OF THE NOTE AND THE RECONVEYANCE, RELEASE OR SATISFACTION OR PARTIAL RECONVEYANCE, RELEASE OR SATISFACTION OF THE SECURITY INSTRUMENT OR OTHER LOAN DOCUMENTS. NOTWITHSTANDING THE FOREGOING, BORROWER SHALL NOT HAVE INDEMNIFCATION OBLIGATIONS OR BE LIABLE FOR THE PAYMENT OF ANY LOSSES, COSTS AND EXPENSES TO THE EXTENT THE SAME ARISE BY REASON OF THE GROSS NEGLIGENCE, ILLEGAL ACTS, FRAUD OR WILLFUL MISCONDUCT OF LENDER. Notwithstanding the foregoing, Borrower shall not have any liability for any of the obligations guaranteed under this Section 13.1 to the extent that such liability arises out of any actions, events, conditions or facts first arising or first occurring after the date on which (i) Lender, or its nominees and/or assigns, acquires title to the Property through Lender’s exercise of its remedies under the Loan Documents, whether by foreclosure, exercise of power of sale, acceptance of a deed/assignment-in-lieu of foreclosure or otherwise, or (ii) Mezzanine Lender, or its nominees and/or assigns, acquires 100% membership interest in Borrower as a result of the exercise of its rights under the terms and conditions of the Mezzanine Loan Documents, unless, in each case, such actions, events, conditions or facts were caused by Borrower (while any Guarantor maintains a Controlling Interest in Borrower) and/or Guarantor.
13.2 NOTICES. All notices, demands, or other communications under this Agreement and the other Loan Documents shall be in writing and shall be delivered to the appropriate party at the addresses set forth below (subject to change from time to time by written notice to all other parties to this Agreement as provided below). All notices, demands or other communications shall be considered as properly given if delivered (i) personally or sent by first class United States Postal Service mail, postage prepaid, (ii) by Overnight Express Mail (i.e., USPS Priority Mail Express), (iii) by overnight commercial courier service, charges prepaid or (iv) email with a copy of such notice to follow sent by any method as set forth in (i)–(iii) above. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal to accept delivery; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be:
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| Borrower: |
Block 40 Property, LLC c/o Stewards, Inc. 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Attn: Katy Murless, Chief Financial Officer Email: [email protected]
With a copy to:
Scott Doney, Esq. 3651 Lindell Rd Ste D121 Las Vegas, NV 89103 Email: [email protected]
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| Lender: |
VMC CRE Master Lending Upper REIT LLC c/o Värde Partners, Inc. 350 N 5th Street, Suite 800 Minneapolis, Minnesota 55401 Attn: Legal Notices Email: [email protected]
With a copy to:
Fox Rothschild LLP 33 South Sixth Street, Suite 3600 Minneapolis, Minnesota 55402 Attn: Tyler K. Olson Email: [email protected] |
Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth hereinabove. Notices, demands, and communications provided by legal counsel on behalf of any party to this Agreement pursuant to this Section 13.2 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
13.3 RELATIONSHIP OF PARTIES. The relationship of Borrower and Lender under the Loan Documents is, and shall at all times remain, solely that of borrower and lender, and Lender neither undertakes nor assumes any responsibility or duty to Borrower or to any third party with respect to the Property, except as expressly provided in this Agreement and the other Loan Documents.
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13.4 ATTORNEYS’ FEES AND EXPENSES; ENFORCEMENT. If any attorney is engaged by Lender to enforce or defend any provision of this Agreement, any of the other Loan Documents, or as a consequence of any Default or Event of Default under the Loan Documents, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding or in connection with any appeal of a lower court decision, then Borrower shall pay to Lender, within ten (10) Business Days of written demand, the amount of all reasonable, out of pocket attorneys’ fees and expenses and costs actually incurred in connection therewith, including all trial and appellate proceedings in any legal action, suit, bankruptcy or other proceeding, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the Principal Balance of the Note as specified therein. In the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and not by jury and shall be included in any judgment obtained by Lender. This provision is separate and several and shall survive merger into judgment.
13.5 NO WAIVER. No previous waiver and no failure or delay by Lender in acting with respect to the terms of the Note or this Agreement shall constitute a waiver of any breach, default, or failure of condition under the Note, this Agreement or the obligations secured thereby. A waiver of any term of the Note, this Agreement or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.
13.6 IMMEDIATELY AVAILABLE FUNDS. Unless otherwise expressly provided for in this Agreement, all amounts payable by Borrower to Lender shall be (a) payable only in United States currency in immediately available funds; and (b) received by Lender at the address specified in the Note, or at other such places as may be designated in writing by Lender, no later than 4 PM Central Time. Any amounts received after such time shall be credited the next Business Day.
13.7 LENDER’S AGENTS. Lender may, at Borrower’s expense, designate an agent or independent contractor to exercise any of Lender’s rights under this Agreement and any of the other Loan Documents. Any reference to Lender in any of the Loan Documents shall include Lender’s agents, employees or independent contractors.
13.8 WAIVER OF RIGHT TO TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
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13.9 SEVERABILITY. If any provision or obligation under this Agreement and the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from this Agreement and the other Loan Documents and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of this Agreement and the other Loan Documents; provided, however, that if the rate of interest or any other amount payable under the Note or this Agreement or any other Loan Document, or the right of collectability therefore, are declared to be or become invalid, illegal or unenforceable, Lender’s obligations to make advances under the Loan Documents shall not be enforceable by Borrower.
13.10 HEIRS, SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided under the terms and conditions herein, the terms of the Loan Documents shall bind and inure to the benefit of the heirs, executors, administrators, nominees, successors and assigns of the parties hereto.
13.11 INTENTIONALLY OMITTED.
13.12 INTENTIONALLY OMITTED.
13.13 TIME. Time is of the essence of each and every term herein.
13.14 GOVERNING LAW AND CONSENT TO JURISDICTION. Notwithstanding the place of execution of this instrument, the parties to this instrument have contracted for Florida law to govern this instrument and it is agreed that this instrument is made pursuant to and shall be construed and governed by the laws of the State of Florida without regard to the principles of conflicts of law. The Borrower submits and consents to personal jurisdiction of the Courts of the State of Florida and Courts of the United States of America sitting in such State for the enforcement of this instrument and waives any and all personal rights under the laws of any state or the United States of America to object to jurisdiction in the State of Florida. Litigation may be commenced in any state court of general jurisdiction for the State of Florida, or the United States District Court located in such state, at the election of the Lender. Nothing contained herein shall prevent Lender from bringing any action against any other party or exercising any rights against any security given to Lender, or against the Borrower personally, or against any property of the Borrower, within any other state. Commencement of any such action or proceeding in any other state shall not constitute a waiver of consent to jurisdiction or of the submission made by the Borrower to personal jurisdiction within the State of Florida.
13.15 USA PATRIOT ACT NOTICE, COMPLIANCE. The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, Lender may from time-to-time request, and Borrower shall provide to Lender, Borrower’s name, address, tax identification number and/or such other identification information as shall be necessary for Lender to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.
13.16 JOINT AND SEVERAL LIABILITY. The liability of all parties named as Borrower under this Agreement shall be joint and several.
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13.17 INTENTIONALLY DELETED.
13.18 NO THIRD PARTIES BENEFITED. No Person other than Lender and Borrower and their permitted successors and assigns shall have any right of action under any of the Loan Documents.
13.19 ACTIONS. Borrower agrees that Lender, in exercising the rights, duties or liabilities of Lender or Borrower under the Loan Documents, may commence, appear in or defend any action or proceeding purporting to affect the Property or the Loan Documents and Borrower shall promptly reimburse Lender upon demand for all such reasonable expenses so incurred or paid by Lender, including, without limitation, reasonable attorneys’ fees and expenses and court costs.
13.20 ASSIGNMENT OF LOAN DOCUMENTS. In connection with the payment in full of the Loan pursuant to a refinancing by Borrower, upon Borrower’s written request, Lender agrees to reasonably cooperate with the assignment of the Note and Security Instrument without representations, recourse or warranty to any such new lender of Borrower at no cost to the Lender. If Lender cannot locate the original Note, Lender agrees to deliver the Florida statutory lost note affidavit together with a copy of the Note, at no cost to the Lender.
13.21 HEADINGS. All article, section or other headings appearing in this Agreement and any of the other Loan Documents are for convenience of reference only and shall be disregarded in construing this Agreement and any of the other Loan Documents.
13.22 ELECTRONIC TRANSMISSION OF DATA. Lender and Borrower agree that certain data related to the Loan (including confidential information, documents, applications and reports) may be transmitted electronically, including transmission over the Internet. This data may be transmitted to, received from or circulated among agents and representatives of Borrower and/or Lender and their affiliates and other Persons involved with the subject matter of this Agreement.
13.23 COUNTERPARTS. To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.
13.24 POWERS OF ATTORNEY. The powers of attorney granted by Borrower to Lender in this Agreement shall be unaffected by the disability of the principal so long as any portion of the Loan remains unpaid or unperformed. Lender shall have no obligation to exercise any of the foregoing rights and powers in any event.
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13.25 BROKERAGE COMMISSIONS. Borrower agrees to pay all commissions and fees due any broker claiming a commission due from the Borrower in connection with the placement of the Loan and Borrower agrees to pay and shall indemnify Lender from any liability, claims or losses arising by reason of any broker claiming such a fee or commission due from Borrower. This provision shall survive the repayment of the Loan and shall continue in full force and effect so long as the possibility of such liability, claims or losses exists.
13.26 RULES OF CONSTRUCTION. The word “Borrower” as used herein shall include both the named Borrower and any other Person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term “Person” as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Agreement is executed by more than one Person, the term “Borrower” shall include all such Persons. The word “Lender” as used herein shall include Lender, its successors, assigns and affiliates.
13.27 USE OF SINGULAR AND PLURAL; GENDER. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
13.28 EXHIBITS, SCHEDULES AND RIDERS. All exhibits, schedules, riders and other items attached hereto are incorporated into this Agreement by such attachment for all purposes.
13.29 INCONSISTENCIES. In the event of any inconsistencies between the terms of this Agreement and the terms of any of the other Loan Documents, the terms of this Agreement shall prevail.
13.30 INTEGRATION; INTERPRETATION. The Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Lender in writing.
13.31 ASSUMPTION OF LOAN. Lender may permit the assignment and assumption of the Loan by a new borrower in Lender’s sole discretion. Lender’s decision to approve any such assignment or assumption shall be based, in part, upon (a) the new borrower and all key principals and potential guarantors meeting Lender’s then current underwriting standards, and (b) payment to Lender of an assumption fee equal to one percent (1.00%) of the total commitment amount of the Loan (whether disbursed or undisbursed) in immediately available funds unless otherwise waived by Lender in connection with the assignment and assumption of the Loan by an affiliate borrower of any Borrower, and (c) a full release of claims from Borrower and Guarantor in form and substance acceptable to Lender in its sole discretion. Unless otherwise waived by Lender in connection with the assignment and assumption of the Loan by an affiliate borrower of any Borrower, if any assumption is approved by Lender in its sole discretion, the Prepayment Fee shall be recalculated based on a new Prepayment Period which shall be the period of time from the effective date of such assumption and on or before 728 days from such effective date. Borrower shall immediately pay Lender upon demand all costs and expenses incurred by Lender in connection with any assumption of the Loan, including any reasonable attorney’s fees.
13.32 INTENTIONALLY OMITTED.
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13.33 INTENTIONALLY OMITTED.
13.34 SERVICER
(a) At the option of Lender, the Loan may be serviced by a master servicer, primary servicer, special servicer and/or trustee (any such master servicer, primary servicer, special servicer and trustee, together with its agents, designees or nominees, collectively, “Servicer”) selected by Lender and Lender may delegate all or any portion of its responsibilities under the Loan Documents to the Servicer pursuant to a pooling and servicing agreement, servicing agreement, special servicing agreement and/or other agreement providing for the servicing of one (1) or more mortgage loans (collectively, the “Servicing Agreement”) between Lender and Servicer. Borrower shall pay (i) any out-of-pocket, actual fees and expenses of Servicer (including, without limitation, reasonable attorneys’ fees and disbursements) payable pursuant to the Servicing Agreement in connection with any release of the Property, any prepayment, defeasance, assumption, amendment or modification of the Loan, any documents or other matters requested by Borrower or Guarantor, any special servicing or workout of the Loan or enforcement of the Loan Documents, including, without limitation, advances made by Servicer and interest on such advances, any liquidation fees in connection with the exercise of any or all remedies permitted under this Agreement, and all reasonable fees, charges, costs and expenses in connection with the Accounts, including, without limitation, any monthly or annual fees or charges as may be assessed by or against Lender or Servicer in connection with the administration of the Accounts, and (ii) the costs payable pursuant to the Servicing Agreement of all property inspections and/or appraisals of the Property (or any updates to any existing inspection or appraisal) that a Servicer may be required to obtain (other than the cost of regular annual inspections required to be borne by Servicer under the Servicing Agreement); provided, however, that Borrower shall not be responsible for payment of any fees or expenses required to be borne by, and not reimbursable to, Servicer. Without limiting the generality of the foregoing, Servicer shall be entitled to reimbursement of costs and expenses as and to the same extent (but without duplication) as Lender is entitled thereto pursuant to the terms of the Loan Documents.
(b) Upon written notice thereof from Lender to Borrower, Servicer shall have the right to exercise all rights of Lender and enforce all obligations of Borrower and Guarantor under the Loan Documents.
(c) Provided Borrower shall have received written notice from Lender of Servicer’s address, Borrower shall deliver, and cause to be delivered, to Servicer duplicate originals of all written notices and other documents and instruments which Borrower and/or Guarantor deliver to Lender pursuant to the Loan Documents. No delivery of any such notices or other documents shall be of any force or effect unless delivered to Lender and Servicer as provided in this Section 13.34(c).
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13.35 SECONDARY MARKET PROVISIONS.
(a) General; Borrower Cooperation. Subject to Section 13.37, Lender shall have the right at any time and from time to time (a) to sell or otherwise transfer the Loan or any portion thereof or the Loan Documents or any interest therein to one or more investors, (b) to sell participation interests in the Loan to one or more investors or (c) to securitize the Loan or any portion thereof in a single asset securitization or a pooled loan securitization of rated single or multi-class securities (the “Securities”) secured by or evidencing ownership interests in the Note and the Security Instrument (each such sale, assignment, participation and/or securitization is referred to herein as a “Secondary Market Transaction”, and the transactions referred to in clause (c) shall be referred to herein as a “Securitization”). In connection with any Secondary Market Transaction, Borrower shall reasonably cooperate in good faith with Lender and otherwise assist Lender in satisfying the market standards to which Lender customarily adheres or which may be reasonably required in the marketplace or by the Rating Agencies in connection with any such Secondary Market Transactions, including: (i) to (A) provide such financial and other information with respect to the Property, Borrower, Guarantor, Property Manager (to the extent not privileged or subject to a confidentiality agreement and in Borrower’s possession), (B) provide business plans and budgets relating to the Property and (C) perform or permit or cause to be performed or permitted such site inspection, appraisals, surveys, market studies, environmental reviews and reports, engineering reports and other due diligence investigations of the Property, as may be reasonably requested from time to time by Lender or, if applicable, the Rating Agencies in each case to the extent necessary or appropriate in connection with a Secondary Market Transaction or Exchange Act requirements (the items provided to Lender pursuant to this clause (i) being called the “Provided Information”), together, if customary, with appropriate verification of and/or consents to the Provided Information through letters of auditors or opinions of counsel of independent attorneys acceptable to Lender and, if applicable, the Rating Agencies; (ii) cause counsel to render opinions as to non-consolidation and any other opinion customary in securitization transactions with respect to the Property, Borrower and its affiliates, which counsel and opinions shall be reasonably satisfactory to Lender and, if applicable, the Rating Agencies; (iii) make such representations and warranties as of the date hereof of any Secondary Market Transaction with respect to the Property, Borrower and the Loan Documents as are customarily provided in such transactions and as may be reasonably requested by Lender or, if applicable, the Rating Agencies and consistent with the facts covered by such representations and warranties as they exist on the date thereof, including the representations and warranties made in the Loan Documents; (iv) provide current certificates of good standing and qualification with respect to Borrower and members owning a direct or indirect interest in Borrower from appropriate Governmental Authorities; and (v) execute such amendments to the Loan Documents and Borrower’s organizational documents, as may be reasonably requested by Lender or, if applicable, the Rating Agencies or otherwise to effect a Secondary Market Transaction, provided that nothing contained in this clause (v) shall result in an economic change in the transaction, a reduction of Borrower’s rights, or an increase in Borrower’s obligations (except in each instance to a de minimis extent). Borrower’s cooperation obligations set forth herein shall continue until the Loan has been paid in full.
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(b) Use of Information. Borrower understands that all or any portion of the Provided Information and the financial statements and records required to be provide pursuant to the terms of this Agreement (the “Required Records”) may be included in disclosure documents in connection with a Secondary Market Transaction, including a prospectus or private placement memorandum (each, a “Disclosure Document”) and may also be included in filings with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or provided or made available to investors or prospective investors in the Securities, the Rating Agencies, and service providers or other parties relating to the Secondary Market Transaction. If the Disclosure Document is required to be revised, Borrower shall cooperate with Lender in updating the Provided Information or Required Records for inclusion or summary in the Disclosure Document or for other use required in connection with a Secondary Market Transaction by providing all current information pertaining to Borrower, Property Manager and the Property necessary to keep the Disclosure Document accurate and complete in all material respects with respect to such matters.
(c) Confidentiality. Lender hereby agrees that any materials related to the Loan (including any Provided Information) provided to any potential purchaser, transferee, assignee, participant or investor in connection with any Secondary Market Transaction shall contain a legend or notice indicating that such materials are confidential and not to be used for any purpose other than evaluating the merits of an investment in such Secondary Market Transaction.
13.36 SEVERANCE OF LOAN AND REGISTERED NOTE.
(a) Severance of Loan. Subject to Section 13.37, Lender, without in any way limiting Lender’s other rights hereunder, shall have the right, at any time (whether prior to, in connection with, or after any Secondary Market Transaction), with respect to all or any portion of the Loan, to modify, split and/or sever all or any portion of the Loan as hereinafter provided. Without limiting the foregoing, Lender may (a) cause the Note and the Security Instrument to be split into a first and second mortgage/deed of trust loan, (b) create one or more senior and subordinate notes (i.e., an A/B or A/B/C structure), (c) create multiple components of the Note (and allocate or reallocate the principal balance of the Loan among such components), (d) otherwise sever the Loan into two (2) or more loans secured by mortgages/deeds of trust and (to the extent the Mezzanine Loan has been paid in full) by a pledge of partnership or membership interests (directly or indirectly) in Borrower (i.e., a new senior loan/mezzanine loan structure), in each such case described in clauses (a) through (d) above, in whatever proportion and whatever priority Lender determines, and (e) modify the Loan Documents with respect to the newly created notes or components of the Note such that the pricing and marketability of the Securities and the size of each class of Securities and the rating assigned to each such class by the Rating Agencies shall provide the most favorable rating levels and achieve the optimum rating levels for the Loan. In connection with any severance of the Loan as detailed in the preceding sentence, (i) Borrower acknowledges and agrees that any unfunded portion of the Loan (“Unfunded Loan Proceeds”) and any funded Loan proceeds may be held by two or
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more Persons as a result of any such severance of the Loan and Borrower shall make required payments on the funded Loan proceeds regardless of whether or not any Unfunded Loan Proceeds are advanced after such severance and/or note division/bifurcation, and (ii) Borrower shall have no right to off-set claims against the holders of one portion of the Note against the holders of another portion of the Note. Notwithstanding the foregoing, no such amendment described above shall (i) modify or amend any economic or any material non-economic term of the Loan, or (ii) increase the obligations, or decrease the rights, of Borrower under the Loan Documents; provided, further, in each such instance the outstanding Principal Balance of all the notes evidencing the Loan (or components of such notes) immediately after the effective date of such modification equals the outstanding Principal Balance of the Loan immediately prior to such modification and the weighted average of the interest rates for all such note(s) (or components thereof) immediately after the effective date of such modification equals the Contract Rate (as applicable) immediately prior to such modification and the scheduled monthly payments for all such note(s) (or components thereof) immediately after the effective date of such modification equals the scheduled monthly payments under the Loan immediately prior to such modification (provided, however, that it is agreed that partial prepayments of principal, including resulting from a prepayment based on a casualty at or condemnation of the Property may cause the weighted average interest rate to change over time due to the non-pro rata allocation of such prepayments between any such separate notes, participations or counterparts). If requested by Lender, Borrower (and Borrower’s constituent members, if applicable) and Guarantor) shall execute within ten (10) Business Days after such request, such documentation as Lender may reasonably request to evidence and/or effectuate any such modification or severance. At Lender’s election, each note comprising the Loan may be subject to one or more Securitizations.
(b) Registered Note. Lender, acting solely for this purpose as an agent of Borrower, will maintain at one of its offices in the United States of America, a register for the recordation of the names and addresses of the Lender, and the commitment of, and principal amounts (and stated interest) of the advances owing to the Lender, pursuant to the terms hereof from time to time (the “Register”). The entries in the Register will be conclusive, absent manifest error, and Borrower may treat each Person whose name is recorded in the Register pursuant to the terms hereof as the Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register will be available for inspection by Borrower at any reasonable time and from time to time upon reasonable prior notice. The Note is intended to be in “registered form” within the meaning under Section 1.871-14(c) of the United States Treasury Regulations. Accordingly, the Note will be registered to the Lender in the Register. The Borrower shall treat the Lender (and any other Lender identified in the Register as a Lender) as the absolute owner thereof (unless the Borrower has been given notice of the transfer of the Note as permitted in accordance with the terms of this Agreement and there has been a surrender of the existing instrument and the reissuance by Borrower to the new holder of an instrument or a replacement instrument, in accordance with the provisions of the following sentence) for all purposes, including the right to receive payments of Principal of, and Interest (each as defined in the Note) on, the Note. The right to receive the Principal of, and Interest on, the Note may be transferred only upon the delivery to the Borrower of written notice of such transfer, duly executed by the registered owner of the Note containing information sufficient to enable the Borrower to identify each owner of an interest in the Note and the surrender of the existing instrument and the reissuance by the Borrower to the new holder of such instrument or a replacement instrument. Each permitted transfer of ownership of an interest in the Note shall be reflected by an entry by Lender in the Register. Upon request, the Lender agrees to provide Borrower with current tax documents to certify any Lender’s entitlement to an exemption from, or reduction in, United States withholding tax. Borrower authorizes the Lender to disclose to any participant or purchaser of the Note (each a “Transferee”) and any prospective Transferee any and all information in such Lender’s possession.
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13.37 COSTS AND EXPENSES. Notwithstanding anything to the contrary contained in Section 13.35 and 13.36, Borrower shall not be required to incur any costs or expenses in the performance of its obligations under Sections 13.35 and 13.36, other than expenses of Borrower’s and/or Guarantor’s counsel, accountants and consultants.
13.38 EXCULPATION.
(a) Subject to the qualifications below, Lender shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in the Note, this Agreement, the Security Instrument or the other Loan Documents by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Lender to enforce and realize upon its interest under the Note, this Agreement, the Security Instrument and the other Loan Documents, or in the Property, the Gross Income, or any other Collateral given to Lender pursuant to the Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower's interest in the Property, in the Gross Income and in any other Collateral given to Lender, and Lender shall not sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Security Instrument or the other Loan Documents. The provisions of this Section 13.38 shall not, however: (i) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents (including but not limited to any indemnity or guaranty); (ii) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure and sale under the Security Instrument; (iii) affect the validity or enforceability of any of the Loan Documents or any guaranty made in connection with the Loan or any of the rights and remedies of Lender thereunder; (iv) impair the rights of Lender to (A) obtain the appointment of a receiver and/or (B) enforce its rights and remedies provided in Articles 3 and 4 hereof; (v) impair the enforcement of the assignment of leases and rents contained in the Security Instrument and in any other Loan Documents (including the Assignment of Leases and Rents); (vi) constitute a prohibition against Lender to seek a deficiency judgment against Borrower in order to fully realize the security granted by the Security Instrument or to commence any other appropriate action or proceeding in order for Lender to exercise its remedies against the Property and all additional Collateral; or (vii) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any Losses (as defined in the Limited Guaranty) incurred by Lender (including attorneys’ fees and costs reasonably incurred) arising out of or in connection with any of the Recourse Carve-Out Events (as defined in the Limited Guaranty).
(b) Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan Documents, (i) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt or to require that all Collateral shall continue to secure all of the Debt owing to Lender in accordance with the Loan Documents, and (ii) Lender’s agreement not to pursue personal liability of Borrower as set forth above SHALL BECOME NULL AND VOID and shall be of no further force and effect, and the Debt shall be fully recourse to Borrower in the event that one or more Full Recourse Events (as defined in the Limited Guaranty) shall occur.
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13.39 ORAL AGREEMENTS. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER FLORIDA LAW.
13.40 INTERCREDITOR AGREEMENT. Lender and Mezzanine Lender will be parties to the Intercreditor Agreement memorializing their relative rights and obligations with respect to the Loan, the Mezzanine Loan, Borrower, Mezzanine Borrower, the Property and the Collateral. Borrower hereby acknowledges and agrees that (i) such Intercreditor Agreement is intended solely for the benefit of Lender and Mezzanine Lender and (ii) neither Borrower nor Mezzanine Borrower are intended third-party beneficiaries of any of the provisions therein and shall not be entitled to rely on any of the provisions contained therein. Lender and Mezzanine Lender shall have no obligation to disclose to Borrower the contents of the Intercreditor Agreement. Borrower’s obligations hereunder are independent of, and separate and distinct from, such Intercreditor Agreement and remain unmodified by the terms and provisions thereof.
[Signature Page(s) to Follow]
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IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the date first written above.
LENDER
VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company
By: Värde Partners, Inc.
Its: Manager
By: /s/ Chase Heichel
Name: Chase Heichel
Its: Director
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BORROWER
BLOCK 40 PROPERTY, LLC, a Delaware limited liability company
By: Block 40 Managers, LLC,
a Florida limited liability company,
its manager
By: /s/ Shaun A. Quin
Name: Shaun A. Quin
Title: Authorized Signatory
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EXHIBIT A
LEGAL DESCRIPTION
ALL THAT CERTAIN LOT OR PARCEL OF LAND SITUATE IN THE COUNTY OF BROWARD, STATE OF FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1:
LOTS 1, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
PARCEL 2:
LOTS 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 AND 14, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
LESS AND EXCEPT THEREFROM THAT CERTAIN PROPERTY CONVEYED TO THE CITY OF HOLLYWOOD BY THAT CERTAIN DEED RECORDED IN OFFICIAL RECORDS BOOK 3476, PAGE 399, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF LOT 6, BLOCK 40, OF THE SUBDIVISION OF THE TOWN OF HOLLYWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 1, AT PAGE 21, IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA; RUN EAST ON AND ALONG THE SOUTH LINE OF LOTS 6, 7 AND 8 FOR A DISTANCE OF 65.36 FEET TO THE POINT OF BEGINNING. SAID POINT OF BEGINNING BEING THE POINT OF CURVATURE OF A CURVE CONCAVE TO THE NORTHWEST AND HAVING THE FOLLOWING PROPERTIES:
R=30.0 FEET, DELTA=123 DEGREES 06 MINUTES 46 SECONDS, ARC LENGTH=64.46 FEET; THENCE RUN NORTHEASTERLY ON SAID CURVE FOR A DISTANCE OF 64.46 FEET TO THE POINT OF INTERSECTION WITH THE EAST PROPERTY LINE OF LOT 8 OF SAID BLOCK 40. THENCE RUN SOUTHEASTERLY ON THE EAST LINE OF LOT 8, SAID EAST LINE BEING A CURVE HAVING THE FOLLOWING PROPERTIES: R=492.0 FEET, DELTA=9 DEGREES 52 MINUTES 51 SECONDS, ARC LENGTH=84.85 FEET, EXTENDED TO A POINT OF INTERSECTION WITH THE SOUTH LINE OF LOTS 6, 7 AND 8 EXTENDED EASTERLY; THENCE RUN WESTERLY ON AND ALONG THE EXTENSION OF LOTS 6, 7 AND 8 TO THE POINT OF BEGINNING.
PARCEL 3:
THAT CERTAIN 13.00 FOOT ALLEY LYING IN BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS VACATED AND MORE PARTICULARLY DESCRIBED BY THAT CERTAIN ORDINANCE NO. 0-2005-16 RECORDED IN OFFICIAL RECORDS BOOK 47110, PAGE 253, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
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EXHIBIT B
LOAN DOCUMENTS
1. LOAN DOCUMENTS.
1.1 This Agreement.
1.2 The Note.
1.3 The Security Instrument.
1.4 The Assignment of Leases and Rents.
1.5 The Guaranty.
1.6 The Hazardous Materials Indemnity.
1.7 The DACA – Restricted Account Agreement.
1.8 The Assignment of Management Agreement.
1.9 The Assignment of Asset Management Agreement.
1.10 Collateral Assignment of Interest Rate Cap Agreement of even date herewith executed by Borrower in favor of Lender.
1.11 Assignment of Contracts and Agreements of even date herewith executed by Borrower in favor of Lender.
1.12 Uniform Commercial Code National UCC Financing Statement (Form UCC1) of even date herewith, naming Borrower as Debtor and Lender as Secured Party.
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EXHIBIT C
OPTION TO EXTEND REQUEST LETTER FROM BORROWER
VMC CRE Master Lending Upper REIT LLC
c/o Värde Partners, Inc.
901 Marquette Ave. S., Suite 3300
Minneapolis, Minnesota 55402
RE: 1818 Park - $69,000,000.00 Loan (“Loan”)
Pursuant to the terms of that certain Loan Agreement dated as of July 24, 2026 (“Loan Agreement”), BLOCK 40 PROPERTY, LLC, a Delaware limited liability company (“Borrower”), hereby exercises Borrower’s option to extend the maturity date of the Loan described therein from _______________ to _______________. The Borrower hereby certifies that there is no Event of Default under the loan documents. Borrower further certifies that all conditions precedent to such extension as set forth in the Loan Agreement have been satisfied.
BORROWER
BLOCK 40 PROPERTY, LLC, a Delaware limited liability company
By:
Name: ______________________________
Its: _________________________________
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EXHIBIT D
RESERVED
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EXHIBIT E
ORGANIZATIONAL CHART
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SCHEDULE 1
MATERIAL AGREEMENTS
· Commons Areas Housekeeping
· Knight Force Security Corp. – 3/20/25
· Legacy Water Treatment – 8/12/25
· Quamec Corp.
· Superior Lawn & Property Maintenance – 7/30/24
· BestClean LLC
· Johnson Controls Fire Protection LP – 5/6/25
· HudsonYards – 5/5/25
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SCHEDULE 6.21(c)
LEASING REP EXCEPTIONS
· Tenant Improvement Work evidenced by that certain Notice of Commencement dated April 27, 2026 and recorded in the Public Records of Broward County, Florid as Instrument Number 120831967
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SCHEDULE 7.3
LITIGATION
· Fallah Construction LLC v. Block 40 Property LLC, Case Number CACE-26-008543 filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Circuit Civil Division.
· Elias v. Stewards, Inc., Block 40, LLC et al., Case Number CACE-26-008644 filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Circuit Civil Division.
· Mila and Mikhail Williams v. Block 40, LLC, Case Number CACE-25-078892 filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Circuit Civil Division.
· SINO-US INVESTMENT AND MANAGEMENT CONSULTING LIMIT and A&J Capital, INC. v. Block 40, LLC, Case Number CACE-25-078892 filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Circuit Civil Division.
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DOCUMENTARY STAMP TAXES, AS REQUIRED BY FLORIDA LAW, WERE PREVIOUSLY PAID IN CONNECTION WITH THE INDEBTEDNESS EVIDENCED BY THAT CERTAIN AMENDED AND RESTATED PROMISSORY NOTE IN THE PRINCIPAL AMOUNT OF $84,000,000.00 DATED AS OF JUNE 1, 2022 (THE “PRIOR NOTE”), EXECUTED BY BORROWER IN FAVOR OF DEUTSCHE BANK AG, NEW YORK BRANCH (“DEUTSCHE”) AND EVIDENCE OF SUCH PAYMENT IS AFFIXED TO THAT CERTAIN AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING EXECUTED BY BORROWER IN FAVOR OF DEUTSCHE, DATED JUNE 1, 2022, RECORDED AS INSTRUMENT NO. 118200871, IN THE OFFICIAL RECORDS OF BROWARD COUNTY, FLORIDA. THIS NOTE EVIDENCES A RENEWAL, AMENDMENT AND RESTATEMENT OF SUCH INDEBTEDNESS, WITH NO NEW OBLIGORS, AND NO ADDITIONAL PRINCIPAL BALANCE IS BEING ADVANCED HEREUNDER. THEREFORE, NO ADDITIONAL FLORIDA DOCUMENTARY STAMP TAX IS DUE, PURSUANT TO SECTION 201.09, FLORIDA STATUTES.
AMENDED AND RESTATED PROMISSORY NOTE
$69,000,000.00
Date: July 24, 2026
1. PROMISE TO PAY. FOR VALUE RECEIVED, the undersigned BLOCK 40 PROPERTY, LLC, a Delaware limited liability company (“Borrower”), hereby unconditionally promises to pay to VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”), by such means or at such places as may be designated in writing by Lender, the principal sum of up to Sixty-Nine Million and 00/100 Dollars ($69,000,000.00) or so much thereof as may from time to time be owing under this Promissory Note (as the same may be further amended, supplemented, restated, replaced or otherwise modified from time to time, this “Note”) by reason of Advances by Lender to or for the benefit or account of Borrower, with Interest (as defined below) thereon, per annum, at the rate or rates of Interest hereinafter set forth payable in the following manner and on the following terms. All sums owing hereunder are payable in lawful money of the United States of America, in immediately available funds without offset, deduction or counterclaim of any kind.
Definitions. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Loan Agreement. For purposes of this Note the following terms shall have the following meanings:
“Benchmark” shall have the meaning given to such term in the definition of “Term SOFR Rate.”
“Board” shall mean the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Business Day” means any day, except a Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized or required by law to close.
“Contract Rate” shall have the meaning ascribed to it in Section 2.1 below.
“Default Rate” shall have the meaning ascribed to it in Section 2.2 below.
“Effective Date” shall have the meaning ascribed to it in the Loan Agreement.
“Loan Agreement” shall mean that certain Loan Agreement of even date herewith between Borrower and Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Loan Documents” shall have the meaning ascribed to it in the Loan Agreement.
“Margin Change Date” shall mean the date that Borrower makes the Replenishment Deposit pursuant to Section 3.8 of the Loan Agreement.
“Principal” shall mean the sums of money disbursed by the Lender pursuant to this Note and the terms and conditions of the Loan Agreement and any additional Loan Document from time to time.
“Principal Balance” shall mean the amount of Principal remaining unpaid from time to time.
“Rate Change Date” shall mean the seventh (7th) day of each calendar month.
“SOFR” means the secured overnight financing rate which is published by the Board or any committees convened by the Board.
“Term SOFR” means a forward-looking term rate based on SOFR and recommended by the Board.
“Term SOFR Administrator’s Website” means the website or any successor source for Term SOFR identified by CME Group Benchmark Administration Ltd. (or a successor administrator of Term SOFR).
“Term SOFR Margin” means 350 basis points (3.50%); provided, however, that from and after the Margin Change Date, the Term SOFR Margin shall be reduced to 300 basis points (3.00%).
“Term SOFR Rate” means the greater of (a) zero and (b) the one-month forward-looking term rate based on SOFR quoted by Lender from the Term SOFR Administrator’s Website (or other commercially available source providing such quotations as may be selected by Lender from time to time), which shall be that one-month Term SOFR rate in effect two (2) Business Days prior to the Rate Change Date; provided that if the Term SOFR rate is not published on such Business Day due to a holiday or other circumstance that Lender deems in its sole discretion to be temporary, the applicable Term SOFR rate shall be the Term SOFR rate last published prior to such Business Day. If the initial advance under this Note occurs other than on the Rate Change Date, the initial one-month Term SOFR
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rate shall be that one-month Term SOFR rate in effect two (2) Business Days prior to the later of (a) the immediately preceding Rate Change Date and (b) the Effective Date, which rate shall be in effect until the next Rate Change Date. If Lender has determined in its sole but reasonable discretion that (i) the administrator of Term SOFR, or any relevant agency or authority for such administrator of Term SOFR (or any substitute index which replaces Term SOFR (Term SOFR or such replacement, the “Benchmark”)), has announced that such Benchmark will no longer be provided, (ii) any relevant agency or authority has announced that such Benchmark is no longer representative of Lender’s costs to maintain the Loan, or (iii) that any circumstance exists such that such Benchmark has become unavailable, is no longer representative of Lender’s costs to maintain the Loan, or has ceased to exist, in Lender’s sole but reasonable discretion, Lender will replace such Benchmark with a replacement rate in a manner consistent with Lender’s treatment of other similarly situated loans. In the case of a replacement rate other than Term SOFR, Lender may add a spread adjustment and/or adjust the Term SOFR Margin, as selected by the Lender, taking into consideration any selection or recommendation of a replacement rate by any other relevant agency or authority, and evolving or prevailing market practice. The replacement benchmark shall be deemed to be “Term SOFR Rate” for purposes of determining the Contract Rate and Default Rate pursuant to Section 2 herein from and after the immediately succeeding Rate Change Date following the date on which Lender gives written notice to Borrower thereof. In connection with the selection and implementation of any such replacement rate, Lender may make any technical, administrative or operational changes that Lender decides in good faith may be appropriate to reflect the adoption and implementation of such replacement rate and consistent with evolving or prevailing market practices. Lender does not warrant or accept any responsibility for the administration or submission of, or any other matter related to, Term SOFR or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation whether any such alternative, successor or replacement rate will have the same value as, or be economically equivalent to, Term SOFR. Lender’s internal records of applicable interest rates shall be determinative in the absence of manifest error.
2. INTEREST RATE. The Principal Balance of this Note outstanding at the close of each day shall bear interest (“Interest”) at the following per annum rate of interest based on a 360-day year and charged on the basis of actual days elapsed:
2.1 Contract Rate. Subject to Section 2.2 below, the Loan will bear interest at a per annum rate equal to the sum of (i) the Term SOFR Rate, which interest rate shall change on each Rate Change Date and shall apply to all interest accrued on and after such Rate Change Date until changed at the next successive Rate Change Date, plus (ii) the Term SOFR Margin (“Contract Rate”); provided however that prior to the Margin Change Date, the Contract Rate shall never be less than seven percent (7.00%), and from and after the Margin Change Date, the Contract Rate shall never be less than six and fifty hundredths percent (6.50%), which floor rates will apply regardless of fluctuations in Term SOFR Rate that would otherwise cause the Contract Rate to be less than such floor rates.
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2.2 Default Rate. From and after the Maturity Date (as may be extended pursuant to the terms of the Loan Agreement), and upon the occurrence and during the continuance of an Event of Default (as defined in the Loan Agreement) under the Loan Agreement or under any of the other Loan Documents, then at the option of Lender, all sums owing on this Note shall bear interest at a rate per annum equal to the lesser of (i) the maximum lawful rate of interest permitted to be paid on the Loan or (ii) four and five-tenths percent (4.50%) plus the applicable Contract Rate (“Default Rate”) whether or not the Lender has exercised its option to accelerate the maturity of the Loan and declare the entire Principal Balance due and payable. To the extent permitted by law, the Default Rate shall apply both before and after any judgment on the Indebtedness (hereinafter defined). Notwithstanding the foregoing, to the extent a Replenishment Deposit Event of Default shall occur and be continuing, the Default Rate shall be the lesser of (i) the maximum lawful rate of interest permitted to be paid on the Loan or (ii) ten percent (10.00%) plus the applicable Contract Rate.
3. TERMS OF PAYMENT. This Note shall be payable as follows:
3.1 Interest-Only Payments. Borrower shall make a payment to Lender of Interest only on the Effective Date for the period from (and including) the Effective Date through (and including) the sixth (6th) day of the calendar month immediately following the Effective Date; provided, however, if the Effective Date is the seventh (7th) day of a calendar month, no such separate payment of Interest shall be due. Commencing on September 7, 2026, and continuing on the seventh (7th) day of each month thereafter (or the first Business Day thereafter if the seventh (7th) calendar day of such month is not a Business Day) through and including the Maturity Date (as may be extended pursuant to the terms of the Loan Agreement) (each a “Monthly Payment Date”), Borrower shall pay an amount equal to the Interest then accrued and unpaid on the Principal Balance computed at the interest rate described in Section 2 above.
3.2 Maturity Date. On the Maturity Date, as may be extended pursuant to the terms of the Loan Agreement, the entire Principal Balance plus accrued Interest and all other charges and sums due under this Note shall be due and payable in full.
4. EXIT FEE. In addition to all required Principal and Interest payments on this Note, Borrower shall also pay to Lender the Exit Fee in accordance with the terms of the Loan Agreement.
5. SECURED NOTE. This Note is secured by, among other things, that certain Security Instrument (as defined in the Loan Agreement), and the other Loan Documents.
6. LATE CHARGE. If any interest or principal payment required hereunder (other than the payment of the Principal Balance on the Maturity Date or upon acceleration) is not received by Lender (whether by direct debit or otherwise) on or before the fifth (5th) Business Day following each Monthly Payment Date, Borrower shall pay, at Lender’s option, a late or collection charge equal to four and five-tenths percent (4.50%) of the amount of such unpaid payment (“Late Charge”); provided, however, no such Late Charge shall be due as a result of Lender's failure to attempt to auto-debit from an applicable Reserve Account despite sufficient funds being available or during the continuance of a Cash Sweep Period in such applicable Reserve Account.
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7. PREPAYMENT. The Principal Balance of the Note may be prepaid, in whole or in part, subject to the terms of the Loan Agreement.
8. ACCELERATION. Upon the occurrence and during the continuance of an Event of Default, Lender may, at its sole option, declare all sums owing under this Note immediately due and payable; provided, however, that if any Loan Document provides for automatic acceleration of payment of sums owing hereunder, all sums owing hereunder shall be automatically due and payable in accordance with the terms of that Loan Document.
9. MISCELLANEOUS.
9.1 Notices. All notices or other communications required or permitted to be given pursuant to this Note shall be given to the parties at the address and in the manner provided for in the Loan Agreement.
9.2 Waiver of Right to Trial By Jury. TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, EACH PARTY TO THIS NOTE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS NOTE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
9.3 Waivers.
(i) Borrower hereby waives presentment for payment, protest, notice of non-payment and notice of dishonor.
(ii) (ii) Borrower hereby consents, without affecting its liability, to the Lender granting, with written notice, any extension of time for payment of any sum or sums due hereunder or under the Loan Documents or for the performance of any covenant, condition or agreement contained herein or therein, or to the Lender taking or releasing or subordinating any security for the Loan evidenced hereby, or to Lender’s acceptance of additional security of any kind, or to Lender’s release of, or resort to, any party liable for payment hereof, and agrees that such action will in no way release or discharge the liability of Borrower, whether or not granted or done with the consent of Borrower.
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(iii) Borrower hereby waives and renounces, to the extent permitted by applicable law, all rights to the benefits of any statute of limitations and any moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead now provided, or which may hereafter be provided, by the Constitution or laws of the United States of America or the State of Florida, both as to itself and in and to all of its property, real and personal, against the enforcement and collection of the obligations evidenced by this Note and the Loan Documents.
9.4 Time. Time is of the essence of each and every term herein.
9.5 Governing Law and Consent to Jurisdiction. This Note shall be governed in accordance with the terms and provisions of Section 13.14 of the Loan Agreement.
9.6 Commercial Use; Maximum Rate Permitted By Law. Borrower hereby represents that the Loan is for commercial use and not for personal, family or household purposes. Borrower agrees to an effective rate of Interest that is the rate stated in this Note plus any additional rate of Interest resulting from any other charges in the nature of Interest within the meaning of applicable state statutes paid or to be paid by or on behalf of Borrower, or any benefit received or to be received by Lender, in connection with this Note. It is the specific intent of Borrower and Lender that this Note bear a lawful rate of interest, and if any court of competent jurisdiction should determine that the rate herein provided for exceeds that which is statutorily permitted for the type of transaction evidenced hereby, the interest rate shall be reduced to the highest rate permitted by applicable law, with any excess interest heretofore collected being applied against Principal or, if such Principal has been fully repaid, returned to Borrower on demand.
9.7 Lender’s Damages. Borrower recognizes that the occurrence and continuance of any Event of Default hereunder or under any other Loan Document, will require Lender to incur additional expense in servicing and administering the Loan, in loss to Lender of the use of the money due and in frustration to Lender in meeting its other financial and loan commitments and that the damages caused thereby would be extremely difficult and impractical to ascertain. Borrower agrees (a) that an amount equal to the Late Charge (if applicable) plus the accrual of Interest at the Default Rate is a reasonable estimate of the damage to Lender in the event of a late payment, and (b) that the accrual of Interest at the Default Rate following the occurrence and during the continuance of any Event of Default is a reasonable estimate of the damage to Lender in the event of such other Event of Default, regardless of whether there has been an acceleration of the Loan. Nothing in this Note shall be construed as an obligation on the part of Lender to accept, at any time, less than the full amount then due hereunder, or as a waiver or limitation of Lender’s right to compel prompt performance.
9.8 Intentionally Omitted.
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9.9 Costs of Collection. Borrower agrees to pay to Lender, upon written notice from Lender, all actual, out-of-pocket costs, expenses, disbursements, escrow fees, title charges, appraisal fees, and reasonable, out of pocket legal fees and expenses incurred by Lender and its counsel in connection with: (a) the collection, attempted collection, or negotiation and documentation of any settlement or workout of any payment due hereunder, and (b) any suit or proceeding whatsoever in regard to this Note or the protection or enforcement of the lien of any instrument securing this Note, including, without limitation, in connection with any litigation, mediation, arbitration, bankruptcy or administrative proceeding, and including any appellate proceeding or judicial or non-judicial foreclosure proceeding in connection therewith. This provision is separate and several and shall survive merger into judgment.
9.10 Successors and Assigns. The provisions of this Note shall be binding upon Borrower and its successors and assigns and shall inure to the benefit of any Lender and its successors and assigns.
9.11 Use of Singular and Plural; Gender. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
9.12 Exhibits, Schedules and Riders. All exhibits, schedules, riders and other items attached hereto (if any) are incorporated into this Note by such attachment for all purposes.
9.13 Inconsistencies. In the event of any inconsistencies between the terms of this Note and the terms of any of the other Loan Documents related to the Loan, the terms of the Loan Agreement shall prevail.
9.14 Borrower Not Released. No delay or omission of Lender to exercise any of its rights and remedies under this Note or any other Loan Document at any time following the occurrence and during the continuance of an Event of Default shall constitute a waiver of the right of Lender to exercise such rights and remedies at a later time by reason of such Event of Default or by reason of any subsequently occurring and continuing Event of Default. The acceptance by Lender of payment of any sum payable hereunder after the due date of such payment shall not be a waiver of Lender’s right to either require prompt payment when due of all other sums payable hereunder or to declare an Event of Default for failure to make prompt payment.
9.15 Florida Documentary Stamps. The State of Florida Documentary Stamps in the amount required by law are affixed to the Security Instrument securing this Note.
9.16 Savings Clause. It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Lender to contract for, charge, take, reserve, or receive a greater amount of Interest than permitted under state law) and that this Section 9.16 shall control every other covenant and agreement in this Note and any other Loan Documents delivered in connection herewith. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or under any other Loan Documents, or contracted for, charged,
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taken, reserved, or received with respect to the indebtedness evidenced by this Note (“Indebtedness”), or if Lender’s exercise of the option to accelerate the maturity of this Note, or if any prepayment by Borrower results in Borrower having paid any Interest in excess of that permitted by applicable law, then it is Borrower’s and Lender’s express intent that all excess amounts theretofore collected by Lender shall be credited on the Principal Balance of this Note and all other Indebtedness (or, if this Note and all other Indebtedness have been or would thereby be paid in full, refunded to Borrower), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Indebtedness shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Indebtedness until payment in full so that the rate or amount of Interest on account of the Indebtedness does not exceed the maximum lawful rate from time to time in effect and applicable to the Indebtedness for so long as the Indebtedness is outstanding.
9.17 Severability. The parties hereto intend and believe that each provision of this Note comports with all applicable local, state and federal laws and judicial decisions. However, if any provision or any portion of any provision contained in this Note is held by a court of law to be invalid, illegal, unlawful, void or unenforceable as written in any respect, then it is the intent of all parties hereto that such portion or provision shall be given force to the fullest possible extent that it is legal, valid and enforceable, that the remainder of this Note shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion or provision was not contained therein, and the rights, obligations and interests of Borrower and Lender under the remainder of this Note shall continue in full force and effect.
9.18 Amendment to Prior Note. This Note constitutes a renewal, amendment and restatement, without the addition of any new obligors, of that certain Amended and Restated Promissory Note dated June 1, 2022, in the original principal amount of $84,000,000.00 (the “Prior Note”), executed by Borrower in favor of DEUTSCHE BANK AG, NEW YORK BRANCH (“Deutsche”), as such Prior Note was assigned to BREDS V US INVESTMENTS 2 L.L.C., a Delaware limited liability company (“Prior Lender”) pursuant to that certain Endorsement To Note dated as of November 18, 2024. This Note is not intended to extinguish and satisfy the indebtedness evidenced by the Prior Note or create a novation thereof. Should there be any conflict between any of the terms of the Prior Note and the terms of this Note, the terms of this Note shall control. The Prior Note, the Original Note (as defined in the Notice to Recorder of the Security Instrument) and all allonges and promissory notes renewed thereby shall be attached to this Note and shall not be negotiated separate from this Note. Florida documentary tax and intangible tax were paid with respect to the obligations evidenced by the Prior Note and the Original Note and evidence of such payment is found on the “Prior Mortgage” (as defined in the Notice to Recorder of the Security Instrument) and the “Original Mortgage” (as defined in the Notice to Recorder of the Security Instrument).
10. EXCULPATION. Any provision of this Note to the contrary notwithstanding, the limitations on liability set forth in Section 13.38 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.
[Signature Page(s) to follow]
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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first written above.
BORROWER:
BLOCK 40 PROPERTY, LLC,
a Delaware limited liability company
By: Block 40 Managers, LLC,
a Florida limited liability company,
its manager
By:/s/ Shaun A. Quin
Name: Shaun A. Quin
Title: Authorized Signatory
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LENDER
VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company
By: Värde Partners, Inc.
Its: Manager
By: /s/ Chase Heichel
Name: Chase Heichel
Its: Director
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THIS DOCUMENT WAS DRAFTED BY
AND WHEN RECORDED RETURN TO:
Tyler K. Olson, Esq.
Fox Rothschild LLP
33 South Sixth Street, Suite 3600
Minneapolis, MN 55402-3338
(612) 607-7000
(Space Above For Recorder’s Use)
AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FINANCING STATEMENT
AND NOTICE OF FUTURE ADVANCE
NOTICE TO RECORDER: THIS INSTRUMENT SECURES AN AMENDED AND RESTATED PROMISSORY NOTE (THE “A&R NOTE”) IN THE ORIGINAL PRINCIPAL AMOUNT OF $69,000,000.00 DATED AS OF EVEN DATE HEREWITH, BY BLOCK 40 PROPERTY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (THE “BORROWER”) IN FAVOR OF VMC CRE MASTER LENDING UPPER REIT LLC, A DELAWARE LIMITED LIABILITY COMPANY (“LENDER”). THE A&R NOTE AMENDS, RESTATES AND RENEWS THAT CERTAIN AMENDED AND RESTATED PROMISSORY NOTE IN THE PRINCIPAL AMOUNT OF $84,000,000.00 DATED AS OF JUNE 1, 2022 (THE “PRIOR NOTE”), EXECUTED BY BORROWER IN FAVOR OF DEUTSCHE BANK AG, NEW YORK BRANCH (“DEUTSCHE”), as such Original Note was assigned to BREDS V US INVESTMENTS 2 L.L.C., a Delaware limited liability company (“prior Lender”) pursuant to that certain ENDORSEMENT TO NOTE dated as of November 18, 2024. THE PRIOR NOTE AMENDED, RESTATED AND RENEWED THAT CERTAIN PROMISSORY NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $70,000,000.00 GIVEN BY BLOCK 40, LLC IN FAVOR OF TREZ CAPITAL BLOCK 40, LP (“TREZ LENDER”) DATED FEBRUARY 16, 2021, AS AMENDED AND RESTATED BY THAT CERTAIN AMENDED AND RESTATED PROMISSORY NOTE IN THE MAXIMUM PRINCIPAL AMOUNT OF $71,157,593.00 GIVEN BY BLOCK 40, LLC IN FAVOR OF TREZ LENDER DATED MAY 27, 2021 (COLLECTIVELY, THE “ORIGINAL NOTE”). THE PRIOR NOTE HAS BEEN ASSIGNED FROM PRIOR LENDER TO LENDER PURSUANT TO THAT CERTAIN ALLONGE OF EVEN DATE HEREWITH.
THE A&R NOTE IS NOT INTENDED TO EXTINGUISH AND SATISFY THE INDEBTEDNESS EVIDENCED BY THE PRIOR NOTE OR CREATE A NOVATION THEREOF. ALL DOCUMENTARY STAMP TAXES AND INTANGIBLE TAXES DUE IN CONNECTION WITH THE ORIGINAL NOTE AND THE PRIOR NOTE WERE PAID AT THE TIME OF RECORDING OF, AND EVIDENCE OF SUCH PAYMENTS APPEARS ON: (A) THAT CERTAIN Amended and Restated Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing executed by Borrower in favor of Deutsche, dated June 1, 2022, recorded as Instrument No. 118200871, in the Official Records of Broward County, Florida, as assigned by Deutsche to PRIOR Lender pursuant to that certain Assignment of Mortgage dated November 18, 2024, and recorded as
Instrument No. 119913684, in the Official Records of Broward County, Florida (collectively, the “prior Mortgage”), AND (B) THAT CERTAIN MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS AND FIXTURE FILING executed by BLOCK 40, LLC in favor of TREZ LENDER, dated FEBRUARY 12, 2021 AND RECORDED AS INSTRUMENT NUMBER 117063543 OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS MODIFIED BY THAT CERTAIN FIRST MODIFICATION OF MORTGAGE AND NOTICE OF FUTURE ADVANCE BETWEEN BLOCK 40, LLC AND TREZ LENDER, dated ON MAY 27, 2021, RECORDED AS INSTRUMENT NUMBER 117304696 OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS SUBSEQUENTLY ASSIGNED FROM TREZ LENDER TO DEUTSCHE pursuant to that certain Assignment of NOTE AND Mortgage dated MAY 24, 2022, and recorded as Instrument No. 118200866 in the Official Records of Broward County, Florida (collectively, THE “ORIGINAL MORTGAGE”). THE PRIOR MORTGAGE HAS BEEN ASSIGNED FROM PRIOR LENDER TO LENDER PURSUANT TO THAT CERTAIN ASSIGNMENT OF MORTGAGE OF EVEN DATE HEREWITH TO BE RECORDED IMMEDIATELY PRIOR TO THE RECORDATION OF THIS SECURITY INSTRUMENT IN THE PUBLIC RECORDS.
THE A&R NOTE EVIDENCES A RENEWAL, AMENDMENT AND RESTATEMENT OF THE INDEBTEDNESS UNDER THE PRIOR NOTE, WITH NO NEW OBLIGORS, AND NO ADDITIONAL PRINCIPAL BALANCE IS BEING ADVANCED IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THE A&R NOTE AND THIS SECURITY INSTRUMENT. THEREFORE, NO ADDITIONAL DOCUMENTARY STAMP TAXES AND/OR INTANGIBLE TAXES ARE REQUIRED TO BE PAID HEREUNDER, PURSUANT TO SECTION 201.09, FLORIDA STATUTES AND SECTION 199.45, FLORIDA STATUTES.
THIS SECURITY INSTRUMENT COVERS GOODS THAT ARE OR WILL BECOME FIXTURES ON THE DESCRIBED REAL PROPERTY AND SHOULD BE FILED FOR RECORD IN THE REAL PROPERTY RECORDS WHERE MORTGAGES AND DEEDS OF TRUST ON REAL ESTATE ARE RECORDED. THIS SECURITY INSTRUMENT SHOULD ALSO BE INDEXED AS A UNIFORM COMMERCIAL CODE FINANCING STATEMENT COVERING GOODS THAT ARE OR WILL BECOME FIXTURES ON THE DESCRIBED REAL PROPERTY, THE MAILING ADDRESSES OF THE SECURED PARTY AND THE DEBTOR ARE WITHIN.
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THIS SECURITY INSTRUMENT SECURES FUTURE ADVANCES AND ALSO SECURES A NOTE WHICH PROVIDES FOR A VARIABLE INTEREST RATE.
AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FINANCING STATEMENT
AND NOTICE OF FUTURE ADVANCE
THIS AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FINANCING STATEMENT AND NOTICE OF FUTURE ADVANCE (“Security Instrument”), made as of July 24, 2026, is granted by BLOCK 40 PROPERTY, LLC, a Delaware limited liability company (“Mortgagor” or “Borrower”), for the benefit of VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company (together with its successors and/or assigns, “Mortgagee” or “Lender”). Lender is the Mortgagee hereunder for indexing purposes by the clerk of court.
RECITALS:
A. Immediately prior to the execution and delivery hereof, Prior Lender (as defined in the Notice to Recorder of this Security Instrument) has assigned to Lender the Prior Note (as defined in the Notice to Recorder of this Security Instrument) and Prior Mortgage (as defined in the Notice to Recorder of this Security Instrument), pursuant to that certain Allonge of even date herewith and Assignment of Mortgage of even date herewith to be recorded in the Public Records of Broward County, Florida immediately prior to the recordation hereof.
B. Borrower and Lender desire hereby to amend, restate, replace and supersede the Prior Mortgage to secure all of the indebtedness evidenced by the Note as hereinafter set forth.
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce Lender to make the loan evidenced by the Note to Borrower, Borrower and Lender hereby agree that the Prior Mortgage is hereby amended, restated, renewed, replaced and superseded in its entirety as follows:
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1
GRANT
1.1 GRANT. For the purposes of and upon the terms and conditions in this Security Instrument, Mortgagor irrevocably bargains, conveys, warrants, mortgages, encumbers, transfers, hypothecates, pledges, sells, sets over, assigns and grants a security interest and assigns to Lender, its successors and assigns, with power of sale and right of entry and possession, all of Mortgagor’s rights, title and interest in and to the following:
(a) that real property located in the County of Broward, State of Florida, described on Exhibit A attached hereto and made a part hereof (the “Real Property”);
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(b) the Collateral (as defined herein);
(c) all right, title, interest and claim of Borrower in, to, under or pursuant to any Interest Rate Cap Agreement and any replacements, amendments or supplements thereto, and all income and proceeds thereof, and all claims of Borrower for breach by the counterparty thereunder of any covenant, agreement, representation or warranty contained in any Interest Rate Cap Agreement;
(d) the buildings and other improvements now or hereafter erected on the Real Property, including fixtures and equipment attached to such buildings or other improvements or otherwise located on or related to the Property, it being intended by the parties that all such items shall be conclusively considered to be part of the Real Property whether or not attached or affixed to the Real Property (“Improvements”);
(e) to the extent assignable, all right, title, interest, and privileges of Mortgagor now owned or hereafter acquired in and to all streets, ways, roads, and alleys used in connection with or pertaining to such Real Property, all proceeds refunds, rebates or credits in connection with reduction in real estate taxes and assessments charged against the Property (as defined below) as a result of tax certiorari or any applications or proceedings for reduction; all awards, compensation or settlement proceeds made by any governmental or other lawful authorities for the threatened or actual taking or damaging by eminent domain of the whole or any part of the Property, including any awards for a temporary taking, change of grade of streets or taking of access, together with all insurance proceeds resulting from a casualty to any portion of the Property; all rights and interests of Mortgagor against others, including adjoining property owners, arising out of damage to the property including damage due to environmental injury or release of hazardous substances; all development rights or credits, licenses and permits, air rights, water, water rights and water stock related to the Real Property and all minerals, oil and gas, and other hydrocarbon substances in, on or under the Real Property and all appurtenances, easements, estates, tenements, hereditaments, privileges, rights and rights of way appurtenant or related thereto; and
(f) to the extent assignable, all interest or estate which Mortgagor may hereafter acquire in the property described above, and all additions and accretions thereto, and the proceeds of any of the foregoing (all of the foregoing being collectively referred to as the “Property”). The listing of specific rights or property shall not be interpreted as a limit of general terms.
1.2 ADDRESS. The address of the Real Property is 1818 Hollywood Blvd., Hollywood, Florida 33020. However, neither the failure to designate an address nor any inaccuracy in the address designated shall affect the validity or priority of the lien of this Security Instrument on the Property as described on Exhibit A.
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1.3 WARRANTY OF TITLE; USE OF PROPERTY. Mortgagor represents and warrants that, Mortgagor lawfully holds and possesses fee simple and/or easement, as applicable, title to the Real Property, without limitation on the right to convey and encumber, and that this Security Instrument is a first and prior lien on the Property subject only to the Permitted Encumbrances (as defined in the Loan Agreement). Mortgagor will warrant and defend the title to the Property against claims from all parties claiming by, through or under Mortgagor. Mortgagor further warrants that the Property is not used principally for agricultural or farming purposes, and that the Property is not homestead and that all of the Property comprises one or more tax parcels, and there are no properties included in such tax parcels other than the Property. Mortgagor further covenants and agrees that it shall not cause all or any portion of the Property to be replatted or for any lots or boundary lines to be adjusted, changed or altered for either ad valorem tax purposes or otherwise, and shall not consent to the assessment of the Property in more than one tax parcel or in conjunction with any property other than the Property.
1.4 USE OF PROCEEDS. Mortgagor represents and warrants to Lender that the proceeds of the obligations secured hereby shall be used solely for business purposes and in furtherance of the regular business affairs of Mortgagor, and the entire principal obligations secured by this Security Instrument constitute a business loan.
1.5 MATURITY DATE. All outstanding amounts due under the Note are due and payable on August 7, 2028, unless Borrower exercises its First Option to Extend, Second Option to Extend or Third Option to Extend (each as defined in the Loan Agreement) and the maturity date is thereby extended to August 7, 2029, August 7, 2030, and August 7, 2031, as applicable (as may be otherwise extended or amended from time to time, the “Maturity Date”).
Article
2
OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Mortgagor makes this Security Instrument for the purpose of securing the payment and performance of the following obligations (collectively “Secured Obligations”):
(a) Payment to Lender of all sums at any time owing with interest thereon at the rate or rates therein provided, according to the terms of that certain Amended and Restated Promissory Note of even date herewith, in the principal amount of Sixty-Nine Million and No/100 Dollars ($69,000,000.00), executed by Borrower and payable to the order of Lender (as the same may be amended, modified, supplemented or replaced from time to time, the “Note”);
(b) Payment and performance of all covenants and obligations of Borrower under this Security Instrument;
(c) Payment of all out-of-pocket costs, expenses, reasonable legal fees and liabilities incurred by Lender in connection with the enforcement of any of Lender’s rights or remedies under the Loan Documents (as defined in the Loan Agreement), or collateral therefor, whether now in effect or hereafter executed, and whether before or after judgment, but excluding any obligations or liabilities under the Hazardous Materials Indemnity;
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(d) Payment and performance of all covenants and obligations on the part of Mortgagor under that certain Loan Agreement (as the same may be amended, modified, supplemented or replaced from time to time, the “Loan Agreement”) of even date herewith by and between Borrower and Lender and each of the additional Loan Documents;
(e) Payment and performance of all future advances and other obligations that the Mortgagor may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Lender, when such future advance or obligation is evidenced by an instrument in writing, which recites that it is secured by this Security Instrument including any and all advances or disbursements of Lender with respect to the Property for the payment of taxes, assessments, insurance premiums or costs incurred for the protection of the Property;
(f) All modifications, extensions, novations and renewals of any of the obligations secured hereby, however evidenced, including, without limitation: (i) modifications of the required principal payment dates or interest payment dates or both, as the case may be, deferring or accelerating payment dates wholly or partly; or (ii) modifications, extensions or renewals at a different rate of interest whether or not in the case of a note, the modification, extension or renewal is evidenced by a new or additional promissory note or notes; and
(g) All indebtedness, liabilities, duties, covenants, promises and other obligations whether joint or several, direct or indirect, fixed or contingent, liquidated or unliquidated, and the cost of collection of all such amounts, owed by Borrower to Lender now or hereafter incurred or arising pursuant to or permitted by the provisions of the Loan Agreement, the Note, this Security Instrument, or any other document now or hereafter evidencing, governing, guaranteeing, securing or otherwise executed by Borrower for the benefit of Lender in connection with the Note, including but not limited to any loan or loan agreement, letter of credit or reimbursement agreement, tri-party financing agreement, or Interest Rate Cap Agreement (as defined in the Loan Agreement).
2.2 OBLIGATIONS. The term “obligations” is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges (if any), late charges and loan fees at any time accruing or assessed on any of the Secured Obligations together with all costs of collecting the Secured Obligations.
2.3 INCORPORATION. All Persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of the Secured Obligations and to have notice, if provided therein, that the rate of interest on one or more Secured Obligations may vary from time to time.
2.4 FUTURE ADVANCES. This Security Instrument secures the payment of the entire Secured Obligations. This Security Instrument is given to secure not only presently existing indebtedness under the Note, the Loan Agreement or any other Loan Documents, but also Future Advances, as more particularly described in Section 7.2 of this Security Instrument.
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Article
3
ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Mortgagor hereby absolutely and irrevocably assigns and transfers to Lender, to the extent assignable, all of Mortgagor’s right, title and interest in, to and under: (a) all present and future leases, subleases, licenses or occupancy agreements of the Property or any portion thereof, and all other agreements of any kind relating to the management, leasing, operation, use or occupancy of the Property or any portion thereof, whether now existing or entered into after the date hereof (“Leases”); and (b) the rents, revenue, income, receipts, reserves, issues, deposits and profits of the Property, including, without limitation, all amounts payable and all rights and benefits accruing to Mortgagor under the Leases (“Payments”). The term “Leases”, as referred to herein, shall also include all subleases and other agreements for the use or occupancy of the Property, options, rights of first refusal or guarantees of and security for the tenant’s performance thereunder, the right to exercise any landlord’s liens and other remedies to which the landlord is entitled, and all amendments, extensions, renewals or modifications thereto which are permitted hereunder. This assignment is intended to be and constitutes a present, unconditional and absolute assignment, not an assignment for security purposes only, and Lender’s right to the Leases and Payments is not contingent upon, and may be exercised without possession of, the Property. The assignment of Leases and Payments contained in this Security Instrument is intended to and does constitute an assignment of rents as contemplated in Florida Statutes Section 697.07. Upon the occurrence and during the continuance of an Event of Default (as hereinafter defined), Lender shall be entitled to the remedies provided in said Section 697.07, in addition to all rights and remedies, whether procedural or substantive, in effect at the time of execution or enforcement of this Security Instrument. Nothing contained in this Security Instrument is intended to diminish, alter, impair, or affect any other rights and remedies of Lender, including, but not limited to, the appointment of a receiver, nor shall any provision in this Section 3.1 diminish, alter, impair or affect any rights or powers of the receiver in law or equity or as set forth herein. In addition, this assignment shall be fully operative without regard to value of the Property or without regard to the adequacy of the Property to serve as security for the obligations owed by Mortgagor to Lender, and shall be in addition to any rights at law or in equity. Further, except for the notices required hereunder or under any of the other Loan Documents, if any, Mortgagor hereby waives any notice of default or demand for turnover of rents by Lender, together with any rights, if any, to apply to a court to deposit the Payments into the registry of the court or such other depository as the court may designate.
3.2 GRANT OF LICENSE. Lender confers upon Mortgagor a revocable license (“License”) to collect, receive, use, enjoy and retain the Payments as they become due and payable, until the occurrence and during the continuance of an Event of Default (as hereinafter defined). Upon the occurrence and during the continuance of an Event of Default, the License shall be automatically suspended and Lender may collect and apply the Payments pursuant to that certain Section 6.5 hereof without notice and without taking possession of the Property. Upon the waiver or cure of any and all Events of Default, the License shall be automatically reinstated if repayment of the Secured Obligations has not been accelerated by Lender’s exercise of its remedy to do so and a receiver for the Property has not been appointed. All payments collected by Mortgagor shall be held by Mortgagor as trustee under a constructive trust for the benefit of Lender. Mortgagor hereby irrevocably authorizes and directs the tenants under the Leases to rely upon and comply with any notice or demand by Lender for the payment to Lender of any rentals or other sums which may at any time become due under the Leases, or for the performance of any of
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the tenants’ undertakings under the Leases, and the tenants shall have no right or duty to inquire as to whether any Event of Default has actually occurred or is then existing hereunder. Mortgagor hereby relieves the tenants from any liability to Mortgagor by reason of relying upon and complying with any such notice or demand by Lender. Lender may apply, in its sole but reasonable discretion, any Payments so collected by Lender against any Secured Obligation under the Loan Documents, whether existing on the date hereof or hereafter arising. Collection of any Payments by Lender shall not cure or waive any Event of Default or notice of an Event of Default or invalidate any acts done pursuant to such notice.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable assignment shall not cause Lender to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care, management or repair of the Property or for performing any of the terms, agreements, undertakings, obligations, representations, warranties, covenants and conditions of the Leases; (c) responsible or liable for any waste committed on the Property by the tenants under any of the Leases or any other parties; for any dangerous or defective condition of the Property; or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee, invitee or other Person; or (d) responsible for or under any duty to produce rents or profits. Lender shall not directly or indirectly be liable to Mortgagor or any other person as a consequence of: (i) the exercise or failure to exercise by Lender, or any of its respective employees, agents, contractors or subcontractors, any of the rights, remedies or powers granted to Lender hereunder; or (ii) the failure or refusal of Lender to perform or discharge any obligation, duty or liability of Mortgagor arising under the Leases.
3.4 LENDER RIGHT TO CURE. Upon the occurrence and during the continuance of an Event of Default, Borrower acknowledges and agrees (A) that Lender may, at its option, with no obligation to do so, take any actions necessary to cure such default including, without limitation, any actions that require Lender or its designee to enter onto the Property, (B) to indemnify, defend and hold Indemnitees (as defined in the Loan Agreement) harmless in connection with any such action, and (C) any money advanced for any such purpose shall be secured hereby and payable by Mortgagor to Lender on written demand, with interest thereon at the Default Rate from the date such amounts are advanced.
3.5 APPLICABLE FLORIDA LAW. The assignment of Leases and Payments contained in this Security Instrument are intended to provide Mortgagee with all of the rights and remedies of mortgagees pursuant to Section 697.07 of the Florida Statutes (hereinafter “Section 697.07”), as may be amended from time to time. However, in no event shall this reference diminish, alter, impair, or affect any other rights and remedies of Mortgagee, including but not limited to, the appointment of a receiver, nor shall any provision in this Section diminish, alter, impair or affect any rights or powers of the receiver in law or equity or as set forth herein. In addition, this assignment shall be fully operative without regard to value of the Property or without regard to the adequacy of the Property to serve as security for the obligations owed by Mortgagor to Mortgagee, and shall be in addition to any rights arising under Section 697.07. Further, except for the notices required by applicable law or any Loan Documents, if any, Mortgagor waives, to the extent permitted by applicable law, any notice of default or demand for turnover of rents by Mortgagor, together with any rights under Section 697.07 to apply to a court to deposit the Payments into the registry of the court or such other depository as the court may designate.
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3.6 RIGHTS CUMULATIVE. Lender’s rights under this Article 3 are cumulative with, and not in lieu of, its rights under the Assignment of Leases and Rents made by Mortgagor in Lender’s favor. In the event of conflict between this Article 3 and a provision of any such Assignment of Leases and Rents, the provision giving Lender greater or more extensive rights and/or protection shall control.
Article
4
SECURITY AGREEMENT AND FIXTURE FILING
4.1 SECURITY INTEREST. This Security Instrument shall constitute a security agreement as defined in the UCC (as defined below) and Mortgagor hereby grants, conveys, transfers, sets over and assigns to Lender a security interest, to secure payment and performance of all of the Secured Obligations, in, to the extent assignable, all assets of Mortgagor, including, but not limited to Mortgagor’s rights, title and interest in and to the following described personal property in which Mortgagor now or at any time hereafter has any interest and to the fullest extent any of the following is assignable and/or subject to a grant of security interest under the UCC or any other applicable law (collectively, the “Collateral”):
All goods, building and other materials, supplies, inventory, work in process, equipment, machinery, fixtures, furniture, furnishings, signs and other personal property and embedded software included therein and supporting information, wherever situated, which are or are to be incorporated into, used in connection with, or appropriated for use on the Property; together with all Payments and other rents and security deposits derived from the Property; together with all rents, income, leases, room charges, fees, issues, revenues, deposits, accounts, profits, receivables, credit card payables and receipts, and other payments paid or payable, and all other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of possession, use or occupancy of any facilities in or about the Property, any commercial space located in or about the Property, the rental of any office space, retail space, commercial space, or other space, halls, stores or offices, exhibit or sales space of every kind, all license, lease, sublease and all proceeds from the same; all inventory, accounts (including any interest of Borrower in the Cash Management Account, Restricted Account, and any reserves described in the Loan Agreement), any and all swap payments due to Mortgagor under any Interest Rate Cap Agreement, whether now or hereafter existing, cash receipts, deposit accounts (including impound accounts, if any), accounts receivable, contract rights, licenses, agreements, general intangibles, payment intangibles, software, chattel paper (whether electronic or tangible), instruments, documents, promissory notes, drafts, letters of credit, letter of credit rights, supporting obligations, insurance policies, insurance and condemnation awards and proceeds, proceeds of the sale of promissory notes, any other rights to the payment of money, trade names, trademarks and service marks arising from or related to the ownership, management, leasing, operation, sale or disposition of the Property or any business now or hereafter conducted thereon by Mortgagor and, to the extent assignable, contract rights, licenses, agreements, general intangibles, instruments and documents; all proceeds refunds, rebates or credits in connection with reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction; all development rights and credits, and any and all permits, consents, approvals, licenses, authorizations and other rights granted by, given by or obtained from, any governmental entity with respect to the Property; all water and water rights, wells and well rights,
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canals and canal rights, ditches and ditch rights, springs and spring rights, and reservoirs and reservoir rights appurtenant to or associated with the Property, whether decreed or undecreed, tributary, non-tributary or not non-tributary, surface or underground or appropriated or unappropriated, and all shares of stock in water, ditch, lateral and canal companies, well permits and all other evidences of any of such rights; all deposits or other security now or hereafter made with or given to utility companies by Mortgagor; all advance payments of insurance premiums made by Mortgagor with respect to the Property; all plans, drawings and specifications relating to the Property; all loan funds held by Lender, whether or not disbursed; all funds deposited with Lender pursuant to any loan agreement; all reserves, deferred payments, deposits, accounts, refunds, cost savings and payments of any kind related to the Property or any portion thereof; together with all replacements and proceeds of, and additions and accessions to, any of the foregoing; together with all books, records and files relating to any of the foregoing.
As to all of the above described personal property which is or which hereafter becomes a “fixture” under applicable law, it is intended by Mortgagor and Lender that THIS SECURITY INSTRUMENT SHALL BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING with the real estate records of Broward County, Florida, under the Uniform Commercial Code, as amended or recodified from time to time, from the state wherein the Property is located (“UCC”). For purposes of this fixture filing, the “Debtor” is the Mortgagor and the “Secured Party” is the Lender. A description of the Real Property which relates to the fixtures is set forth in Exhibit A attached hereto. Mortgagor is the record owner of such Real Property. The filing of a financing statement covering the Collateral shall not be construed to derogate from or impair the lien or provisions of this Security Instrument with respect to any property described herein which is real property or which the parties have agreed to treat as real property. Similarly, nothing in any financing statement shall be construed to alter any of the rights of Lender under this Security Instrument or the priority of Lender’s lien created hereby, and such financing statement is declared to be for the protection of Lender in the event any court shall at any time hold that notice of Lender’s priority interest in any property or interests described in this Security Instrument must, in order to be effective against a particular class of persons, including but not limited to the Federal government and any subdivision, agency or entity of the Federal government, be filed in the UCC records.
4.2 FIXTURE FILING. This instrument shall be deemed to be a Fixture Filing within the meaning of the Florida Uniform Commercial Code, and for such purpose, the following information is given:
(a) Name and Address of Debtor:
Block 40 Property, LLC
4300 N. University Drive, Suite D105
Lauderhill, FL 33351
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(b) Name and Address of Secured Party:
VMC CRE Master Lending Upper REIT LLC
c/o Värde Partners, Inc.
350 N 5th Street, Suite 800
Minneapolis, Minnesota 55401
(c) Description of the types of property covered by this Fixture Filing:
The Property and Collateral described above.
(d) The real estate to which such fixtures are or are to be attached:
See Exhibit A attached hereto, the record owner of which is Debtor.
4.3 REPRESENTATIONS AND WARRANTIES. Mortgagor represents and warrants that: (a) Mortgagor has, or will have, good title to the Collateral; (b) to Mortgagor’s knowledge, Mortgagor has not previously assigned or encumbered the Collateral other than in favor of a prior lender which will be paid in full with proceeds of the Loan, and no financing statement covering any of the Collateral has been delivered to any other person or entity that has not been terminated as of the date hereof; and (c) Mortgagor’s principal place of business is located at the address set forth herein. As of the date of this Security Instrument, except as otherwise disclosed to Lender in writing by Mortgagor, no work or construction of any kind has been commenced on the Real Property and there are no outstanding bills for labor and materials relating to the Real Property due and owing to any contractor, subcontractor or supplier.
4.4 COVENANTS. Mortgagor agrees: (a) to execute and deliver such documents as Lender reasonably deems necessary to create, perfect and continue the security interests contemplated hereby; provided, that no such documents serve to change or modify any of the terms and conditions of the Loan Documents (except to a de minimis extent); (b) not to change its name, and as applicable, its chief executive office or the jurisdiction in which it is organized and/or registered without giving Lender prior written notice thereof; (c) to reasonably cooperate with Lender in perfecting all security interests granted herein and in obtaining such agreements from third parties as Lender deems reasonably necessary, proper or convenient in connection with the preservation, perfection or enforcement of any of its rights hereunder; and (d) that Lender is authorized to file financing statements in the name of Mortgagor to perfect Lender’s security interest in the Collateral.
4.5 RIGHTS OF LENDER. In addition to Lender’s rights as a “Secured Party” under the UCC, but subject to the terms and conditions of the Loan Agreement, Lender may, but shall not be obligated to, at any time without notice and at the expense of Mortgagor: (a) following an Event of Default that is continuing, give notice to any Person of Lender’s rights hereunder and enforce such rights at law or in equity; (b) following an Event of Default that is continuing, insure, protect, defend and preserve the Collateral or any rights or interests of Lender therein; (c) inspect the Collateral; and (d) following an Event of Default that is continuing, endorse, collect and receive any right to payment of money owing to Mortgagor under or from the Collateral. Notwithstanding the foregoing to the contrary, in no event shall Lender be deemed to have accepted any property other than cash in satisfaction of any obligation of Mortgagor to Lender unless Lender shall make an express written election of said remedy under UCC §9-620, or other applicable law.
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Upon the occurrence and during the continuance of an Event of Default under this Security Instrument, then in addition to all of Lender’s rights as a “Secured Party” under the UCC or otherwise at law and in accordance with Lender’s rights under the Loan Documents:
(a) Lender may (i) upon written notice, require Mortgagor to assemble any or all of the Collateral and make it available to Lender at a place reasonably designated by Lender; (ii) without prior notice, enter upon the Property or other place where any of the Collateral may be located and take possession of, collect, sell, lease, license or otherwise dispose of any or all of the Collateral, and store the same at locations acceptable to Lender at Mortgagor’s expense; (iii) sell, assign and deliver at any place or in any lawful manner all or any part of the Collateral and bid and become the purchaser at any such sales; and
(b) Lender may, for the account of Mortgagor and at Mortgagor’s expense: (i) operate, use, consume, sell, lease, license or otherwise dispose of the Collateral as Lender deems appropriate for the purpose of performing any or all of the Secured Obligations; (ii) enter into any agreement, compromise, or settlement, including insurance claims, which Lender may deem desirable or proper with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or hereafter owing to Mortgagor in connection with or on account of any or all of the Collateral; and
(c) In disposing of the Collateral hereunder, Lender may disclaim all warranties of title, possession, quiet enjoyment and the like. Any proceeds of any disposition of any Collateral may be applied by Lender to the payment of expenses incurred by Lender in connection with the foregoing, including reasonable, out-of-pocket attorneys’ fees, and the balance of such proceeds may be applied by Lender toward the payment of the Secured Obligations in such order of application as Lender may from time to time elect.
Notwithstanding any other provision hereof, Lender shall not be deemed to have accepted any property other than cash in satisfaction of any obligation of Mortgagor to Lender unless Mortgagor shall make an express written election of said remedy under the UCC or other applicable law. Mortgagor agrees that Lender shall have no obligation to process or prepare any Collateral for sale or other disposition. Mortgagor acknowledges and agrees that a disposition of the Collateral in accordance with Lender’s rights and remedies as heretofore provided is a disposition thereof in a commercially reasonable manner and that ten (10) days prior notice of such disposition is commercially reasonable notice.
Article
5
RIGHTS AND DUTIES OF THE PARTIES
5.1 PERFORMANCE OF SECURED OBLIGATIONS. Mortgagor shall promptly pay and perform each Secured Obligation for which it is responsible hereunder or under the Loan Agreement prior to delinquency. If Mortgagor fails to timely pay or perform any portion of the Secured Obligations (including taxes, assessments and insurance premiums), or if a legal proceeding is commenced that may materially adversely affect Lender’s rights in the Property, then Lender may (but is not obligated to), at Mortgagor’s expense, take such action as it considers to be necessary to protect the value of the Property and Lender’s rights in the Property, including the retaining of counsel, and any amount actually expended by Lender, including reasonable, out-of-pocket attorney’s fees, will be added to the Secured Obligations and will be payable by Mortgagor to Lender, together with interest thereon from the date of advance until paid at the Default Rate provided in the Note.
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5.2 TAXES AND ASSESSMENTS. Subject to Mortgagor’s rights to contest payment of taxes or assessments as may be provided in the Loan Agreement, Mortgagor shall pay prior to delinquency all taxes, assessments, levies and charges imposed by any public or quasi-public authority or utility company which are or which may become a lien upon or cause a loss in value of the Property or any interest therein. Mortgagor shall also pay prior to delinquency all property taxes, assessments, levies and charges imposed by any public authority upon Lender by reason of its interest in any Secured Obligation or in the Property, or by reason of any payment made to Lender pursuant to any Secured Obligation; provided, however, Mortgagor shall have no obligation to pay taxes which may be imposed from time to time upon Lender and which are measured by and imposed upon Lender’s net income.
5.3 LIENS, ENCUMBRANCES AND CHARGES. Subject to the terms and conditions of the Loan Agreement, including Mortgagor’s right to contest, Mortgagor shall promptly discharge all liens, claims and encumbrances not approved by Lender in writing that have or may attain priority over this Security Instrument. Subject to the provisions of the Loan Agreement regarding mechanics’ liens, Mortgagor shall pay when due all obligations secured by, or which may become, liens and encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the Property or Collateral, or any interest therein, whether senior or subordinate hereto.
5.4 INTENTIONALLY OMITTED.
5.5 MAINTENANCE AND PRESERVATION OF THE PROPERTY. Subject to the provisions of the Loan Agreement, Mortgagor covenants: (a) to insure the Property and Collateral against such risks as Lender may reasonably require as set forth in the Loan Agreement; (b) to keep the Property and Collateral in good condition and repair; (c) not to remove or demolish the Property or Collateral or any part thereof, subject to Mortgagor’s right to replace items of personal property with items of comparable utility and value (or to not replace same if such items are deemed to be obsolete); (d) to complete or restore promptly and in good and workmanlike manner the Property and Collateral, or any part thereof which may be damaged or destroyed, subject to receipt of Insurance Proceeds to make such repairs, in each case in accordance with the Loan Agreement; (e) to comply in all material respects with all laws, ordinances, regulations and standards, and all covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character which affect the Property or Collateral and pertain to acts committed or conditions existing thereon, including, without limitation, any work, alteration, improvement or demolition mandated by such laws, covenants or requirements; and (f) not to commit or permit waste of the Property or Collateral.
5.6 REQUIRED INSURANCE. Mortgagor shall at all times provide, maintain and keep in force or cause to be provided, maintained and kept in force with respect to the Property, at no expense to Lender, policies of insurance in such forms and amounts required by the Loan Agreement.
5.7 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. Subject to the terms of the Loan Agreement, at Mortgagor’s sole expense, Mortgagor shall protect, preserve and defend the Property and Collateral and title to and right of possession of the Property and Collateral, the security hereof and the rights and powers of Lender hereunder against all adverse claims. Subject to the terms of the Loan Agreement, Mortgagor shall give Lender prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding, of the occurrence of any damage to the Property or Collateral and of any condemnation offer or action with respect to the Property or Collateral.
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5.8 DUE ON SALE; ENCUMBRANCE. The terms and conditions of Sections 9.6 and 12.2 of the Loan Agreement are incorporated herein by reference.
5.9 ACTIONS BY LENDER. From time to time, without affecting the personal liability of any person for payment of any indebtedness or performance of any obligations secured hereby, Lender, without liability therefor and without notice, may: (a) release all or any part of the Property from this Security Instrument; (b) consent to the making of any map or plat thereof; and (c) join in any grant of easement thereon, any declaration of covenants and restrictions, or any extension agreement or any agreement subordinating the lien or charge of this Security Instrument.
5.10 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without notice to or the consent, approval or agreement of any persons or entities having any interest at any time in the Property and Collateral or in any manner obligated under the Secured Obligations (“Interested Parties”), Mortgagee, may, from time to time and without notice to Mortgagor (i) release any person or entity from liability for the payment or performance of any Secured Obligation; or (ii) accept additional security or release all or a portion of the Property and Collateral and other security for the Secured Obligations. None of the foregoing actions shall release or reduce the personal liability of any of said Interested Parties, or release or impair the priority of the lien of and security interests created by this Security Instrument upon the Property, the Collateral or any other security provided herein or in the other Loan Documents.
5.11 SUBROGATION. Lender shall be subrogated to the lien of all encumbrances, whether released of record or not, paid in whole or in part by Lender pursuant to the Loan Documents or by the proceeds of any loan secured by this Security Instrument.
5.12 RIGHT OF INSPECTION. Lender, its agents, representatives and employees, may at all times during the term of the Loan during normal business hours and upon reasonable advance notice to Borrower, have the right of entry and free access to the Property; provided that suitable arrangements are made to minimize disruption of any business on the Property, except following the occurrence and during the continued existence of an Event of Default when no notice is required, but in all events subject to the rights of the Tenants.
Article
6
DEFAULT PROVISIONS
6.1 DEFAULT AND EVENT OF DEFAULT. For all purposes hereof, the terms “Default” and “Event of Default” shall have the meanings given such terms in the Loan Agreement.
6.2 RIGHTS AND REMEDIES. At any time after the occurrence and during the continuance of an Event of Default, Lender shall have each and every one of the following rights and remedies in addition to Lender’s rights at law, equity, or under the other Loan Documents:
(a) With or without notice (except as may be required by applicable law or pursuant to the Loan Agreement), to declare all Secured Obligations immediately due and payable.
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(b) With or without notice (except as may be required pursuant to the Loan Agreement), and without releasing Mortgagor from any Secured Obligation, and without becoming a mortgagee in possession, to cure any Event of Default (after applicable notice and cure period) of Mortgagor, in connection therewith, to enter upon the Property and do such acts and things as Lender deems reasonably necessary to protect the security hereof, including, without limitation: (i) to appear in and defend any action or proceeding purporting to affect the security of this Security Instrument or the rights or powers of Lender under this Security Instrument; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien or claim of lien which, in the sole judgment of Lender, is or may be senior in priority to this Security Instrument, the judgment of Lender being conclusive as between the parties hereto; (iii) to obtain insurance and to pay any premiums or charges with respect to insurance required to be carried under this Security Instrument; or (iv) to employ counsel, accountants, contractors and other appropriate persons.
(c) To commence and maintain an action or actions in any court of competent jurisdiction to foreclose this Security Instrument as a deed of trust or mortgage or to obtain specific enforcement of the covenants of Mortgagor hereunder, and Mortgagor agrees that such covenants shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purposes of any suit brought under this subparagraph, Mortgagor waives the defense of laches and any applicable statute of limitations.
(d) To the extent this Security Instrument may encumber more than one property, the Lender at its sole option shall have the right to foreclose any one property or to foreclose en masse. In any suit to foreclose the lien hereof, there shall be allowed and included as additional indebtedness to the decree for sale all costs, fees and expenses described in that certain Section hereof entitled Payment of Costs, Expenses and Attorney’s Fees which may be paid or incurred by or on behalf of Lender to prosecute such suit, and such other out-of-pocket costs and fees including, but not limited to, appraisers’ fees, outlays for documentary and expert evidence, stenographers’ charges, publication costs, accounting fees, brokerage commissions, costs of whatever nature or kind to protect and avoid impairment of the Property, and other related costs and fees as shall be reasonably necessary.
(e) To foreclose this Security Instrument by action or advertisement, pursuant to the statutes of the State of Florida in such case made and provided, power being expressly granted to sell the Property at public auction and convey the same to the purchaser thereof and, out of the proceeds arising from such sale, to pay the Secured Obligations secured hereby with interest, and all reasonable legal costs and out-of-pocket charges of such foreclosure (not to exceed the maximum reasonable, out-of-pocket attorneys’ fees permitted by law), which out-of-pocket costs, charges and fees Mortgagor agrees to pay.
(f) To apply to a court of competent jurisdiction for and obtain appointment of a receiver of the Property to the fullest extent permitted by applicable law, as a matter of strict right and without regard to the adequacy of the security for the repayment of the Secured Obligations, the existence of a declaration that the Secured Obligations are immediately due and payable, or the filing of a notice of default, and Mortgagor hereby consents to such appointment (ex parte or otherwise) and waives notice of any hearing or proceeding for such appointment.
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(g) To enter upon, possess, control, lease, manage and operate the Property or any part thereof, to take and possess all documents, books, records, papers and accounts of Mortgagor or the then owner of the Property, to make, terminate, enforce or modify Leases of the Property upon such terms and conditions as Lender deems proper, to make repairs, alterations and improvements to the Property as necessary, in Lender’s sole but reasonable judgment, to protect or enhance the security hereof.
(h) To resort to and realize upon the security hereunder and any other security now or later held by Lender concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non-judicial proceedings, or both, and to apply the proceeds received upon the Secured Obligations all in such order and manner as Lender determines in its sole discretion.
(i) Upon sale of the Property at any foreclosure sale, Lender may credit bid (as determined by Lender in its sole and absolute discretion) all or any portion of the Secured Obligations. In determining such credit bid, to the extent permitted by law, Lender may, but is not obligated to, take into account all or any of the following: (i) appraisals of the Property as such appraisals may be discounted or adjusted by Lender in its sole and absolute underwriting discretion; (ii) expenses and costs incurred by Lender with respect to the Property prior to foreclosure; (iii) expenses and costs which Lender anticipates will be incurred with respect to the Property after foreclosure, but prior to resale, including, without limitation, costs of structural reports and other due diligence, costs to carry the Property prior to resale, costs of resale (e.g. commissions, reasonable, out-of-pocket attorneys’ fees, and taxes), costs of any hazardous materials clean-up and monitoring, costs of deferred maintenance, repair, refurbishment and retrofit, costs of defending or settling litigation affecting the Property, and lost opportunity costs (if any), including the time value of money during any anticipated holding period by Lender; (iv) declining trends in real property values generally and with respect to properties similar to the Property; (v) anticipated discounts upon resale of the Property as a distressed or foreclosed property; (vi) the fact of additional collateral (if any), for the Secured Obligations; and (vii) such other factors or matters that Lender (in its sole and absolute discretion) deems appropriate. In regard to the above, Mortgagor acknowledges and agrees that: (w) Lender is not required to use any or all of the foregoing factors to determine the amount of its credit bid; (x) this Section does not impose upon Lender any additional obligations that are not imposed by law at the time the credit bid is made; (y) the amount of Lender’s credit bid need not have any relation to any loan-to-value ratios specified in the Loan Documents or previously discussed between Mortgagor and Lender; and (z) Lender’s credit bid may be (at Lender’s sole and absolute discretion) higher or lower than any appraised value of the Property.
(j) Apply any sums then deposited or held in escrow or otherwise by or on behalf of Lender in accordance with the terms of the Loan Agreement, this Security Instrument or any other Loan Document to the payment of the following items in any order in its sole discretion:
(i) Taxes and other charges;
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(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the Note; or
(iv) All other sums payable pursuant to the Note, Loan Agreement, this Security Instrument and the other Loan Documents, including, without limitation, the Prepayment Fee, if applicable, and advances made by Lender pursuant to the terms of this Security Instrument;
(k) To the extent permitted by applicable law, upon the completion of any foreclosure of all or a portion of the Property, commence an action to recover any of the Secured Obligations that remains unpaid or unsatisfied.
(l) Exercise any and all remedies at law, equity, or under the Note, Security Instrument or other Loan Documents for such Default or Event of Default.
6.3 Waiver of Appraisement, Homestead, Redemption. To the extent permitted by applicable law, the Mortgagor hereby covenants and agrees that it will not at any time insist or plead, or in any manner whatever claim or take any advantage of, any stay, exemption or extension law or any so-called “Moratorium Law” now or at any time hereafter in force, nor claim, take or insist upon any benefit of advantage of or from any law now or hereafter in force providing for the valuation or appraisement of the Property, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or pursuant to decree, judgment or order of any court of competent jurisdiction; or after such sale or sales claim or exercise any rights under any statute now or hereafter in force to redeem the property so sold, or any part thereof, or relating to the marshaling thereof, upon foreclosure sale or other enforcement hereof.
6.4 APPLICATION OF FORECLOSURE SALE PROCEEDS. Except as may be otherwise required by applicable law, after deducting all out-of-pocket costs, fees and expenses of Lender, including, without limitation, the costs of evidence of title and reasonable, out-of-pocket attorneys’ fees in connection with any foreclosure sale and out-of-pocket costs and expenses of any foreclosure sale and of any judicial proceeding wherein such foreclosure sale may be made, all proceeds of any foreclosure sale shall be applied: (a) to payment of all sums expended by Lender under the terms hereof and not then repaid, with accrued interest at the rate of interest specified in the Note to be applicable on or after maturity or acceleration of the Note; (b) to payment of all other Secured Obligations; and (c) the remainder, if any, to the person or persons legally entitled thereto.
6.5 APPLICATION OF OTHER SUMS. All sums received by Lender under this Security Instrument other than those described in Section hereof entitled Rights and Remedies or Section hereof entitled Grant of License, less all reasonable, out-of-pocket costs and expenses incurred by Lender or any receiver, including, without limitation, reasonable, out-of-pocket attorneys’ fees, shall be applied in payment of the Secured Obligations in such order as Lender shall determine in its sole discretion; provided, however, Lender shall have no liability for funds not actually received by Lender.
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6.6 NO CURE OR WAIVER. Neither Lender’s nor any receiver’s entry upon and taking possession of all or any part of the Property and Collateral, nor any collection of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds of other security, or other sums, nor the application of any collected sum to any Secured Obligation, nor the exercise or failure to exercise of any other right or remedy by Lender or any receiver shall, cure or waive any breach, Default or Event of Default under this Security Instrument, or nullify the effect of any notice of Default, Event of Default or sale (unless all Secured Obligations then due have been paid and performed and Mortgagor has cured all other Defaults and Events of Default), or limit or impair the status of the security, or prejudice Lender in the exercise of any right or remedy, or be construed as an affirmation by Lender of any tenancy, lease or option or a subordination of the lien of or security interests created by this Security Instrument.
6.7 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS’ FEES. Mortgagor agrees to promptly pay to Lender within ten (10) Business Days of written demand therefor all reasonable costs and expenses of any kind actually incurred by Lender pursuant to this Security Instrument (including, without limitation, reasonable court costs and reasonable, out-of-pocket attorneys’ fees, whether incurred in litigation or not, including, without limitation, at trial, on appeal or in any bankruptcy or other proceeding, or not and the reasonable costs of any appraisals obtained in connection with a determination of the fair market value of the Property) with interest from the date of written demand until said sums have been paid at the rate of interest then applicable to the principal balance of the Note as specified therein or as allowed by applicable law. In addition, Mortgagor will pay the actual costs and fees for title searches, sale guarantees, publication costs, appraisal reports or environmental assessments made in preparation for and in the conduct of any such proceedings or suit. All of the foregoing amounts must be paid to Lender as part of any reinstatement tendered hereunder. In the event of any legal proceedings, court costs and reasonable, out-of-pocket attorneys’ fees shall be set by the court and not by jury and shall be included in any judgment obtained by Lender.
6.8 REMEDIES CUMULATIVE. All rights and remedies of Lender provided hereunder are cumulative and are in addition to all rights and remedies provided by applicable law (including specifically that of foreclosure of this Security Instrument as though it were a mortgage) or in any other agreements between Mortgagor and Lender. No failure on the part of Lender to exercise any of its rights hereunder arising upon any Event of Default shall be construed to prejudice its rights upon the occurrence of any other or subsequent Event of Default. No delay on the part of Lender in exercising any such rights shall be construed to preclude it from the exercise thereof at any time while that Event of Default is continuing. Lender may enforce any one or more remedies or rights hereunder successively or concurrently. By accepting payment or performance of any of the Secured Obligations after its due date, Lender shall not waive the agreement contained herein that time is of the essence, nor shall Lender waive either its right to require prompt payment or performance when due of the remainder of the Secured Obligations or its right to consider the failure to so pay or perform an Event of Default.
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Article
7
FLORIDA STATE LAW PROVISIONs
7.1 INTANGIBLES TAX AND DOCUMENTARY STAMPS TAX. Mortgagor forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, will cause this Security Instrument and any of the other Loan Documents creating a lien or security interest or evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and to fully protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property. Mortgagor will pay all taxes, filing, registration or recording fees, and all expenses, including, but not limited to, the Nonrecurring Florida Intangible Tax and the Florida Documentary Stamp Tax, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges, including, but not limited to, the Nonrecurring Florida Intangible Tax and the Florida Documentary Stamp Tax, arising out of or in connection with the execution and delivery of this Security Instrument, the other Loan Documents, or any instrument of further assurance, and any modification or amendment of the foregoing documents, except where prohibited by law so to do.
7.2 FUTURE ADVANCES. This Security Instrument secures such future or additional advances as may be made by Lender or the holder hereof, at its exclusive option, to Borrower or its successors or assigns in title, for any purpose, provided that all such advances are made within twenty (20) years from the date of this Security Instrument or within such lesser period of time as may be provided by law as a prerequisite for the sufficiency of actual notice or record notice of such optional future or additional advances as against the rights of creditors or subsequent purchasers for valuable consideration to the same extent as if such future or additional advances were made on the date of the execution of this Security Instrument. The total amount of Obligations may be increased or decreased from time to time, but the total unpaid balance so secured at any one time shall not exceed $138,000,000.00, plus interest thereon and any disbursements made under this Security Instrument for the payment of impositions, taxes, assessments, levies, insurance, or otherwise with interest on such disbursements, plus any increase in the principal balance as the result of negative amortization or deferred interest, if any. All such future advances shall be secured to the same extent as if made on the date of the execution of this Security Instrument and this Security Instrument shall secure the payment of the Note and any additional advances made from time to time pursuant thereto, all of said Obligations being equally secured hereby and having the same priority as any amounts advanced as of the date of this Security Instrument. It is agreed that any additional sum or sums advanced by Lender shall be equally secured with and have the same priority as the original indebtedness under the Note and shall be subject to all of the terms, provisions and conditions of this Security Instrument, whether or not such additional loans or advances are evidenced by other notes or other guaranties of Mortgagor and whether or not identified by a recital that it or they are secured by this Security Instrument. It is further agreed that any additional note or guaranty or notes or guaranties executed and delivered pursuant to this paragraph shall automatically be deemed to be included in the term “Note” wherever it appears in the context of this Security Instrument. Without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed, Mortgagor shall not file for record any notice limiting the maximum principal amount that may be secured by this Security Instrument to a sum less than the maximum principal amount set forth herein. Mortgagor covenants and agrees that, in the event any loan or advance shall be made to any Mortgagor pursuant to this paragraph, such Mortgagor shall pay all Florida documentary
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stamp and intangible taxes, if any, which may be due in connection with such loan or advance, and that evidence of such payment shall be affixed to the document containing the written promise to pay or the notice of future advance, if any. In the event that documentary stamp or intangible taxes shall hereafter be assessed due to the future advance provisions contained in this Section, Mortgagor covenants and agrees to pay all such taxes promptly upon assessment, together with any interest and penalties thereon, and payment of all such amounts shall be secured by the lien of the Security Instrument and the other Loan Documents. The provisions of this Section apply regardless of whether any such advance is characterized as obligatory or optional; but nothing contained in this Section by itself obligates Lender to make any additional loans or advances. Borrower will not file a notice limiting the maximum amount which may be secured by this Security Instrument pursuant to Section 697.04(1)(b) of the Florida Statutes.
7.3 STATUTORY COMPLIANCE. Borrower is required to comply with the applicable provisions of Chapter 713, Florida Statutes, from and after the date of this Security Instrument, in connection with any work performed pursuant to the provisions of this Security Instrument.
7.4 PRINCIPLES OF CONSTRUCTION. In the event of any inconsistencies between the terms and conditions of this Article 7 and the other terms and conditions of this Security Instrument, the terms and conditions of this Article 7 shall control and be binding.
7.5 COMPLIANCE WITH MORTGAGE FORECLOSURE LAW. In the event that any provision of this Security Instrument shall be inconsistent with any provision of the statutes or common law of the State of Florida governing the foreclosure of this Security Instrument (collectively, the “Foreclosure Laws”), the provisions of the Foreclosure Laws shall take precedence over the provisions of this Security Instrument but shall not invalidate or render unenforceable any other provision of this Security Instrument that can be construed in a manner consistent with the Foreclosure Laws.
7.6 NO NOVATION. Neither this Security Instrument nor the Note is a substitution or novation of the indebtedness of the Prior Note, which is renewed, amended and restated pursuant to the Note. Neither this Security Instrument nor the Note extinguishes the indebtedness of the Prior Note or discharges or releases or in any way adversely affects the lien or lien priorities of the Prior Mortgage or any other security for the indebtedness of the Prior Note. In the event that any of the provisions of this Security Instrument shall be construed by a court of competent jurisdiction as operating to affect the lien priority of the Prior Mortgage over claims which would otherwise be subordinate thereto, then at the sole option of Lender, Lender may treat such provisions as void and of no force or effect and enforce the provisions of the Prior Mortgage as modified by this Security Instrument excluding such provisions, or at the sole option of Lender, Lender may enforce the Prior Mortgage pursuant to the terms therein contained, independent of this Security Instrument to the extent that third persons acquiring an interest in such real property between the time of recording of the Prior Mortgage and the recording hereof are prejudiced by this Security Instrument; provided however, that in any case Lender may not enforce the provisions of the Prior Mortgage against Borrower. However, if Lender elects either such option, the parties hereto, as between themselves, shall in all events be bound by all the terms and conditions of this Security Instrument and the Note until all Secured Obligations owing from Borrower to Lender shall have been paid in full.
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7.7 COOPERATION WITH FUTURE ASSIGNMENT OF SECURITY INSTRUMENT. At the written request of Borrower that it wishes to have Lender assign this Security Instrument and endorse the Note secured hereby to another lender in connection with any renewal of the Note and this Security Instrument permitted under the Loan Documents (as may then be permissible under applicable Florida law), Lender (at no cost to Lender) shall cooperate with Borrower to promptly provide such assignment documentation (on commercially reasonable customary forms) to assignee lender or Borrower. Lender acknowledges that if such assignment is effectuated, this Security Instrument and the Note will not be released of record or discharged upon payment in full to Lender of all amounts then due under the Loan as set forth in Lender’s payoff letter. Borrower shall pay all costs and expenses of the Lender associated with such assignment and any request for such assignment, including, without limitation, reasonable attorneys’ fees and the costs and expenses of the preparation of assignments and any other document, instrument or agreement.
Article
8
MISCELLANEOUS PROVISIONS
8.1 NOTICES. All notices, demands, or other communications under this Security Instrument shall be in writing and shall be delivered to the appropriate party at the addresses set forth below pursuant to the terms and conditions of Section 13.2 of the Loan Agreement. For purposes of notice, the address of the parties shall be:
| Mortgagor: |
Block 40 Property, LLC c/o Stewards, Inc. 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Attn: Katy Murless, Chief Financial Officer Email: [email protected]
With copy to: Scott Doney, Esq. 3651 Lindell Rd Ste D121 Las Vegas, NV 89103 Email: [email protected]
|
| Lender: |
VMC CRE Master Lending Upper REIT LLC c/o Värde Partners, Inc. 350 N 5th Street, Suite 800 Minneapolis, Minnesota 55401 Attn: Legal Notices Email: [email protected]
With a copy to:
Fox Rothschild LLP 33 South Sixth Street, Suite 3600 Minneapolis, MN 55402 Attn: Tyler K. Olson Email: [email protected]
|
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Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth in Section 13.2 of the Loan Agreement. Notices, demands, and communications provided by legal counsel on behalf of any party to this Security Instrument pursuant to this Section 8.1 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
8.2 INTENTIONALLY OMITTED.
8.3 NO WAIVER. No previous waiver and no failure or delay by Lender in acting with respect to the terms of the Note or this Security Instrument shall constitute a waiver of any breach, default, or failure of condition under the Note, this Security Instrument or the obligations secured thereby. A waiver of any term of the Note, this Security Instrument or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.
8.4 SEVERABILITY. If any provision or obligation under this Security Instrument shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from this Security Instrument and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of this Security Instrument.
8.5 HEIRS, SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided under the terms and conditions herein, the terms of this Security Instrument shall bind and inure to the benefit of the heirs, executors, administrators, nominees, successors and assigns of the parties hereto, including, without limitation, subsequent owners of the Property or any part thereof; provided, however, that this Section 8.5 does not waive or modify the provisions of that certain Section entitled Due on Sale or Encumbrance.
8.6 TIME. Time is of the essence of each and every term herein.
8.7 GOVERNING LAW; WAIVER OF JURY TRIAL; AND CONSENT TO JURISDICTION. IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY INSTRUMENT AND THE OBLIGATIONS ARISING HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, MORTGAGOR, AND LENDER BY ACCEPTANCE HEREOF, HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS SECURITY INSTRUMENT AND THE NOTE, AND THIS SECURITY INSTRUMENT AND THE NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA, AND ANY LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO NATIONAL BANKS. TO THE FULLEST EXTENT PERMITTED BY LAW, MORTGAGOR
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AND LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION RELATING TO THE LOAN AND/OR THE LOAN DOCUMENTS. MORTGAGOR, TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMIT TO PERSONAL JURISDICTION IN THE STATE OF FLORIDA, COUNTY OF BROWARD, OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS SECURITY INSTRUMENT, (B) AGREE THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF FLORIDA, COUNTY OF BROWARD, (C) SUBMIT TO THE JURISDICTION AND VENUE OF SUCH COURTS AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT, AND (D) AGREE THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN WILL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, EACH PARTY TO THIS SECURITY AGREEMENT, INCLUDING THE LENDER BY ITS ACCEPTANCE HEREOF, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS SECURITY INSTRUMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
8.8 INTENTIONALLY OMITTED.
8.9 HEADINGS. All article, section or other headings appearing in this Security Instrument are for convenience of reference only and shall be disregarded in construing this Security Instrument.
8.10 COUNTERPARTS. To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.
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8.11 POWERS OF ATTORNEY. Any powers of attorney granted by Mortgagor to Mortgagee in this Security Instrument shall be unaffected by the disability of the principal so long as any portion of the Loan remains unpaid or unperformed. Any powers of attorney granted by Mortgagor to Mortgagee shall only be exercisable during the continuance of an Event of Default. Mortgagee shall have no obligation to exercise any of the foregoing rights and powers in any event. Mortgagee hereby discloses that it may exercise the foregoing powers of attorney for Mortgagee’s benefit, and such authority need not be exercised for Mortgagor’s best interest.
8.12 DEFINED TERMS. Unless otherwise defined herein, capitalized terms used in this Security Instrument shall have the meanings attributed to such terms in the Loan Agreement.
8.13 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. If any term of this Security Instrument or any application thereof will be invalid or unenforceable, the remainder of this Security Instrument and any other application of the term will not be affected thereby.
8.14 RULES OF CONSTRUCTION. The word “Borrower” as used herein shall include both the named Borrower and any other person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term “person” as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Security Instrument is executed by more than one person, the term “Mortgagor” shall include all such persons. The words “Lender” or “Mortgagee” as used herein shall include Lender, its successors, assigns and affiliates. The term “Property” and “Collateral” means all and any part of the Property and Collateral, respectively, and any interest in the Property and Collateral, respectively.
8.15 USE OF SINGULAR AND PLURAL; GENDER. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
8.16 EXHIBITS, SCHEDULES AND RIDERS. All exhibits, schedules, riders and other items attached hereto are incorporated into this Security Instrument by such attachment for all purposes.
8.17 INCONSISTENCIES. In the event of any inconsistencies between the terms of this Security Instrument and the terms of the Loan Agreement or Note, including without limitation, provisions regarding collection and application of Property revenue, required insurance, tax impounds, and transfers of the Property, the terms of the Loan Agreement or Note, as applicable, shall prevail.
8.18 MERGER. No merger shall occur as a result of Lender’s acquiring any other estate in, or any other lien on, the Property unless Lender consents to a merger in writing and in accordance with the terms of the Loan Agreement.
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8.19 ACCEPTANCE OF PAYMENTS. Mortgagor agrees that if Mortgagor makes a tender of a payment but does not simultaneously tender payment of all amounts due and owing by Mortgagor under this Security Instrument or the other Loan Documents, and such payment is accepted by Lender, with or without protest, such acceptance will not constitute any waiver of Lender’s rights to receive such amounts. Furthermore, if Lender accepts any payment from Mortgagor or any guarantor during the continuance of a Default or Event of Default, such acceptance will not constitute a waiver or satisfaction of any such Default or Event of Default. Any waiver or satisfaction of a Default or Event of Default must be evidenced by an express writing of Lender.
8.20 INTEGRATION; INTERPRETATION. The Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Lender in writing. The Loan Documents grant further rights to Lender and contain further agreements and affirmative and negative covenants by Mortgagor which apply to this Security Instrument and to the Property and Collateral and such further rights and agreements are incorporated herein by this reference.
[Signature Page(s) to Follow]
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IN WITNESS WHEREOF, the undersigned has executed this Security Instrument as of the date first written above.
|
__________________________________ Witness __________________________________ Print Name
__________________________________ Witness __________________________________ Print Name
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BORROWER:
BLOCK 40 PROPERTY, LLC, a Delaware limited liability company
By: Block 40 Managers, LLC, a Florida limited liability company, its manager
By: /s/ Shaun A. Quin Name: Shaun A. Quin Title: Authorized Signatory
|
STATE OF __________________ )
)
COUNTY OF _________________ )
The foregoing instrument was acknowledged before me by means of [____] physical presence or [____] online notarization this ____ day of ____________, 2026, by Shaun A. Quin, the Authorized Signatory of Block 40 Manager, LLC, a Florida limited liability company, the Manager of BLOCK 40 PROPERTY, LLC, a Delaware limited liability company, for and on behalf of the company. He personally appeared before me, is personally known to me or has produced a valid driver’s license as identification.
Notarial Public, State of
Name:
My Commission Expires:
[Seal]
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|
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LENDER:
VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company
By: Värde Partners, Inc., its Manager
By: /s/ Chase Heichel Name: Chase Heichel Its: Director
|
STATE OF __________________ )
)
COUNTY OF _________________ )
The foregoing instrument was acknowledged before me by means of [____] physical presence or [____] online notarization this ____ day of _____________, 2026, by Chase Heichel, the Director of Värde Partners, Inc., the Manager of VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company, for and on behalf of the company. He personally appeared before me, is personally known to me or has produced a valid driver’s license as identification.
Notarial Public, State of
Name:
My Commission Expires:
[Seal]
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EXHIBIT A
Legal Description
ALL THAT CERTAIN LOT OR PARCEL OF LAND SITUATE IN THE COUNTY OF BROWARD, STATE OF FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1:
LOTS 1, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
PARCEL 2:
LOTS 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 AND 14, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
LESS AND EXCEPT THEREFROM THAT CERTAIN PROPERTY CONVEYED TO THE CITY OF HOLLYWOOD BY THAT CERTAIN DEED RECORDED IN OFFICIAL RECORDS BOOK 3476, PAGE 399, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF LOT 6, BLOCK 40, OF THE SUBDIVISION OF THE TOWN OF HOLLYWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 1, AT PAGE 21, IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA; RUN EAST ON AND ALONG THE SOUTH LINE OF LOTS 6, 7 AND 8 FOR A DISTANCE OF 65.36 FEET TO THE POINT OF BEGINNING. SAID POINT OF BEGINNING BEING THE POINT OF CURVATURE OF A CURVE CONCAVE TO THE NORTHWEST AND HAVING THE FOLLOWING PROPERTIES:
R=30.0 FEET, DELTA=123 DEGREES 06 MINUTES 46 SECONDS, ARC LENGTH=64.46 FEET; THENCE RUN NORTHEASTERLY ON SAID CURVE FOR A DISTANCE OF 64.46 FEET TO THE POINT OF INTERSECTION WITH THE EAST PROPERTY LINE OF LOT 8 OF SAID BLOCK 40. THENCE RUN SOUTHEASTERLY ON THE EAST LINE OF LOT 8, SAID EAST LINE BEING A CURVE HAVING THE FOLLOWING PROPERTIES: R=492.0 FEET, DELTA=9 DEGREES 52 MINUTES 51 SECONDS, ARC LENGTH=84.85 FEET, EXTENDED TO A POINT OF INTERSECTION WITH THE SOUTH LINE OF LOTS 6, 7 AND 8 EXTENDED EASTERLY; THENCE RUN WESTERLY ON AND ALONG THE EXTENSION OF LOTS 6, 7 AND 8 TO THE POINT OF BEGINNING.
PARCEL 3:
THAT CERTAIN 13.00 FOOT ALLEY LYING IN BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS VACATED AND MORE PARTICULARLY DESCRIBED BY THAT CERTAIN ORDINANCE NO. 0-2005-16 RECORDED IN OFFICIAL RECORDS BOOK 47110, PAGE 253, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
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THIS DOCUMENT WAS DRAFTED BY
AND WHEN RECORDED RETURN TO:
Tyler K. Olson, Esq.
Fox Rothschild LLP
33 South Sixth Street, Suite 3600
Minneapolis, MN 55402-3338
(612) 607-7000
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (“Assignment”), is made as July 24, 2026, by BLOCK 40 PROPERTY, LLC, a Delaware limited liability company (“Borrower”), as assignor, for the benefit of VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”), as assignee.
RECITALS
A. This Assignment is given to secure a loan (the “Loan”) made by Lender to Borrower pursuant to that certain Loan Agreement of even date herewith between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”) and evidenced by that certain Note (as defined in the Loan Agreement) and secured by, among other things, the Security Instrument (as defined in the Loan Agreement).
B. Borrower desires to further secure the payment of the Loan and performance of all obligations under the Note, the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement).
NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Assignment, the parties hereto agree as follows:
ARTICLE 1
ASSIGNMENT
Section 1.1 Property Assigned. Borrower hereby irrevocably, absolutely and unconditionally assigns, transfers and grants to Lender Borrower’s right, title and interest in and to the following property, rights, interests and estates, now owned, or hereafter acquired by Borrower:
(a) Leases. All present and future leases, subleases, subsubleases, lettings, licenses, concessions or other agreements (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use, enjoy or occupy all or any portion of the Real Property (as defined in the Security Instrument), more particularly described in Exhibit A annexed hereto and made a part hereof, or all or any part of the buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter located thereon (collectively, the “Property”), and every modification, amendment or other agreement relating to such leases, subleases, subsubleases, rental agreements, or other agreements
entered into in connection with such leases, subleases, subsubleases, rental agreements, or other agreements and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto (collectively, the “Leases”), and all right, title and interest of Borrower, its successors and assigns, therein and thereunder. The term “Leases” shall include all agreements, whether or not in writing, affecting the use, enjoyment or occupancy of the Property or any portion thereof now or hereafter made, whether made before or after the filing by or against Borrower of any petition for relief under Title 11 of the United States Code entitled “Bankruptcy”, as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights (collectively, the “Bankruptcy Code”), together with any extension, renewal or replacement of the same; this Assignment of existing and future Leases and other agreements related thereto being effective without any further or supplemental assignment;
(b) Rents. To the extent assignable, all rents, additional rents, rent equivalents, moneys payable as damages in connection with any Leases or in lieu of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including, without limitation, security, utility and other deposits (including, without limitation, cash, letters of credit or securities deposited under Leases to secure the performance by the lessees of their obligations thereunder)), accounts, cash, issues, profits, charges for services rendered, all payments made pursuant to a termination of any Leases or a settlement of the obligations of any Tenant under any Leases, and any other payment and consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or Property Manager or any of their respective agents or employees in each case to the extent such services are rendered in connection with Leases at the Property from any and all sources arising from or attributable to the Property, including, without limitation, all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, rental, concession or other grant of the right of the use and occupancy of the Property or rendering of services by Borrower or Property Manager or any of their respective agents or employees and proceeds, if any, from business interruption or other loss of income insurance, whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code in each case (collectively, the “Rents”);
(c) Bankruptcy Claims. All of Borrower’s claims and rights (the “Bankruptcy Claims”) to the payment of damages arising from any rejection by a lessee of any Lease under the Bankruptcy Code;
(d) Lease Guaranties. To the extent assignable, all of Borrower’s right, title and interest in, and claims under, any and all lease guaranties, letters of credit and any other credit support (individually, a “Lease Guaranty”, and collectively, the “Lease Guaranties”) given by any guarantor in connection with any of the Leases or leasing commissions (individually, a “Lease Guarantor”, and collectively, the “Lease Guarantors”) to Borrower;
(e) Proceeds. All proceeds from the sale or other disposition of the Leases, the Rents, the Lease Guaranties and/or the Bankruptcy Claims pursuant to the terms of the Loan Agreement;
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(f) Other. To the extent assignable, all rights, powers, privileges, options and other benefits of Borrower as lessor under any of the Leases and beneficiary under any of the Lease Guaranties, including, without limitation, the immediate and continuing right to make claim for, receive, collect and receipt for all Rents payable or receivable under the Leases and all sums payable under the Lease Guaranties or pursuant thereto (and to apply the same to the payment of the Loan), and to do all other things which Borrower or any lessor is or may become entitled to do under any of the Leases or Lease Guaranties;
(g) Entry. The right, at Lender’s option, upon the occurrence and during the continuance of an Event of Default (as defined in the Loan Agreement) (unless such license shall be reinstated in accordance with this Assignment), to enter upon the Property in person, by agent or by court appointed receiver, to collect the Rents, subject to the terms hereof and the Loan Agreement;
(h) Power Of Attorney. During the continuance of an Event of Default, Borrower’s irrevocable power of attorney, coupled with an interest, to take any and all of the actions set forth in Section 3.1 of this Assignment and any or all other actions designated by Lender for the proper management and preservation of the Property; and
(i) Other Rights And Agreements. Any and all other rights of Borrower in and to the items set forth in subsections (a) through (h) above, and all amendments, modifications, replacements, renewals and substitutions thereof.
ARTICLE 2
TERMS OF ASSIGNMENT
Section 2.1 Present Assignment and License Back. It is intended by Borrower that this Assignment constitute a present, absolute transfer and assignment of the Leases, Rents, Lease Guaranties and Bankruptcy Claims, and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 2.1, the Loan Agreement, the Security Instrument, Lender grants to Borrower a revocable license to collect, receive, use and enjoy the Rents, as well as other sums due under the Lease Guaranties. Unless and until such license is revoked in accordance with the terms hereof, Borrower shall hold and deposit the Rents pursuant to the terms of the Loan Agreement.
Section 2.2 Notice to Lessees. During the continuance of an Event of Default, Borrower hereby authorizes and directs the lessees named in the Leases or any other future lessees or occupants of the Property and all Lease Guarantors to pay over to Lender, or to such other party as Lender directs, all Rents and all sums due under any Lease Guaranties and to continue so to do until otherwise notified by Lender.
Section 2.3 Incorporation by Reference. All representations, warranties, covenants, conditions and agreements contained in the Loan Agreement and the other Loan Documents, as the same may be modified, renewed, substituted or extended from time to time, are hereby made a part of this Assignment to the same extent and with the same force as if fully set forth herein.
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ARTICLE 3
REMEDIES
Section 3.1 Remedies of Lender. During the continuance of an Event of Default, the license granted to Borrower in Section 2.1 of this Assignment shall automatically be revoked, and Lender shall immediately be entitled to possession of all Rents and all sums due under any Lease Guaranties, whether or not Lender enters upon or takes control of the Property, provided, however, that upon the cure of any Event of Default (to the extent applicable), such license shall be automatically reinstated. In addition, Lender may, at its option, without waiving such Event of Default, without regard to the adequacy of the security for the Loan, either in person or by agent, nominee or attorney, with or without bringing any action or proceeding, or by a receiver appointed by a court, dispossess Borrower, its property manager, and its agents and servants from the Property, without liability for trespass, damages or otherwise and exclude Borrower, its property manager, and its agents or servants wholly therefrom, and, subject to the rights of any tenants take possession of the Property and all books, records and accounts relating thereto and have, hold, manage, lease and operate the Property on such terms and for such period of time as Lender may deem proper and either with or without taking possession of the Property in its own name, demand, sue for or otherwise collect and receive all Rents and all sums due under all Lease Guaranties, including, without limitation, those past due and unpaid with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as Lender may deem proper, and may apply the Rents and sums received pursuant to any Lease Guaranties to the payment of the following in such order and proportion as Lender in its sole discretion may determine, any law, custom or use to the contrary notwithstanding: (a) all reasonable expenses of managing and securing the Property, including, without being limited thereto, the salaries, fees and wages of a managing agent and such other employees or agents as Lender may deem necessary and all reasonable expenses of operating and maintaining the Property, including, without being limited thereto, all taxes, charges, claims, assessments, water charges, sewer rents and any other liens, and premiums for all insurance which Lender may deem reasonably necessary, and the cost of all alterations, renovations, repairs or replacements, and all expenses incident to taking and retaining possession of the Property; and (b) the Loan or any other amounts owed to Lender pursuant to the Loan Documents, together with all costs and reasonable attorneys’ fees. In addition, upon the occurrence and during the continuance of an Event of Default, Lender, at its option, may (1) intentionally omitted, (2) exercise all rights and powers of Borrower, including, without limitation, the right to negotiate, execute, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents from the Property and all sums due under any Lease Guaranties, (3) either (x) require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupancy of such part of the Property as may be in the possession of Borrower, or (y) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise, or (4) seek the appointment of a receiver to exercise any of the rights of Borrower or Lender to collect, hold and apply the Rents from the Property and to exercise all rights and powers of Borrower, which receiver may upon and during the continuance of an Event of Default be appointed ex parte, without notice to Borrower, except to the extent required under the Loan Agreement.
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Section 3.2 Other Remedies. Nothing contained in this Assignment and no act done or omitted by Lender pursuant to the power and rights granted to Lender hereunder shall be deemed to be a waiver by Lender of its rights and remedies under the Loan Agreement, the Note, or the other Loan Documents and this Assignment is made and accepted without prejudice to any of the rights and remedies possessed by Lender under the terms thereof. The right of Lender to collect the Loan and to enforce any other security therefor held by it may be exercised by Lender either prior to, simultaneously with, or subsequent to any action taken by it hereunder. Borrower hereby absolutely, unconditionally and irrevocably waives any and all rights to assert any setoff, counterclaim or crossclaim of any nature whatsoever with respect to the Loan under this Assignment, the Loan Agreement, the Note, the other Loan Documents or otherwise with respect to the Loan in any action or proceeding brought by Lender to collect same, or any portion thereof, or to enforce and realize upon the lien and security interest created by this Assignment, the Loan Agreement, the Note, the Security Instrument, or any of the other Loan Documents (provided, however, that the foregoing shall not be deemed a waiver of Borrower’s right to assert any compulsory counterclaim if such counterclaim is compelled under local law or rule of procedure).
Section 3.3 Other Security. Lender may take or release other security for the payment of the Loan or any other obligations of Borrower pursuant to the Loan Documents, may release any party primarily or secondarily liable therefor, may apply any other security held by it to the payment of the Loan, or pursue any other remedies granted to Lender pursuant to the other Loan Documents, without prejudice to any of its rights under this Assignment.
Section 3.4 Non-Waiver. The exercise by Lender of the option granted it in Section 3.1 of this Assignment and the collection of the Rents and sums due under the Lease Guaranties and the application thereof as herein provided shall not be considered a waiver of any Default (as defined in the Loan Agreement) or Event of Default by Borrower under the Note, the Loan Agreement, the Security Instrument, the Leases, this Assignment or the other Loan Documents. The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Assignment. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (a) the failure of Lender to comply with any request of Borrower or any other party to take any action to enforce any of the provisions hereof or of the Loan Agreement, the Note or the other Loan Documents, (b) the release, regardless of consideration, of the whole or any part of the Property, or (c) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of this Assignment, the Loan Agreement, the Security Instrument, the Note or the other Loan Documents. Lender may resort for the payment of the Loan or any other amounts owed to Lender pursuant to the Loan Documents, to any other security held by Lender in such order and manner as Lender, in its sole discretion, may elect. Lender may take any action to recover the Loan or any other amounts owed to Lender pursuant to the Loan Documents, or any portion thereof, without prejudice to the right of Lender thereafter to enforce its rights under this Assignment. The rights of Lender under this Assignment shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision.
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Section 3.5 Bankruptcy.
(a) Upon or at any time after the occurrence and during the continuance of an Event of Default, Lender shall have the right to proceed in its own name or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the rejection of any Lease, including, without limitation, the right to file and prosecute, to the exclusion of Borrower, any proofs of claim, complaints, motions, applications, notices and other documents, in any case in respect of the lessee under such Lease under the Bankruptcy Code.
(b) If there shall be filed by or against Borrower a petition under the Bankruptcy Code, and Borrower, as lessor under any Lease, shall determine to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code, then Borrower shall give Lender not less than ten (10) Business Days’ prior notice of the date on which Borrower shall apply to the bankruptcy court for authority to reject such Lease. Lender shall have the right, but not the obligation, to serve upon Borrower within such ten (10) Business Day period a notice stating that (i) Lender demands that Borrower assume and assign the Lease to Lender pursuant to Section 365 of the Bankruptcy Code and (ii) Lender covenants to cure or provide adequate assurance of future performance under the Lease. If Lender serves upon Borrower the notice described in the preceding sentence, Borrower shall not seek to reject the Lease and shall comply with the demand provided for in clause (i) of the preceding sentence within thirty (30) days after Lender’s notice shall have been given, subject to the performance by Lender of the covenant provided for in clause (ii) of the preceding sentence.
Section 3.6 Full Remedies. The assignments of Leases and Rents contained in this Assignment are intended to provide Lender with all of the rights and remedies of mortgagees pursuant to Section 697.07 of the Florida Statutes (hereinafter “Section 697.07”), as may be amended from time to time. However, in no event shall this reference diminish, alter, impair, or affect any other rights and remedies of Lender, including but not limited to, the appointment of a receiver, nor shall any provision in this Section diminish, alter, impair or affect any rights or powers of the receiver in law or equity or as set forth herein. In addition, this Assignment shall be fully operative without regard to value of the Property or without regard to the adequacy of the Property to serve as security for the obligations owed by Borrower to Lender, and shall be in addition to any rights arising under Section 697.07. Further, except for the notices required under the Loan Documents, if any, Borrower waives any notice of default or demand for turnover of rents by Borrower, together with any rights under Section 697.07 to apply to a court to deposit the Rents into the registry of the court or such other depository as the court may designate.
ARTICLE 4
NO LIABILITY, FURTHER ASSURANCES
Section 4.1 No Liability of Lender. This Assignment shall not be construed to bind Lender to the performance of any of the covenants, conditions or provisions contained in any Lease or Lease Guaranty or otherwise impose any obligation upon Lender. Lender shall not be liable for any loss sustained by Borrower resulting from Lender’s failure to let the Property after an Event of Default or from any other act or omission of Lender in managing the Property after an Event of Default except to the extent such loss is caused by the gross negligence, fraud, or willful misconduct of any Indemnitee. Lender shall not be obligated to perform or discharge any obligation, duty or liability under the Leases or any Lease Guaranties or under or by reason of this Assignment and Borrower shall indemnify Lender for, and hold Lender harmless from, any and all liability,
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actual loss or damage actually incurred by Lender under the Leases, any Lease Guaranties or under or by reason of this Assignment and from any and all actual third party claims and demands, including the defense of any such third party claims or demands which may be asserted against Lender by reason of any alleged obligations and undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases or any Lease Guaranties except to the extent that such liability, actual loss or damage or third party claims or demands is a result of the willful misconduct or gross negligence of any Indemnitee. Should any of Indemnitees (as defined in the Loan Agreement) incur any such liability, the amount thereof, including reasonable costs, expenses and reasonable attorneys’ fees, shall be secured by this Assignment and by the Security Instrument and the other Loan Documents and Borrower shall reimburse such Indemnitees therefor promptly upon written demand and upon the failure of Borrower so to do Lender may, at its option, declare all sums secured by this Assignment and by the Security Instrument and the other Loan Documents immediately due and payable. This Assignment shall not operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor for the carrying out of any of the terms and conditions of the Leases or any Lease Guaranties; nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the tenants or any other third parties, or for any dangerous or defective condition of the Property including, without limitation, the presence of any Hazardous Materials (as defined in the Hazardous Materials Indemnity), or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee or stranger other than the willful misconduct or gross negligence of any Indemnitee. The provisions of this Section 4.1 shall survive any payment or prepayment of the Loan and any foreclosure or satisfaction of the Security Instrument.
Section 4.2 No Mortgagee In Possession. Nothing herein contained shall be construed as constituting Lender a “mortgagee in possession” in the absence of the taking of actual possession of the Property by Lender. In the exercise of the powers herein granted Lender, no liability shall be asserted or enforced against Lender, all such liability being expressly waived and released by Borrower.
Section 4.3 Further Assurances. Borrower will, at the reasonable cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, conveyances, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, reasonably require for the better assuring, conveying, assigning, transferring and confirming unto Lender the property and rights hereby assigned or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Assignment or for filing, registering or recording this Assignment and, on demand, will execute and deliver and hereby authorizes Lender to execute in the name of Borrower to the extent Lender may lawfully do so, one or more financing statements, chattel mortgages or comparable security instruments, to evidence more effectively the lien and security interest hereof in and upon the Leases; provided, that the same do not diminish any of Borrower’s or Guarantor’s rights under the Loan Documents and do not subject Borrower, Guarantor or any other Person to additional liability or obligations, except in each case to a de minimis extent.
ARTICLE 5
MISCELLANEOUS PROVISIONS
Section 5.1 Conflict of Terms. In case of any conflict between the terms of this Assignment and the terms of the Loan Agreement, the terms of the Loan Agreement shall prevail.
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Section 5.2 No Oral Change. This Assignment and any provisions hereof may not be modified, amended, waived, extended, changed, discharged or terminated orally, or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom the enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
Section 5.3 General Definitions. All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Assignment may be used interchangeably in singular or plural form and the word “Borrower” shall mean “the named borrower and any subsequent owner or owners of the Property or any part thereof or interest therein,” the word “Lender” shall mean “Lender and any subsequent holder of the Note, the word “Note” shall mean “the Note and any other evidence of indebtedness secured by the Loan Agreement,” the word “Property” shall include any portion of the Property and any interest therein, the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder; whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.
Section 5.4 Inapplicable Provisions. If any provision of this Assignment is held to be illegal, invalid, or unenforceable under present or future laws effective during the terms of this Assignment, such provision shall be fully severable and this Assignment shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Assignment, and the remaining provisions of this Assignment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Assignment, unless such continued effectiveness of this Assignment, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.
Section 5.5 Governing Law. The governing law and related provisions contained in the Loan Agreement are hereby incorporated by reference as if fully set forth herein.
Section 5.6 Termination of Assignment. Upon payment in full of the Loan and all other amounts owed to Lender pursuant to the Loan Documents, this Assignment shall automatically become and be void and of no effect.
Section 5.7 Notices. All notices, demands, or other communications hereunder shall be delivered in accordance with the notice provisions set forth in the Loan Agreement.
Section 5.8 Waiver of Trial by Jury. BORROWER (AND LENDER BY ACCEPTANCE HEREOF) HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS ASSIGNMENT OR ANY OTHER LOAN DOCUMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.
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Section 5.9 Successors and Assigns. This Assignment shall be binding upon and shall inure to the benefit of Borrower and Lender and their respective successors and permitted assigns forever. Lender shall have the right to sell, assign, pledge, participate, transfer or delegate, as applicable, to one or more Persons, all or any portion of its rights and obligations under this Assignment and the other Loan Documents in connection with any assignment of the Loan and the Loan Documents to any Person pursuant to the terms of the Loan Agreement. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Assignment. Borrower shall not have the right to assign, delegate or transfer its rights or obligations under this Assignment without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment, delegation or transfer without such consent shall be null and void.
Section 5.10 Headings, Etc. The headings and captions of the various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
Section 5.11 Joint and Several. If more than one Person has executed this Assignment as “Borrower,” the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.
Section 5.12 Attorneys’ Fees and Expenses; Enforcement. If the Note is placed with an attorney for collection or if an attorney is engaged by Lender to exercise rights or remedies or otherwise take actions to collect thereunder or under this Assignment or any other Loan Document, or if suit be instituted for collection, reinforcement of rights and remedies, then in all events, Borrower agrees to pay to Lender, all out-of-pocket costs of collection, exercise of remedies or rights or other assertion of claims, including, but not limited to, reasonable attorneys’ fees, whether or not court proceedings are instituted, and, where instituted, whether in district court, appellate court, or bankruptcy court. In the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and not by jury and shall be included in any judgment obtained by Lender. This provision is separate and several and shall survive merger into judgment.
[Signature Page(s) to Follow]
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IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the date first written above.
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__________________________________ Witness __________________________________ Print Name
__________________________________ Witness __________________________________ Print Name
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BORROWER:
BLOCK 40 PROPERTY, LLC, a Delaware limited liability company
By: Block 40 Managers, LLC, a Florida limited liability company, its manager
By: /s/ Shaun A. Quin Name: Shaun A. Quin Title: Authorized Signatory
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STATE OF __________________ )
)
COUNTY OF _________________ )
The foregoing instrument was acknowledged before me by means of [____] physical presence or [____] online notarization this ____ day of ________________, 2026, by Shaun A. Quin, the Authorized Signatory of Block 40 Managers, LLC, a Florida limited liability company, the Manager of BLOCK 40 PROPERTY, LLC, a Delaware limited liability company, for and on behalf of the company. He personally appeared before me, is personally known to me or has produced a valid driver’s license as identification.
Notarial Public, State of
Name:
My Commission Expires:
[Seal]
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EXHIBIT A
LEGAL DESCRIPTION
ALL THAT CERTAIN LOT OR PARCEL OF LAND SITUATE IN THE COUNTY OF BROWARD, STATE OF FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1:
LOTS 1, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
PARCEL 2:
LOTS 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 AND 14, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
LESS AND EXCEPT THEREFROM THAT CERTAIN PROPERTY CONVEYED TO THE CITY OF HOLLYWOOD BY THAT CERTAIN DEED RECORDED IN OFFICIAL RECORDS BOOK 3476, PAGE 399, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF LOT 6, BLOCK 40, OF THE SUBDIVISION OF THE TOWN OF HOLLYWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 1, AT PAGE 21, IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA; RUN EAST ON AND ALONG THE SOUTH LINE OF LOTS 6, 7 AND 8 FOR A DISTANCE OF 65.36 FEET TO THE POINT OF BEGINNING. SAID POINT OF BEGINNING BEING THE POINT OF CURVATURE OF A CURVE CONCAVE TO THE NORTHWEST AND HAVING THE FOLLOWING PROPERTIES:
R=30.0 FEET, DELTA=123 DEGREES 06 MINUTES 46 SECONDS, ARC LENGTH=64.46 FEET; THENCE RUN NORTHEASTERLY ON SAID CURVE FOR A DISTANCE OF 64.46 FEET TO THE POINT OF INTERSECTION WITH THE EAST PROPERTY LINE OF LOT 8 OF SAID BLOCK 40. THENCE RUN SOUTHEASTERLY ON THE EAST LINE OF LOT 8, SAID EAST LINE BEING A CURVE HAVING THE FOLLOWING PROPERTIES: R=492.0 FEET, DELTA=9 DEGREES 52 MINUTES 51 SECONDS, ARC LENGTH=84.85 FEET, EXTENDED TO A POINT OF INTERSECTION WITH THE SOUTH LINE OF LOTS 6, 7 AND 8 EXTENDED EASTERLY; THENCE RUN WESTERLY ON AND ALONG THE EXTENSION OF LOTS 6, 7 AND 8 TO THE POINT OF BEGINNING.
PARCEL 3:
THAT CERTAIN 13.00 FOOT ALLEY LYING IN BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS VACATED AND MORE PARTICULARLY DESCRIBED BY THAT CERTAIN ORDINANCE NO. 0-2005-16 RECORDED IN OFFICIAL RECORDS BOOK 47110, PAGE 253, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
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MEZZANINE LOAN AGREEMENT
Between
BLOCK 40 HOLDCO LLC,
a Delaware limited liability company,
as Borrower
and
1818 MEZZ LENDER LLC,
a Delaware limited liability company,
as Lender
Entered into as of July 24, 2026
TABLE OF CONTENTS
Page
| Article 1. DEFINITIONS | 1 |
| 1.1 DEFINED TERMS | 1 |
| Article 2. LOAN | 23 |
| 2.1 LOAN | 23 |
| 2.2 PURPOSE | 23 |
| 2.3 INTEREST RATE AND DEFAULT RATE | 23 |
| 2.4 TERMS OF PAYMENT | 23 |
| 2.5 EXIT FEE | 23 |
| 2.6 PREPAYMENT | 24 |
| 2.7 GRANT OF SECURITY INTEREST IN COLLATERAL | 24 |
| 2.8 GRANT OF SECURITY INTEREST IN ACCOUNTS AND RESERVES; APPLICATIONS OF FUNDS | 24 |
| 2.9 FEE | 25 |
| 2.10 LOAN DOCUMENTS | 25 |
| 2.11 EFFECTIVE DATE | 25 |
| 2.12 FULL REPAYMENT AND RELEASE | 25 |
| 2.13 FIRST OPTION TO EXTEND | 25 |
| 2.14 SECOND OPTION TO EXTEND | 27 |
| 2.15 THIRD OPTION TO EXTEND | 29 |
| Article 3. DISBURSEMENT and reserves | 31 |
| 3.1 CONDITIONS PRECEDENT | 31 |
| 3.2 PLEDGE AND ASSIGNMENT AND DISBURSEMENT AUTHORIZATION | 33 |
| 3.3 DISBURSEMENTS | 33 |
| 3.4 INTENTIONALLY OMITTED | 33 |
| 3.5 INTENTIONALLY OMITTED | 33 |
| 3.6 INTEREST AND CARRY RESERVE | 34 |
| 3.7 INTENTIONALLY OMITTED | 34 |
| 3.8 INTENTIONALLY OMITTED | 34 |
| 3.9 INTENTIONALLY OMITTED | 34 |
| 3.10 TRANSFER OF RESERVE FUNDS UNDER MORTGAGE LOAN | 35 |
| 3.11 GENERAL | 35 |
| Article 4. cash management PROVISIONS | 35 |
| 4.1 CASH MANAGEMENT ACCOUNT | 35 |
| Article 5. INSURANCE | 36 |
| 5.1 REQUIRED INSURANCE | 36 |
| 5.2 INTENTIONALLY OMITTED | 37 |
| 5.3 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS | 37 |
| Article 6. REPRESENTATIONS AND WARRANTIES | 38 |
| 6.1 AUTHORITY/ENFORCEABILITY | 38 |
| 6.2 BINDING OBLIGATIONS | 38 |
| 6.3 ORGANIZATION | 39 |
| 6.4 FORMATION AND ORGANIZATIONAL DOCUMENTS | 39 |
| 6.5 NO VIOLATION | 39 |
| 6.6 COMPLIANCE WITH LAWS; USE | 39 |
| 6.7 LITIGATION | 39 |
| 6.8 FINANCIAL CONDITION | 39 |
| 6.9 NO MATERIAL ADVERSE CHANGE | 40 |
| 6.10 ACCURACY | 40 |
| 6.11 INTENTIONALLY OMITTED | 40 |
| 6.12 INTENTIONALLY OMITTED | 40 |
| 6.13 TAX LIABILITY | 40 |
| 6.14 BUSINESS LOAN | 40 |
| 6.15 FULL FORCE AND EFFECT | 40 |
| 6.16 ENFORCEABLE OBLIGATIONS | 40 |
| 6.17 NO DEFAULT | 40 |
| 6.18 ERISA | 40 |
| 6.19 INVESTMENT COMPANY ACT | 41 |
| 6.20 NO BANKRUPTCY FILING | 41 |
| 6.21 LEASES; MATERIAL AGREEMENTS | 41 |
| 6.22 NOT FOREIGN PERSON | 41 |
| 6.23 LABOR MATTERS | 41 |
| 6.24 COLLATERAL | 41 |
| 6.25 INTENTIONALLY OMITTED | 42 |
| 6.26 PHYSICAL CONDITION | 42 |
| 6.27 FRAUDULENT CONVEYANCE | 43 |
| 6.28 MANAGEMENT | 43 |
| 6.29 CONDEMNATION | 43 |
| 6.30 ASSESSMENTS | 43 |
| 6.31 NO JOINT ASSESSMENT | 43 |
| 6.32 SECURITIES COMPLIANCE | 43 |
| 6.33 EB-5 PROGRAM | 43 |
| Article 7. SPECIAL PURPOSE ENTITY STATUS | 44 |
| 7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING SPECIAL PURPOSE ENTITY STATUS; FUTURE AND PAST ACTIVITIES | 44 |
| 7.2 SPE COVENANTS IN BORROWER ORGANIZATIONAL DOCUMENTS | 47 |
| 7.3 PAST ACTIVITIES | 47 |
| Article 8. HAZARDOUS MATERIALS | 49 |
| 8.1 SPECIAL REPRESENTATIONS AND WARRANTIES, COVENANTS AND INDEMNITY | 49 |
| Article 9. COVENANTS OF BORROWER | 50 |
| 9.1 EXPENSES | 50 |
| 9.2 ERISA COMPLIANCE | 50 |
| 9.3 LEASING | 50 |
| 9.4 LEASE COVENANTS | 50 |
| 9.5 NO LIENS ON CONTROLLING INTEREST IN BORROWER | 52 |
| 9.6 NO TRANSFER AND FURTHER ENCUMBRANCE | 52 |
| 9.7 NO MERGER, CONSOLIDATION AND TRANSFER OF ASSETS | 52 |
| 9.8 NO CHANGE IN STRUCTURE OR MANAGEMENT; SINGLE PURPOSE ENTITY | 53 |
| 9.9 NO ADDITIONAL DEBT AND NO SEPARATE GUARANTY | 53 |
| 9.10 EXISTENCE | 53 |
| 9.11 TAXES AND OTHER LIABILITIES | 53 |
| 9.12 NOTICE | 54 |
| 9.13 FACILITIES | 54 |
| 9.14 MANAGEMENT OF PROPERTY | 54 |
| 9.15 SUBDIVISION MAPS | 55 |
| 9.16 FURTHER ASSURANCES | 55 |
| 9.17 NO ASSIGNMENT | 56 |
| 9.18 SANCTIONS | 56 |
| 9.19 DISTRIBUTIONS TO MEMBERS OF BORROWER | 56 |
| 9.20 INTEREST RATE CAP AGREEMENT | 56 |
| 9.21 INTEREST RATE CAP AGREEMENT COVENANTS | 56 |
| 9.22 CONTROLLED SUBSTANCES | 58 |
| 9.23 MATERIAL AGREEMENTS | 58 |
| 9.24 COMPLIANCE WITH LAWS | 59 |
| 9.25 ADDITIONAL LOAN PROVISIONS | 59 |
| 9.26 ALTERATIONS | 62 |
| 9.27 LIVE LOCAL ACT | 62 |
| 9.28 TITLE TO THE COLLATERAL | 63 |
| 9.29 TITLE INSURANCE PROCEEDS | 63 |
| 9.30 POST-CLOSING OBLIGATIONS | 63 |
| 9.31 EB-5 PROGRAM COVENANTS | 63 |
| Article 10. reserved | 64 |
| Article 11. FINANCIAL STATEMENTS | 65 |
| 11.1 BORROWER AND GUARANTOR FINANCIAL STATEMENTS | 65 |
| 11.2 MONTHLY PROPERTY REPORTING | 65 |
| 11.3 BOOKS AND RECORDS | 65 |
| 11.4 OTHER INFORMATION | 65 |
| 11.5 FORM, WARRANTY | 66 |
| 11.6 TAX RETURNS | 66 |
| 11.7 BUDGET | 66 |
| 11.8 INTENTIONALLY OMITTED | 66 |
| 11.9 INTENTIONALLY OMITTED | 66 |
| 11.10 FINANCIAL STATEMENTS | 67 |
| Article 12. DEFAULTS AND REMEDIES | 67 |
| 12.1 EVENTS OF DEFAULT | 67 |
| 12.2 ACCELERATION UPON EVENT OF DEFAULT; REMEDIES | 71 |
| 12.3 ACCELERATION UPON LOSS OF SECURITY | 71 |
| 12.4 DISBURSEMENTS TO THIRD PARTIES | 71 |
| 12.5 SET OFF | 71 |
| 12.6 COLLATERAL PROCEEDINGS | 71 |
| 12.7 RIGHTS CUMULATIVE; NO WAIVER | 72 |
| Article 13. MISCELLANEOUS PROVISIONS | 72 |
| 13.1 INDEMNITY | 72 |
| 13.2 NOTICES | 73 |
| 13.3 RELATIONSHIP OF PARTIES | 74 |
| 13.4 ATTORNEYS’ FEES AND EXPENSES; ENFORCEMENT | 74 |
| 13.5 NO WAIVER | 74 |
| 13.6 IMMEDIATELY AVAILABLE FUNDS | 74 |
| 13.7 LENDER’S AGENTS | 74 |
| 13.8 WAIVER OF RIGHT TO TRIAL BY JURY | 74 |
| 13.9 SEVERABILITY | 75 |
| 13.10 HEIRS, SUCCESSORS AND ASSIGNS | 75 |
| 13.11 INTENTIONALLY OMITTED | 75 |
| 13.12 INTENTIONALLY OMITTED | 75 |
| 13.13 TIME | 75 |
| 13.14 GOVERNING LAW AND CONSENT TO JURISDICTION | 75 |
| 13.15 USA PATRIOT ACT NOTICE, COMPLIANCE | 76 |
| 13.16 JOINT AND SEVERAL LIABILITY | 76 |
| 13.17 INTENTIONALLY DELETED | 76 |
| 13.18 NO THIRD PARTIES BENEFITED | 76 |
| 13.19 ACTIONS | 76 |
| 13.20 ASSIGNMENT OF LOAN DOCUMENTS | 76 |
| 13.21 HEADINGS | 76 |
| 13.22 ELECTRONIC TRANSMISSION OF DATA | 76 |
| 13.23 COUNTERPARTS | 76 |
| 13.24 POWERS OF ATTORNEY | 77 |
| 13.25 BROKERAGE COMMISSIONS | 77 |
| 13.26 RULES OF CONSTRUCTION | 77 |
| 13.27 USE OF SINGULAR AND PLURAL; GENDER | 77 |
| 13.28 EXHIBITS, SCHEDULES AND RIDERS | 77 |
| 13.29 INCONSISTENCIES | 77 |
| 13.30 INTEGRATION; INTERPRETATION | 77 |
| 13.31 ASSUMPTION OF LOAN | 77 |
| 13.32 INTENTIONALLY OMITTED | 78 |
| 13.33 INTENTIONALLY OMITTED | 78 |
| 13.34 SERVICER | 78 |
| 13.35 SECONDARY MARKET PROVISIONS | 79 |
| 13.36 SEVERANCE OF LOAN AND REGISTERED NOTE | 80 |
| 13.37 COSTS AND EXPENSES | 82 |
| 13.38 EXCULPATION | 82 |
| 13.39 INTENTIONALLY OMITTED | 83 |
| 13.40 INTERCREDITOR AGREEMENT | 83 |
EXHIBIT A LEGAL DESCRIPTION…………………………………………………………A-1
EXHIBIT B LOAN DOCUMENTS……………………………………………………………B-1
EXHIBIT C OPTION TO EXTEND REQUEST LETTER FROM BORROWER…………....C-1
EXHIBIT D RESERVED……………………………………………………………………...D-1
EXHIBIT E ORGANIZATIONAL CHART …………………………………………………..E-1
SCHEDULE 7.3 LITIGATION……………………..……………………...…………..SCH 7.3-1
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MEZZANINE LOAN AGREEMENT
THIS MEZZANINE LOAN AGREEMENT (“Agreement”) is entered into as of July 24, 2026 (the “Effective Date”), by and between BLOCK 40 HOLDCO LLC, a Delaware limited liability company (“Borrower”), and 1818 Mezz Lender LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”).
RECITALS
A. Borrower desires to borrow from Lender, and Lender agrees to loan to Borrower, the Loan for which provision is made herein.
B. Borrower is the owner of Mortgage Borrower (as defined below), which owns certain real property described in Exhibit A attached hereto and all Improvements (as hereinafter defined) and certain additional personal property now or hereafter existing thereon and related thereto (collectively, the “Property”).
NOW, THEREFORE, Borrower and Lender agree as follows:
Article 1. DEFINITIONS
1.1 DEFINED TERMS. The following capitalized terms generally used in this Agreement shall have the meanings defined or referenced below. Certain other capitalized terms used only in specific sections of this Agreement are defined in such sections.
“Account Funds” – means all sums now or hereafter on deposit in or payable or withdrawable from the Accounts.
“Accounts” – means the Reserve Account, any subaccounts created thereunder and all other accounts created hereunder and under the other Loan Documents from time to time.
“ADA” – means the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et seq., as now or hereafter amended or modified, and any similar and applicable law, rule or regulation relating to access by disabled persons.
“Affiliate” – means, with respect to any Person, (i) any domestic Person which owns, directly or indirectly twenty percent (20%) or more of the equity interests in such Person, (ii) any foreign Person which owns, directly or indirectly ten percent (10%) or more of the equity interests in such Person, or (iii) any Person which is under common control with, controlled by, or controlling (in each case, by possession of a Controlling Interest) with, the applicable Person. For the avoidance of doubt, in no event shall any shareholder or any partner, managing member, officer, director, trustee or employee, of Guarantor be deemed to be an Affiliate hereunder unless such Person satisfies clauses (i) or (ii) of this definition.
“Affiliate Lease” – means any Lease with an Affiliate of Borrower or Guarantor.
“Agreement” – shall have the meaning ascribed to such term in the preamble hereto.
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“Alteration Threshold” shall mean $400,000 individually and in the aggregate.
“Annual Budget” – means the operating and capital budget for the Property setting forth, on a month-by-month basis, good faith estimate, of anticipated Gross Rents, Gross Income, Operating Expenses, in reasonable detail, each line item of Mortgage Borrower’s TI Leasing Costs and Capital Expenditures for the applicable calendar year.
“Approved Accounting Method” – means (i) cash or federal tax basis accounting or GAAP (in each case, consistently applied) or (ii) such other method of accounting, consistently applied, as may be reasonably acceptable to Lender.
“Approved Annual Budget” – shall have the meaning set forth in Section 11.7 hereof.
“Approved Extraordinary Expense” means an Operating Expense or Capital Expenditure of the Property not set forth on the Approved Annual Budget, but approved by Lender in writing (which such approval shall not be unreasonably withheld, conditioned or delayed).
“Approved Lease” – means any Lease (or amendment or modification of an existing Lease) that (i) is existing as of the Effective Date, (ii) (A) is executed after the Effective Date, (B) is for residential purposes, (C) provides for rental rates required pursuant to any applicable law or, in Mortgage Borrower’s commercially reasonable judgment, comparable to existing local market rates for similar properties, (D) does not contain any option, offer, right of first refusal or other similar entitlement to purchase all or any portion of the Property, and (E) is on Mortgage Borrower’s standard residential lease form, which form has been approved by Mortgage Lender in its reasonable discretion, and/or (iii) any other commercial Lease for the Property that is approved by Lender in its reasonable discretion pursuant to the terms and conditions of Section 9.4 hereof.
“Asset Management Agreement” – means that certain Management Agreement dated as of November 14, 2025, by and among Block 40, LLC, a Florida limited liability company (“Block 40”) and Asset Manager, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time pursuant to the terms of the Loan Documents. Said Asset Management Agreement has been assigned from Block 40 to Mortgage Borrower pursuant to an assignment of contracts dated on or about the Effective Date.
“Asset Manager” – means GCF Development, LLC, a Florida limited liability company.
“Bankruptcy Code” – means the Bankruptcy Reform Act of 1978 (11 U.S.C. § 101-1330) as now or hereafter amended or recodified.
“Borrower” – shall have the meaning ascribed to such term in the preamble hereto.
“Borrowing Group” – means, individually and collectively: (a) the Borrower, (b) the Mortgage Borrower, (c) Guarantor, (d) any domestic Person owning or holding greater than or equal to twenty percent (20%) or more of the direct or indirect ownership interests in Borrower, (e) any foreign Person owning or holding greater than or equal to ten percent (10%) or more of the direct or indirect ownership interests in Borrower, and (f) any officer, director, member or partner or other person or entity acting on behalf of Borrower or Guarantor with respect to the Loan or this Agreement.
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“Business Day” – means a day, except a Saturday, Sunday, or any other day which commercial banks in New York, New York are authorized or required by law to close. Unless specifically referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.
“Capital Expenditures” – means for any period, the amount expended (or to be expended, as the context requires) for (i) Capital Improvements that are set forth in the Approved Annual Budget, or otherwise approved by Lender in its reasonable discretion, (ii) expenditures set forth in the Approved Annual Budget or otherwise approved by Lender for soft costs related to Capital Improvements, including, without limitation, architectural, design, project management, engineering, financing and legal fees related thereto.
“Capital Improvements” – means improvements, replacements or major repairs at the Property, as well as fixtures, furniture and equipment that are to be owned by Mortgage Borrower and used in connection with or installed (or to be installed) into the Property.
“Carry Guaranty” – means that certain Mezzanine Guaranty of Debt Service and Carry Costs dated as of the Effective Date executed and delivered by Guarantor to Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Cash Management Account” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Cash Sweep Period” – means a period during the term of the Loan:
(i) commencing upon the Effective Date and expiring as of the date that the Property achieves a Debt Service Coverage Ratio equal to or greater than 1.10 for three (3) consecutive calendar months (“Initial DSCR Release”);
(ii) at any time following the Initial DSCR Release (if applicable), commencing upon the occurrence of the Debt Service Coverage Ratio falling below 1.0 for three (3) consecutive calendar months, and thereafter expiring upon the date that the Debt Service Coverage Ratio is thereafter equal to or greater than 1.10 for three (3) consecutive calendar months;
(iii) commencing upon the occurrence of a Mortgage Event of Default and expiring upon the cure (if applicable) of such Mortgage Event of Default; and/or
(iv) commencing upon the occurrence of an Event of Default and expiring upon the cure (if applicable) of such Event of Default.
“Code” – means the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.
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“Collateral” – shall have the meaning set forth in the Pledge and Security Agreement.
“Compliance Requirement” – shall have the meaning set forth in Section 9.25(k)(i).
“Contract Rate” – shall have the meaning ascribed to such term in the Note.
“Controlled Substances” – means marijuana, cannabis or other controlled substances as defined in the Federal Controlled Substances Act or that otherwise are illegal or regulated under any Controlled Substances Laws.
“Controlled Substances Laws” – means the Federal Controlled Substances Act (21 U.S.C. § 801 et seq.) or any other similar or related federal, state or local law, ordinance, code, rule, regulation or order.
“Controlled Substances Uses” – means any cultivation, growth, creation, production, manufacture, sale, distribution, storage, handling, possession or other use of a Controlled Substance.
“Controlling Interest” – means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of such Person, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise, provided, however, that a member or partner containing customary “major decision” rights shall not be deemed a Controlling Interest; and “Control” when used as a defined term shall have the correlative meaning.
“DACA-Restricted Account Agreement” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Debt” – shall mean the outstanding principal amount set forth in, and evidenced by, this Agreement and the Note, together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Note, this Agreement, the Pledge and Security Agreement or any other Loan Document.
“Debt Service” – means, as to any applicable period, interest payments and principal payments (if any) with respect to the Loan, required to be paid during such period by Borrower in accordance with the terms and conditions of the Loan Documents.
“Debt Service Coverage Ratio” – means, as of any date of calculation, the number obtained by dividing (i) Underwritten Net Operating Income by (ii) Debt Service (including, for the purposes of this definition, all debt service due and owing on the Mortgage Loan), each calculated for the immediately succeeding twelve (12) month period, as calculated by Lender in its reasonable discretion.
“Debt Yield Ratio” – means the number (expressed as a percentage) obtained by dividing (i) Underwritten Net Operating Income, by (ii) the then total outstanding Principal Balance of the Loan and the Mortgage Loan (in the aggregate), as calculated by Lender in its reasonable discretion.
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“Deemed Approval Requirements” means that (i) no Event of Default shall have occurred and be continuing, (ii) Borrower shall have sent Lender a written request for approval with respect to a matter in accordance with the notice provisions in Section 13.2 hereof (the “Initial Notice”), which Initial Notice shall have been (A) accompanied by such information and documentation relating thereto as Borrower reasonably determines may be required by Lender in order to approve or disapprove such matter (the “Approval Information”), and (B) marked in bold lettering with the following language: “LENDER’S RESPONSE IS REQUIRED WITHIN FIVE (5) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A MEZZANINE LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER” and the envelope containing the Initial Notice shall have been marked “PRIORITY-DEEMED APPROVAL MAY APPLY”, (iii) Lender shall have failed to respond to the Initial Notice within the aforesaid time-frame, (iv) Borrower shall have submitted a second request for approval with respect to such matter in accordance with the notice provisions in Section 13.2 hereof (the “Second Notice”), which such Second Notice shall have been (A) accompanied by the Approval Information and (B) marked in bold lettering with the following language: “LENDER’S RESPONSE IS REQUIRED WITHIN FIVE (5) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A MEZZANINE LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER” and the envelope containing the Second Notice shall have been marked “PRIORITY-DEEMED APPROVAL MAY APPLY, and (v) Lender shall have failed to respond to the Second Notice within the aforesaid timeframe. For purposes of clarification, Lender requesting additional information and/or clarifying information, in addition to approving or denying any request (in whole or in part), shall be deemed a response by Lender for purposes of the foregoing. For the avoidance of doubt, Lender’s response, whether for clarification, additional information, or otherwise, alone, shall not constitute an approval or a deemed approval by Lender.
“Default” – means any event which, with the giving of notice or the lapse of time (to the extent applicable pursuant to the terms of the Loan Documents), or both, would constitute an Event of Default.
“Default Rate” – shall have the meaning ascribed to such term in the Note.
“Depository Bank” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Developer Agreement” – means that certain Amended and Restated Developer Agreement by and between City of Hollywood, a municipal corporation of the State of Florida, Broward County, Florida, the City of Hollywood Downtown Community Redevelopment Agency, a public instrumentality of the State of Florida, Broward County, Florida, and Block 40, LLC (as predecessor-in-interest to Mortgage Borrower), recorded February 9, 2021, with the Broward County Commission, State of Florida, as Instrument No. 117046118
“Drug-Related Activities” – means any Controlled Substances Uses, any violation of any Controlled Substances Law or any business, communications, financial transactions or other activities related to Controlled Substances or Controlled Substances Uses.
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“EB-5 Capital Contribution” – means any capital contribution made by an EB-5 Investor in connection with the EB-5 Program.
“EB-5 Investor” – means any investor who has made, or committed to make, an EB-5 Capital Contribution in connection with the EB-5 Program.
“EB-5 Offering Documents” – means, collectively, all private placement memoranda, subscription agreements, operating agreements, escrow agreements, investor agreements, and any other offering documents or agreements between any EB-5 Investor and Borrower, Mezzanine Borrower, Block 40, any Affiliate of Borrower, Mezzanine Borrower or Block 40, or the Regional Center, in connection with the EB-5 Program.
“EB-5 Program” – means the immigrant investor program established pursuant to Section 203(b)(5) of the Immigration and Nationality Act (8 U.S.C. § 1153(b)(5)), as amended by the EB-5 Reform and Integrity Act of 2022, and the rules and regulations promulgated thereunder by USCIS, as the same may be amended, modified, or supplemented from time to time.
“Effective Date” – shall have the meaning set forth in the introductory paragraph.
“Eligible Account” – means a separate and identifiable account from all other funds held by the holding institution that is an account or accounts maintained with a federal or state-chartered depository institution or trust company which (i) complies with the definition of Eligible Institution, (ii) has a combined capital and surplus of at least $50,000,000 and (iii) has corporate trust powers and is acting in its fiduciary capacity. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
“Eligible Institution” – means (i) a depository institution or trust company insured by the Federal Deposit Insurance Corporation (A) the short term unsecured debt obligations or commercial paper of which are rated at least “A-1+” (or its equivalent) from each of the Rating Agencies (in the case of accounts in which funds are held for thirty (30) days or less) and (B) the long term unsecured debt obligations of which are rated at least “A” (or its equivalent) from each of the Rating Agencies (in the case of accounts in which funds are held for more than thirty (30) days) or (ii) such other depository institution otherwise approved by the Rating Agencies from time-to-time, or (iii) Depository Bank.
“Environmental Report” – means that certain Phase I Environmental Site Assessment dated July 1, 2026, prepared by AEI Consultants, as Project No. 531369.
“ERISA” – means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.
“ERISA Affiliate” – means, at any time, each trade or business (whether or not incorporated) that would, at the time, be treated together with Borrower as a single employer under Title IV or Section 302 of ERISA or Section 412 of the Code.
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“Event of Default” – shall have the meaning ascribed to such term in Section 12.1 hereof.
“Exit Fee” – shall have the meaning assigned thereto in Section 2.5 hereof.
“Financing Statement” shall mean, individually and collectively, the UCC Financing Statement or UCC Financing Statements naming Borrower, as debtor, and Lender, as secured party, pertaining to the Collateral, and filed in the appropriate filing office or offices required under applicable state law.
“First Extended Maturity Date” – means August 7, 2029.
“First Option to Extend” – means Borrower’s option, subject to the terms and conditions of Section 2.13 hereof, to extend the term of the Loan from the Original Maturity Date to the First Extended Maturity Date.
“GAAP” – means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of any date of determination.
“Governmental Authority” – means any court, board, agency, commission, office or authority of any executive, legislative, judicial, regulatory or administrative nature whatsoever or any governmental unit (federal, state, commonwealth, county, district, municipal, city, foreign or otherwise) whether now or hereafter in existence.
“Gross Income” – means, without duplication, all (i) Gross Rents, and (ii) all other income, computed in accordance with the Approved Accounting Method, derived from the ownership and operation of the Property from whatever source, including, without limitation, common area maintenance recoveries, real estate tax recoveries, utility recoveries, other miscellaneous expense recoveries, interest income, forfeited security deposits, late charges, and other miscellaneous income, including but not limited to pet fees, transfer fees, NSF fees, late fees and application fees, but excluding rental income taxes, sales taxes, use and occupancy taxes or other taxes on receipts required to be accounted for by Borrower or Mortgage Borrower to any Governmental Authority, refunds and uncollectible accounts, sales of furniture, fixtures and equipment, interest income, insurance proceeds (other than business interruption, rent loss, or other loss of income insurance), condemnation or similar awards, unforfeited security deposits, non-recurring or extraordinary income (including, without limitation, Lease Termination Payments, and any disbursements to Borrower from the Reserves), and any payments made to Borrower pursuant to any “in-the-money” Interest Rate Cap Agreement. For purposes of clarity, income calculated under clause (ii) shall not include any income calculated under clause (i) above.
“Gross Rents” – means an amount equal to annual rental income for all Tenants under Leases for the Property (if any).
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“Guarantor” – means, collectively and individually (as the context requires), (i) STEWARDS, INC., a Nevada corporation, (ii) SHAUN A. QUIN, (iii) CHARLES R. ABELE, (iv) PETER J. JAGO, (v) GLEN STEWARD, and (vi) any additional guarantor approved by Lender pursuant to the terms and conditions of this Agreement after the Effective Date.
“Guarantor Financial Covenants” – shall have the meaning set forth in Section 12.1(n) hereof.
“Guaranty” – means, collectively and individually (as the context requires), (i) the Mezzanine Limited Guaranty, (ii) Mezzanine Carry Guaranty, (iii) the Mezzanine Limited Payment Guaranty and (iv) any additional guaranty executed in connection with the Loan after the Effective Date.
“Hazardous Materials Indemnity” – means that certain Mezzanine Hazardous Materials Indemnity Agreement, dated as of the Effective Date, executed by Borrower and Guarantor in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Improvements” – means the buildings and improvements that are now existing on the Property (including, the 273-unit multifamily building), and any other improvements that may be constructed upon the Property, if applicable, or otherwise as expressly permitted hereunder or approved in writing by Lender, including all site work, utilities, infrastructure, paving, striping, signage, curb and gutter, landscaping and installation of all “common area” improvements.
“Indemnitees” - means Lender, Lender’s parent, subsidiaries and affiliates, any holder of or participant in the Loan and all directors, officers, employees, agents, successors and assigns of any of the foregoing. The term “Indemnitees” shall not include any Person who has not owned an interest in the Loan and acquires the Property at foreclosure or from Lender or any Affiliate thereof after a foreclosure or deed-in-lieu thereof.
“Independent Manager” - shall mean a natural Person who (a) is not at the time of initial appointment and has never been, and will not while serving as independent manager be: (i) a stockholder, director (with the exception of serving as the independent manager of Borrower), officer, employee, partner, member (other than a “special member” or “springing member”), manager (with the exception of serving as the independent manager of Borrower), attorney or counsel of Borrower, equity owners of Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor; (ii) a customer, supplier or other person who derives any of its purchases or revenues from its activities with Borrower or any Guarantor, equity owners of Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor; (iii) a Person controlling or under common control with any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person of Borrower, equity owners of Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor; or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person of Borrower, equity owners of Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor and (b) has (i) prior experience as an independent director or independent manager for a corporation, a trust or limited liability company whose charter documents required the unanimous consent of all independent directors or independent managers thereof before such corporation, trust or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three (3) years of employment experience with CT Corporation, Corporation Service Company, National Registered Agents, Inc. or Stewart Management Company, or another nationally recognized company reasonably acceptable to Lender, that is not an Affiliate of Borrower and that provides, inter alia, professional independent directors or independent managers in the ordinary course of their respective business to issuers of securitization or structured finance instruments, agreements or securities or lenders originating commercial real estate loans for inclusion in securitization or structured finance instruments, agreements or securities (a “Professional Independent Director”) and is an employee of such a company or companies at all times during his or her service as an independent manager. A natural Person who satisfies the foregoing definition except for being (or having been) the independent director or independent manager of a “special purpose entity” affiliated with Borrower (provided such Affiliate does not or did not own a direct or indirect equity interest in Borrower) shall not be disqualified from serving as an independent manager, provided that such natural Person satisfies all other criteria set forth above and that the fees such individual earns from serving as independent director or independent manager of Affiliates of Borrower or in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year. A natural Person who satisfies the foregoing definition other than subparagraph (a)(ii) shall not be disqualified from serving as an independent manager if such individual is a Professional Independent Director and such individual complies with the requirements of the previous sentence.
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“Insurance Premiums” – means the costs of any premiums for any policy of insurance required to be maintained pursuant to the terms of this Agreement.
“Intercreditor Agreement” – means that certain Intercreditor Agreement dated as of the Effective Date between Lender and Mortgage Lender, as the same may be amended or otherwise modified from time to time.
“Interest Rate Cap Agreement” – means an interest rate cap agreement (a) in form and substance reasonably acceptable to Lender, and (b) issued by a provider maintaining a long-term unsecured debt or counter-party rating of at least “A-” from S&P, or “A3” from Moody’s or the equivalent from any other Rating Agency.
“Job Creation Plan” – means the business plan and economic impact analysis submitted to USCIS in connection with the EB-5 Program describing the jobs to be created by the investment of the EB-5 Capital Contributions, as the same may be amended or supplemented from time to time with USCIS approval.
“Lease” and “Leases” – means any and all present and future leases of the Property or any portion thereof, all licenses and all other agreements of any kind relating to the use or occupancy of the Property, including any guarantees, extensions, renewals, modifications or amendments thereof and all additional remainders, reversions and other rights and estates appurtenant thereunder.
“Lease Termination Payments” – means (i) all fees, penalties, commissions or other payments made to Mortgage Borrower in connection with or relating to the rejection, buy-out, termination, amendment, modification, surrender or cancellation of any Lease (including in connection with any bankruptcy proceeding), (ii) any security deposits or proceeds of letters of credit held by Mortgage Borrower in lieu of cash security deposits, which Mortgage Borrower actually retains for itself and does not return to the applicable Tenant pursuant to the applicable provisions of any Lease (except to the extent applied to rent arrears or rent currently due and payable by such residential Tenant) and (iii) any payments made to Mortgage Borrower relating to unamortized tenant improvements and leasing commissions under any Lease.
“Leasing Commissions” – means leasing commissions incurred by Mortgage Borrower in connection with the execution or extension of an Approved Lease for retail space at the Property, provided that such Leasing Commissions are (i) consistent with then-prevailing market terms and conditions, or (ii) are otherwise approved by Lender in its reasonable discretion.
“Legal Requirements” – means all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees, demands and injunctions of any Governmental Authority affecting the Loan, any Secondary Market Transaction with respect to the Loan, Borrower, Guarantor or the Property or any part thereof or the ownership, construction, alteration, use, management or operation of the Property or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the ADA, the Live Local Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Dodd-Frank Wall Street Reform and Consumer Protection Act, zoning and land use laws and the rules and regulations promulgated pursuant to any of the foregoing, and all permits, licenses and authorizations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting Borrower, Guarantor or the Property or any part thereof, including, without limitation, any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof or (ii) in any way limit the use and enjoyment thereof.
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“Lender” – shall have the meaning ascribed to such term in the preamble hereto.
“Lien” – means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights-of-way, zoning restrictions and the like), lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including without limitation any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement or document having similar effect (other than a financing statement filed by a “true” lessor pursuant to Section 9-505 (or a successor section) of the Uniform Commercial Code) naming the owner of the asset to which such Lien relates as debtor, under the Uniform Commercial Code or other comparable law of any jurisdiction.
“Limited Guaranty” – means that certain Mezzanine Limited Guaranty dated as of the Effective Date executed and delivered by Guarantor to Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Limited Payment Guaranty” – means that certain Mezzanine Limited Payment Guaranty dated as of the Effective Date executed and delivered by Guarantor to Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Liquid Assets” – means the following assets: (a) unrestricted and unencumbered cash; (b) unrestricted and unencumbered cash equivalents; (c) unrestricted and unencumbered readily marketable securities (valued, in the case of securities at the then prevailing market price listed on NYSE or NASDAQ, or other “over the counter” markets or public exchange, as of any applicable date of determination); (d) liquid debt instruments that have a readily ascertainable value and are regularly traded in a recognized financial market; and (e) such other assets or properties as Lender may (in its sole discretion) deem acceptable as evidenced by Lender’s written confirmation, excluding any and all retirement accounts and deferred profit sharing accounts.
“Live Local Act” means the amendments to §196.1978, Florida Statutes, enacted by Senate Bill 102 (Chapter 2023-17, Laws of Florida), as amended by Senate Bill 328 (Chapter 2024-188, Laws of Florida) and House Bill 7073 (Chapter 2024-158, Laws of Florida), and any subsequent amendments, modifications, or successor statutes thereto.
“Live Local Covenant” means the restrictive covenant recorded against the Property in favor of the local jurisdiction and/or the Florida Housing Finance Corporation (FHFC) maintaining the affordability of the LLA Qualifying Units for a minimum duration of 3 years.
“LLA Qualifying Units” means the minimum of 70 residential units at the Property required to be rented to individuals or families whose total annual household income does not exceed 120% of the Area Median Income (AMI), and (ii) 2 residential units at the Property required to be rented to individuals or families whose total annual household income does not exceed 80% of the Area Median Income (AMI).
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“Loan” – means an amount up to Ten Million and No/100 Dollars ($10,000,000.00) that Lender agrees to lend and Borrower agrees to borrow subject to and expressly upon the terms and conditions of this Agreement.
“Loan Documents” – means those documents properly executed and in recordable form, if necessary, listed in Exhibit B as Loan Documents, and any other document now or hereafter evidencing or securing the Loan, as each may hereafter be amended, supplemented, replaced or modified.
“Loan-to-Value Percentage” – shall have the meaning given in Section 2.13.
“Management Agreement” – means that certain Property Management Agreement dated as of August 1, 2021, by and among Block 40 and Property Manager, pursuant to which Property Manager is to provide management and other services with respect to the Property, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time pursuant to the terms of the Loan Documents. The Management Agreement has been assigned from Block 40 to Borrower pursuant to an assignment of management agreement dated on or about the Effective Date.
“Material Agreements” - means (x) each contract and agreement entered into (or assumed) by Mortgage Borrower, in each case, relating to the Property, or otherwise imposing obligations on Mortgage Borrower, (i) pursuant to which Mortgage Borrower would have the obligation to pay more than $250,000.00 per annum, (ii) which cannot be terminated by Borrower or Mortgage Borrower without cause upon sixty (60) days’ or less notice without payment by Mortgage Borrower of a termination fee, or (iii) which is with an Affiliate of Borrower, (y) the Developer Agreement, and (z) any reciprocal easement agreement, declaration of covenants, condominium documents, ground lease (i.e., with Borrower as tenant thereunder), or, parking agreement; provided, however, the defined term Material Agreements shall not include the Loan Documents, Leases, or the Management Agreement.
“Maturity Date” – means August 7, 2028, as may be amended, extended, or otherwise modified from time to time pursuant to the terms of this Agreement.
“Monthly Operating Report” – shall have the meaning ascribed to such term in Section 11.2 hereof.
“Monthly Payment Date” – means each regularly scheduled monthly payment date pursuant to the Note, which shall occur on the 7th day of each calendar during the term of the Loan.
“Moody’s” – means Moody’s Investors Service, Inc.
“Mortgage Borrower” means Block 40 Property, LLC, a Delaware limited liability company.
“Mortgage Event of Default” - shall have the meaning assigned to the term “Event of Default” in the Mortgage Loan Agreement.
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“Mortgage Lender” - means VMC CRE Master Lending Upper REIT LLC, and its permitted successors and assigns pursuant to the Intercreditor Agreement.
“Mortgage Loan” - means the loan evidenced by the Mortgage Loan Documents.
“Mortgage Loan Agreement” - means that certain Loan Agreement, dated as of the date hereof, between Mortgage Lender and Mortgage Borrower.
“Mortgage Loan Documents” - shall have the meaning assigned to the term “Loan Documents” in the Mortgage Loan Agreement.
“Net Proceeds” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Note” - means that certain Promissory Note dated as of the Effective Date, in the maximum principal amount of the Loan, executed by Borrower and payable to the order of Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“OFAC” means the United States Treasury Department Office of Foreign Assets Control and any successor thereto.
“Operating Expenses” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Original Maturity Date” – means August 7, 2028.
“Ownership Certificates” – means the certificates evidencing the Pledged Company Interests.
“Patriot Act” - means the USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto, as amended, modified or supplemented from time to time.
“Permitted Easements” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Permitted Encumbrances” – means (i) the encumbrances approved by Lender or Mortgage Lender on the Title Policy, (ii) the Liens and other security interests created by the Mortgage Loan Documents, (iii) Liens for taxes and assessments imposed by any Governmental Authority not yet delinquent or which are being contested by Mortgage Borrower in accordance with this Agreement, (iv) the Leases, (v) Permitted Easements, (vi) Liens contested in accordance with this Agreement or the Mortgage Loan Agreement, (vii) equipment financing for equipment used in the ordinary course of business at the Property, provided that the same is secured solely by a loan on the equipment that is the subject of such financing and otherwise complies with Section 7.1(b)(iii)(B) of the Mortgage Loan Agreement, (viii) such other matters as Lender has approved in writing or may from time to time approve in writing in its reasonable discretion, and/or (ix) the Liens and other security interests created by the Loan Documents.
“Permitted Operating Expenses” – means, for any period, projected amounts to be paid or reasonably allocated as Operating Expenses for such period as set forth in the Approved Annual Budget or otherwise approved by Lender.
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“Permitted Transfers” – means:
(i) any Approved Lease entered into in accordance with the Loan Documents,
(ii) any sale, disposal and replacement of personal property at the Property in the Mortgage Borrower’s normal course of business as permitted pursuant to the Loan Documents;
(iii) a Permitted Encumbrance;
(iv) a Transfer of a direct or indirect interest in Borrower to any Person provided that:
(1) such Transfer shall not cause the transferee, together with its Affiliates, to (x) acquire a Controlling Interest in Borrower or (y) increase its direct or indirect interest in Borrower from an amount that is less than fifty percent (50%) to an amount which, in the aggregate, equals or exceeds fifty percent (50%);
(2) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion;
(3) if such Transfer would cause a change in the Controlling Interest in Borrower or the transferee to increase its direct or indirect interest in Borrower from, in the aggregate, an amount less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount, in the aggregate, which equals or exceeds twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), Borrower shall give Lender notice of such Transfer not less than twenty (20) days prior to such Transfer and shall deliver copies of all instruments effecting such Transfer upon request of Lender (or drafts thereof); and
(4) the single purpose nature and bankruptcy remoteness of Borrower after such Transfer, shall satisfy Lender’s then current applicable underwriting criteria and requirements;
(5) notwithstanding the foregoing, a Transfer occurring solely by reason of the death of any one (but not more than one) of Glen Steward, Shaun Quin, or Vincent Napolitano (each, a “Stewards Key Person”) shall not constitute a prohibited Transfer under this clause (vi), provided that (A) the two (2) surviving Stewards Key Persons collectively continue to Control Stewards, Inc. immediately following such death, (B) Borrower shall give Lender written notice of such death and the resulting Transfer within thirty (30) days following such death, together with reasonable documentation evidencing that the surviving Stewards Key Persons continue to Control Stewards, Inc., and (C) if such Transfer would fall under sub-clause (2) above, Borrower and such transferee shall comply with the requirements set forth therein;
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(v) a Transfer of any indirect interest in Borrower related to or in connection with the estate planning of such transferor to (1) an immediate family member of such interest holder (or to partnerships, limited liability companies, or other Persons (including estate planning vehicles) that one or more of such family members shall maintain a Controlling Interest) or (2) a trust or other entity established for the benefit of such immediate family member, provided that:
(1) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion;
(2) Borrower shall give Lender notice of such Transfer within thirty (30) days following such Transfer and shall deliver copies of all instruments effecting such Transfer upon written request of Lender (other than a Transfer as described in clause (v)(1) above, when Borrower shall give Lender notice of such Transfer at least twenty (20) days prior to such Transfer);
(3) such Transfer shall not result in a change in the Controlling Interest of Borrower; and
(4) the single purpose nature and bankruptcy remoteness of Borrower after such Transfer, shall satisfy Lender’s current applicable underwriting criteria and requirements;
(vi) a Transfer of any indirect interest in Borrower that occurs by devise or bequest or by operation of law upon the death, disability or incapacity of a natural person that was the holder of such interest, provided that:
(1) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion;
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(2) Borrower shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer (if requested by Lender) as soon as practicable thereafter but in no event more than ninety (90) days after the date of such Transfer; and
(3) if such Transfer results in a change in the Controlling Interest of Borrower, such Transfer is approved by Lender in writing within thirty (30) days after Lender receives written notice of such Transfer;
(vii) the Transfer of one or more portions of the Property to any federal, state or local government or any political subdivision thereof in connection with involuntary takings or condemnation proceedings of any portion of the real property for dedication or public use;
(viii) any Transfer pursuant to the foreclosure, acceptance of a deed-in-lieu of foreclosure or other exercise of remedies by Mortgage Lender with respect to the Mortgage Loan;
(ix) the sale, transfer or issuance of shares of common stock or preferred stock in the holder of any direct or indirect ownership interest in Borrower that is a publicly traded entity; provided that:
(1) such shares of common stock or preferred stock are listed on the New York Stock Exchange, Nasdaq, over the counter market or another nationally recognized stock exchange;
(2) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion; and
(3) such Transfer shall not result in a change in the Controlling Interest of Borrower;
(x) any transfer (including a pledge), sale, or issuance of shares of preferred or common stock that is a publicly registered non-listed real estate investment trust to third party investors through licensed U.S. broker-dealers in accordance with Legal Requirements; provided that:
(1) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion; and
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(2) such Transfer shall not result in a change in the Controlling Interest of Borrower;
(xi) a Transfer of any interest (the “Token Subsidiary Interest”) in Stewards Real Estate LLC or another direct or indirect subsidiary of Stewards, Inc. (other than Borrower, Mortgage Borrower, Block 40 Investment Holdings, LLC, a Florida limited liability company, or Block 40) (the “Token Sponsor”) of not more than forty nine percent (49%) of the indirect interest in the Borrower that occurs by the creation, issuance and registration by Token Sponsor of digital tokens, digital securities, blockchain-based interests or similar instruments (collectively, “Tokens”) through Securitize.io, as custodian, or any similar platform performing substantially similar functions in connection with a financing transaction with Stewards, Inc., in which such Tokens, either individually, or as part of a pool of assets, are all or a part of the collateral on such platform or any permitted connected blockchain-base platform, in exchange for a contractual right of repayment for the lender has a contractual right of repayment; provided that:
(1) if such Transfer would cause the transferee to increase its direct or indirect interest in Borrower from an amount, in the aggregate, less than twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), to an amount which equals or exceeds, in the aggregate, twenty percent (20%) (if a domestic Person) or ten percent (10%) (if a foreign Person), (A) Borrower shall have delivered to Lender, at Borrower’s sole cost and expense, customary searches (credit, judgment, lien, bankruptcy, etc.) with respect to such proposed transferee as reasonably required by Lender and Lender shall have approved such results in its reasonable discretion, and (B) Borrower shall provide such additional, customary information regarding such transferee to satisfy Lender’s then applicable “know-your-customer” program requirements, in Lender’s reasonable discretion; and
(2) such Transfer shall not result in a change in the Controlling Interest of Borrower;
(xii) a sale by Mortgage Borrower of the Property, the proceeds of which are used to pay off the Loan in full; and/or
(xiii) a Transfer resulting from a foreclosure by Lender of any equity interests in Mortgage Borrower (direct or indirect) or an assignment-in-lieu to Lender or its designee of the equity interests in Mortgage Borrower (direct or indirect).
For purposes of clause (v) above, “immediate family member” shall mean a sibling, family trust, family limited partnership, parent, spouse, child (or step-child), grandchild or other lineal descendant of the interest holder.
“Person” or “person” – means any individual, company, trust or other legal entity of any kind whatsoever, or other organization, whether or not a legal entity. With respect to any Sanctioned Person, “Person” shall also include any group, sector, territory or country.
“Pledge and Security Agreement” shall mean that certain Pledge and Security Agreement dated as of the Effective Date by Borrower in favor of Lender.
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“Pledged Company Interests” shall have the meaning set forth in the Pledge and Security Agreement.
“Policies” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Prepayment Fee” – shall have the meaning set forth in Section 2.6 hereof.
“Principal Balance” – shall have the meaning ascribed to such term in the Note.
“Property” – shall have the meaning ascribed to such term in the Recitals above.
“Property Manager” – means: (i) Castle Residential Management, Inc., a Florida corporation, or (ii) a replacement property manager acceptable to Lender in its discretion engaged pursuant to the terms of this Agreement.
“Qualified Survey” – means a current land survey of the Property prepared by a reputable, registered land surveyor, certified and prepared in form and substance reasonably satisfactory to Mortgage Lender and the Title Company and other interested parties and otherwise complying with the latest version of “Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys,” including Accuracy Standards, as adopted by the American Land Title Association and National Society of Professional Surveyors, and shall include Table A items required by Mortgage Lender, and certifying the description of the Property (including the appurtenant easements), showing all encroachments onto or from the Property, showing access rights, easements, or utilities, rights of way affecting the Property, showing all setback requirements upon the Property, showing any existing Improvements, showing matters affecting title, and such other items as Lender may reasonably request.
“Rating Agencies” – means each of S&P, Moody’s, Fitch Ratings Inc., DBRS, Inc. and Morningstar Credit Ratings, LLC or any other nationally-recognized statistical rating agency which has been designated by Lender (each a “Rating Agency”) and, after the final Securitization of the Loan, shall mean any of the foregoing that have rated any of the Securities.
“Regional Center” – means a regional center designated by USCIS to participate in the EB-5 Program, together with its successors and assigns, as applicable for the Property and Borrower.
“Rent Roll” – means the rent roll for the Property delivered by Mortgage Borrower to Lender as of the Effective Date, or any updated rent roll from time to time delivered to Lender, in each case in substantially similar form as the form of rent rolls delivered as of the Effective Date.
“Replacement Guarantor” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Reserve Accounts” – means the Interest and Carry Reserve Account, and any other reserve account established by this Agreement or the other Loan Documents.
“Reserves” – means the funds in the Interest and Carry Reserve Account and any other reserve account established by this Agreement or the other Loan Documents.
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“Restoration” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Restricted Account” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Restoration Threshold” – shall have the meaning set forth in the Mortgage Loan Agreement.
“S&P” - means Standard & Poor’s Ratings Group, a division of the McGraw-Hill Companies.
“Sanction” or “Sanctions” - means individually and collectively, respectively, any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the OFAC, the U.S. State Department, the U.S. Department of Commerce, or through any existing or future Executive Order, or (b) any other Governmental Authority with jurisdiction over any Person within the Borrowing Group.
“Sanctioned Person” - means any Person that is a target of Sanctions, including without limitation, a Person that is: (a) listed on OFAC’s Specially Designated Nationals and Blocked Persons List; (b) listed on OFAC’s Consolidated Non-Specially Designated Nationals List; (c) a legal entity that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Peron(s); or (d) a Person that is a Sanctions target pursuant to any territorial or country-based Sanctions program.
“Second Extended Maturity Date” – means August 7, 2030.
“Second Option to Extend” - means Borrower’s option, subject to the terms and conditions of Section 2.14 hereof, to extend the term of the Loan from the First Extended Maturity Date to the Second Extended Maturity Date.
“Security Instrument” - means that certain Amended and Restated Mortgage, Security Agreement, Assignment of Leases and Rents, Fixture Financing Statement and Notice of Future Advance dated as of the Effective Date, executed by Mortgage Borrower, in favor of Mortgage Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Separateness Provisions” - shall have the meaning ascribed to such term in Section 7.1 hereof.
“Servicer” – shall have the meaning set forth in Section 13.34(a) hereof.
“Servicing Agreement” – shall have the meaning set forth in Section 13.34(a) hereof.
“Subordination of Asset Management Agreement” – means that certain Mezzanine Subordination of Asset Management Agreement dated as of the Effective Date executed by Borrower, Lender, and Asset Manager, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time
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“Subordination of Management Agreement” – means that certain Mezzanine Subordination of Management Agreement dated as of the Effective Date executed by Borrower, Lender, and Property Manager, as the same may be amended, restated, replaced, extended, renewed, supplemented or otherwise modified from time to time.
“Tangible Net Worth” – means on any date of determination, the following with respect to Guarantor: (a) the sum of the total assets (excluding any equity value in the Property) less the total liabilities (exclusive of contingent liabilities, including, without limitation, any contingent liabilities created by the Loan Documents or the Mortgage Loan Documents) minus (b) intangibles, as determined by Lender in its reasonable discretion.
“Tax Account” – shall have the meaning set forth in the Mortgage Loan Agreement.
“Taxes” – means all taxes, assessments, and other governmental impositions, now or hereafter levied or assessed or imposed against the Collateral or any part thereof.
“Tenant” – means any Person leasing or occupying space in the Property pursuant to a Lease.
“Tenant Improvements” – means tenant construction work which Mortgage Borrower is required to construct (or cause to be constructed) under any Approved Lease for retail space at the Property or an allowance for tenant construction work Mortgage Borrower is obligated to pay or otherwise provide to a Tenant under any Approved Lease for retail space at the Property, in either case, in amounts, if not expressly set forth and approved by Lender in the Approved Annual Budget or such Approved Lease, approved by Lender in its reasonable discretion.
“Term SOFR Rate” – shall have the meaning ascribed to such term in the Note.
“Third Extended Maturity Date” – means August 7, 2031.
“Third Option to Extend” - means Borrower’s option, subject to the terms and conditions of Section 2.15 hereof, to extend the term of the Loan from the First Extended Maturity Date to the Second Extended Maturity Date.
“TI Leasing Costs” – means any allowable (in accordance with the terms of this Agreement) Tenant Improvements and Leasing Commissions.
“Title Company” – means First American Title Insurance Company.
“Title Policy” – means, individually or collectively, as the context may suggest or require, (i) an ALTA extended coverage loan policy of title insurance in form and substance reasonably satisfactory to Lender, insuring Mortgage Lender in the principal amount of the Loan, of the validity and priority of the lien of the Security Instrument on the Property, subject only to Permitted Encumbrances and (ii) a UCC lender’s insurance policy in form acceptable to Lender issued with respect to the Financing Statement and insuring the lien of the Pledge Agreement..
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“Transfer” - means any sale, installment sale, exchange, mortgage, pledge, hypothecation, assignment, encumbrance or other transfer, conveyance or disposition, whether voluntarily, involuntarily or by operation of law or otherwise.
“UCC” or “Uniform Commercial Code” - means the Uniform Commercial Code in effect from time to time in the state where Borrower is organized and where the Property is located, as applicable, as now or hereafter amended or modified.
“Underwriting Adjustments (Commercial)” - means commercially reasonable adjustments made by Lender in its calculation of Underwritten Net Operating Income (Commercial) and the components thereof, in each case, based upon Lender’s standard underwriting criteria for transactions comparable to the Loan, which such adjustments shall include, without limitation, adjustments:
(A) for (i) items of a non-recurring nature, (ii) a credit/loss vacancy allowance equal to the greater of (a) actual vacancy, or (b) 5%, (iii) imminent increases or decreases in liabilities and expenses (including Taxes and/or Insurance Premiums), (iv) management fees in excess of commercially reasonable fees and expenses, and (v) insufficient replacement reserves;
(B) to include (i) rental income with respect to Leases that are in full force and effect under which the Tenant has taken occupancy and commenced rent payment, (ii) rental income (based on a pro-rata calculation for the next successive twelve month period) for all executed Leases where Tenants have not yet commenced rent payments if rent commencement is scheduled to occur within the next 12 months from the date of calculation pursuant to the terms of the Lease; and (iii) scheduled rent increases if such rent increases are scheduled to occur within 12 months from the date of calculation. To the extent such rent increases are scheduled to occur within 6 months from the date of calculation, the increases will be calculated as if applicable as of the date of calculation. To the extent such rent increases are scheduled to occur between 7-12 months from the date of calculation, the rent increases will be included for the applicable forward-looking period (but not as of the date of calculation); and
(C) to exclude rental income attributable to any Tenant under any Lease (i) in bankruptcy to the extent that the Tenant under the Lease has rejected the Lease in the applicable bankruptcy proceeding pursuant to a final, non-appealable order of a court of competent jurisdiction; (ii) not paying base rent under its Lease or otherwise in material monetary default under its Lease, in each case beyond any applicable notice, grace and cure periods; (iii) pursuant to which a material, non-monetary default has occurred and is continuing beyond any applicable notice, grace and cure periods; (iv) that has notified Borrower in writing that it will terminate, cancel, reject and/or not renew its applicable Lease or “go dark” or vacate all or substantially all of its leased space within the successive 12 month period, unless such Tenant is an investment-grade Tenant, in which case rental income shall be included calculated on a pro-rata basis based on the actual rental payments remaining for the next successive 12 month period pursuant to the applicable Lease; (v) whose Lease is not in full force and effect; (vi) whose tenancy at the retail space is month-to-month, unless such month-to-month Tenant has demonstrated to the reasonable satisfaction of Lender that they intend to continue such Lease; and (vii) which expires within 90 days or less of the applicable date of calculation hereunder, and either (1) there is no exercisable option contained in the terms thereof or (2) the tenant has not yet given notice of its exercise of any exercisable option contained therein, unless Lender determines in its reasonable discretion that such Tenant intends to extend such Lease.
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“Underwriting Adjustments (Multifamily)” - shall mean adjustments made by Lender in its calculation of Underwritten Net Operating Income (Multifamily) and the components thereof, in each case, based upon Lender standard underwriting criteria for transactions comparable to the Loan, which such adjustments shall include, without limitation, adjustments for (i) items of a non-recurring nature; (ii) a credit/loss vacancy and collection loss allowance equal to the greater of: (a) actual vacancy, and (b) 5% (the stabilized market vacancy underwritten by Lender as of the Effective Date based on market vacancy rates), (iii) imminent increases or decreases in liabilities and expenses (including Taxes and/or Insurance Premiums), (iv) management fees in excess of commercially reasonable fees and expenses, (v) insufficient replacement reserves, (vi) rental income attributable to any Tenant under any residential Lease not paying rent under its Lease when due or otherwise in material default under its Lease beyond any applicable notice and cure periods, and (vii) for future residential lease term commencement dates and rent concessions.
“Underwritten Net Operating Income” – means the sum of Underwritten Net Operating Income (Commercial) plus Underwritten Net Operating Income (Multifamily).
“Underwritten Net Operating Income (Commercial)” - means the amount calculated by Lender on a monthly basis by which (a) Gross Income for any commercial portion of the Property for the immediately succeeding twelve (12) calendar month period, exceeds (b) the greater of (i) actual Operating Expenses incurred for the preceding twelve (12) calendar month period for such portion of the Property, or (ii) Permitted Operating Expenses shown on the Approved Annual Budget for the immediately succeeding twelve (12) calendar month period for such portion of the Property, all of which shall be subject to the application of the Underwriting Adjustments (Commercial) by Lender in its reasonable discretion. Lender’s monthly calculation of Underwritten Net Operating Income (Commercial) (including determination of items that do not qualify as Gross Income or Operating Expenses such portion of the Property) shall be calculated by Lender in good faith and shall be final absent manifest error.
“Underwritten Net Operating Income (Multifamily)” – means the amount calculated by Lender on a monthly basis by which: (a) Gross Income for the residential portion of the Property for the immediately succeeding twelve (12) calendar month period, exceeds (b) the greater of: (i) actual Operating Expenses for the residential portion of the Property incurred for the preceding twelve (12) calendar month period, or (ii) Permitted Operating Expenses shown on the Approved Annual Budget for the immediately succeeding twelve (12) calendar month period for the residential portion of the Property, all of which shall be subject to the application of the Underwriting Adjustments (Multifamily) by Lender in its reasonable discretion. Lender’s monthly calculation of Underwritten Net Operating Income (Multifamily) (including determination of items that do not qualify as Gross Income or Operating Expenses for such portion of the Property) shall be calculated by Lender in good faith and shall be final absent manifest error.
“USCIS” – means the United States Citizenship and Immigration Services, a component of the United States Department of Homeland Security, and any successor agency thereto.
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Article 2. LOAN
2.1 LOAN. Subject to the terms of this Agreement, Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender the principal sum of up to Ten Million and No/100 Dollars ($10,000,000.00); said sum to be evidenced by the Note. This Loan is not a revolving credit line, and no payments or credits shall increase the maximum amount of advances available from the Loan.
2.2 PURPOSE. Amounts disbursed to or on behalf of Borrower pursuant to the Note shall be used for the refinance of the Property and the payment of related costs and expenses and for such other purposes and uses as may be permitted under this Agreement and the other Loan Documents.
2.3 INTEREST RATE AND DEFAULT RATE. The Principal Balance of the Note outstanding at the close of each day shall bear interest at the Contract Rate or the Default Rate, as applicable, and in accordance with all terms and conditions set forth therein.
2.4 TERMS OF PAYMENT. The Loan shall be repaid in accordance with the terms of this Agreement and the Note.
2.5 EXIT FEE. .
(a) Borrower shall be obligated to pay an exit fee to Lender (the “Exit Fee”) upon repayment in full of the Note or the acceleration or maturity thereof in accordance with the terms of any of the Loan Documents, in an amount equal to $100,000.00 (1.00%) of the total amount of the Loan, whether disbursed or undisbursed). In furtherance of the foregoing, Borrower expressly acknowledges and agrees that (i) Lender shall have no obligation to accept any payment in full of the Note unless and until Borrower shall have complied with this Section 2.5, and (ii) Lender shall have no obligation to release any Loan Document upon payment of the Note unless and until Lender shall have received the Exit Fee then due and payable. Borrower expressly acknowledges and agrees that the Exit Fee shall constitute additional consideration for the Loan. Notwithstanding the forgoing, Lender hereby agrees that the Exit Fee shall be waived and no longer due and payable if the Loan is repaid through a financing with Lender or an Affiliate of Lender.
(b) If Borrower shall make a prepayment of the Loan pursuant to any provisions of Sections 2.13 through 2.15, then a portion of the Exit Fee equal to one percent (1.00%) of such prepaid amount shall be due and payable upon such prepayment.
2.6 PREPAYMENT. The Principal Balance of the Note may be prepaid, in whole only, upon the satisfaction of the following: (i) Borrower shall deliver not less than ten (10) days prior written notice to Lender (or such shorter period of time as may be permitted by Lender) specifying the date on which prepayment is to be made (the “Prepayment Date”); provided that Borrower may revoke such notice in its discretion; (ii) Borrower shall make payment of accrued interest to and including the Prepayment Date; (iii) in the event the Prepayment Date occurs on or before July 24, 2028 (the period of time from the Effective Date through such
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date being the “Prepayment Period”), which prepayment occurring during the Prepayment Period may be in whole only, Borrower shall make payment to Lender of the applicable Prepayment Fee (as defined below); provided that no Prepayment Fee shall be due by Borrower for prepayment of the Loan in connection with application of casualty insurance or condemnation proceeds by or with the consent of Lender in reduction of the Loan; and (iv) Borrower shall make payment of all other sums then due under the Note, the Pledge and Security Agreement and the other Loan Documents to the extent then payable. If any such notice of prepayment is given, the principal amount set forth in such notice and the other sums required under this paragraph shall be due and payable on the Prepayment Date; provided, however, that Borrower may revoke any such prepayment election on or before the Prepayment Date by written notice to Lender. As used herein, the “Prepayment Fee”, being calculated as a percentage of the then outstanding Principal Balance of the Loan at the time of prepayment is calculated in accordance with the following calculation: the Contract Rate in effect for the month in which the Prepayment Date occurs divided by 12 months, divided by 30 days (i.e. to obtain a per diem rate of interest), multiplied by the remaining days in the Prepayment Period following the Prepayment Date, multiplied by the then-outstanding Principal Balance, equals the Prepayment Fee, without duplication for any interest previously paid. Notwithstanding the foregoing to the contrary, Borrower shall be allowed to prepay the Loan in part in connection with Sections 2.13 through 2.15 hereof only, in accordance with the provisions of Section 2.5(b).
2.7 GRANT OF SECURITY INTEREST IN COLLATERAL. The Note shall be secured, in part, by the Pledge and Security Agreement encumbering the Collateral.
2.8 GRANT OF SECURITY INTEREST IN ACCOUNTS AND RESERVES; APPLICATIONS OF FUNDS. As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all Borrower’s right, title and interest in and to all Reserves, the Reserve Accounts and all other Accounts. Borrower shall not, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in any of the Reserves, the Reserve Accounts, or any other Accounts, or permit any lien to attach thereto, or any levy to be made thereon, or any financing statements to be filed thereon, except those naming Lender as the secured party, to be filed with respect thereto, except as may be expressly provided in the Mortgage Loan Documents. This Agreement is, among other things, intended by the parties to be a security agreement for purposes of the UCC. If an Event of Default has occurred and continues beyond any applicable cure periods, Lender may apply all or any part of the Reserves and/or other Account Funds against the amounts outstanding under the Loan in any order and in any manner as Lender shall elect in Lender’s sole discretion without seeking the appointment of a receiver and without adversely affecting the rights of Lender to foreclose the liens and security interests securing the Loan or exercise its other rights under the Loan Documents. The Reserves and other Account Funds shall not constitute trust funds and may be commingled with other monies held by Lender. All interest which accrues on the Reserves and other Account Funds shall be at a rate established by Lender or the institution that is acting as depository with respect to the Account, which may or may not be the highest rate then available, shall accrue for the benefit of Borrower and shall be taxable to Borrower and shall be added to and disbursed in the same manner and under the same conditions as the principal sum on which said interest accrued. Upon satisfaction and repayment in full of Borrower’s obligations under the Loan Documents (including, without limitation, payment of any applicable Exit Fee and Prepayment Fee), all remaining funds held in the Accounts, all remaining Reserves and other Account Funds, if any, shall be (i) delivered to Lender if any portion of the Loan remains outstanding, and (ii) if the Loan has been repaid in full, shall be disbursed to Borrower within ten (10) Business Days unless such amounts have been credited (at Lender’s reasonable discretion) to the satisfaction of Borrower’s obligations under the Loan Documents.
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2.9 FEE. On the Effective Date and as a condition precedent to the effectiveness of this Agreement, Borrower shall pay to Lender a fully earned, non-refundable origination fee in immediately available funds in the amount of $100,000.00 (1.00% of the total Loan) (the “Origination Fee”).
2.10 LOAN DOCUMENTS. Borrower shall deliver to Lender concurrently with this Agreement each of the documents, each properly executed and in recordable form, as applicable, described in Exhibit B as Loan Documents.
2.11 EFFECTIVE DATE. The Loan Documents shall become effective on the Effective Date.
2.12 FULL REPAYMENT AND RELEASE. Upon receipt of all sums owing and outstanding under the Loan Documents (including, without limitation, payment of any applicable Exit Fee and Prepayment Fee), and the full performance of all other obligations secured by the Pledge and Security Agreement, Lender shall release the Collateral from the Lien of the Pledge and Security Agreement and terminate any Financing Statements related to the Collateral and return to Borrower all certificates for and representing the Pledged Company Interests; provided, however, that all of the following conditions shall be satisfied at the time of, and with respect to, such reconveyance, satisfaction or release: Lender shall have received all escrow, closing and filing costs, the costs of preparing and delivering such release, the payment of any and all sums then due and payable under the Loan Documents, and the full payment and performance of all other obligations secured by the Pledge and Security Agreement, including, without limitation, those set forth in the Note and the Pledge and Security Agreement. Lender’s obligation to make further disbursements under the Loan shall terminate as to any portion of the Loan undisbursed as of the date of issuance of such release, and any commitment of Lender to lend any undisbursed portion of the Loan shall be cancelled. Upon request from Borrower, at Borrower’s sole cost and expense, Lender agrees to assign the Note and the Pledge and Security Agreement to any future lender of Borrower’s choosing upon repayment of the Debt.
2.13 FIRST OPTION TO EXTEND. Borrower shall have the option to extend (“First Option to Extend”) the term of the Loan from the Original Maturity Date to the First Extended Maturity Date, upon satisfaction of each and every one of the following conditions precedent (unless otherwise waived by Lender in its sole discretion):
(a) Borrower shall provide Lender with written notice of Borrower’s request to exercise the First Option to Extend substantially in the form attached hereto as Exhibit C not less than sixty (60) days prior to the Original Maturity Date.
(b) As of the date of Borrower’s delivery of notice of request to exercise the First Option to Extend, and as of the Original Maturity Date, no Event of Default or Mortgage Event of Default shall have occurred and be continuing beyond any applicable cure periods and Borrower shall so certify in writing if requested by Lender.
(c) Borrower shall execute or cause the execution of all documents reasonably required by Lender in a form reasonably satisfactory to Borrower and Lender to exercise the First Option to Extend.
(d) Lender shall have received evidence that, under the terms hereof and thereof, the Mortgage Loan shall have been or will simultaneously be extended to a date that is no earlier than the First Extended Maturity Date.
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(e) Intentionally omitted.
(f) Mortgage Lender shall have determined that the outstanding Principal Balance of the Loan and Mortgage Loan (in the aggregate) as a percentage of the as-is fair market value of the Property (“Loan-to-Value Percentage”) as of the Original Maturity Date does not exceed 80.00%. To the extent Mortgage Lender determines that the Loan-to-Value Percentage exceeds 80.00% as of the Original Maturity Date, Mortgage Lender may, or at the request of Borrower or Lender, shall, order at Borrower’s expense a written appraisal prepared by an M.A.I. appraiser approved by Lender in its reasonable discretion in conformance with the requirements of FIRREA, as well as any other applicable rules and/or regulations from any and any applicable Governmental Authority (“Approved Appraisal”), confirming to the reasonable satisfaction of Mortgage Lender that the Loan-to-Value Percentage does not exceed 80.00%. Provided, however, in the event such fair market value is not adequate to meet the required Loan-to-Value Percentage of 80.00%, then Borrower may pay down the outstanding Principal Balance of the Loan and Mortgage Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) by an amount such that said Loan-to-Value Percentage requirement may be met. The valuation date of any Approved Appraisal delivered in connection with the First Option to Extend shall be within ninety (90) days of the Original Maturity Date.
(g) Borrower shall have entered into an (or extended the then-existing) Interest Rate Cap Agreement (or Substitute IRPA pursuant to the terms and conditions of Section 9.21 below, if applicable) which such Interest Rate Cap Agreement shall cap the Term SOFR Rate at a strike price equal to or less than 4.50% (unless a higher strike price is approved by Lender in its sole discretion) during the period from the Original Maturity Date through the First Extended Maturity Date. As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all Borrower’s right, title and interest in and to any Interest Rate Cap Agreement and agrees to enter into any documentation or take such other action reasonably requested by Lender to establish, protect, perfect or enforce any such security interest granted to Lender pursuant to this Section.
(h) Borrower shall have delivered evidence satisfactory to Lender that as of the Original Maturity Date the Property has achieved a Debt Yield Ratio of at least 6.75%, as reasonably calculated by Mortgage Lender; provided, however, in the event such required minimum Debt Yield Ratio is not achieved, then Borrower may pay down the outstanding Principal Balance of the Loan and Mortgage Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) such that said minimum Debt Yield Ratio is met as calculated by Mortgage Lender in Mortgage Lender’s reasonable discretion (unless otherwise waived by Mortgage Lender in its sole discretion).
(i) On or before the Original Maturity Date, Borrower shall pay to Lender an extension fee in the amount one quarter of one percent (0.25%) of the then-outstanding Principal Balance of the Loan.
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Notwithstanding the provisions of clauses (f) and (h) of this Section 2.13 to the contrary, should: (1) Mortgage Lender waive its right to calculate the Loan-to-Value Percentage and/or Debt Yield Ratio, (2) Mortgage Lender waive its right to order an Approved Appraisal, and/or (3) Lender be able to provide evidence of manifest error in the calculation of the Loan-to-Value Percentage or Debt Yield Ratio, Lender shall have the right to determine the Loan-to-Value Percentage and/or Debt Yield Ratio, or order an Approved Appraisal, as applicable.
2.14 SECOND OPTION TO EXTEND. If Borrower shall have exercised the First Option to Extend and the Original Maturity Date of the Note shall have been extended in accordance with the terms and provisions of this Agreement, Borrower shall have the option to further extend the term of the Loan (“Second Option to Extend”) from the First Extended Maturity Date to the Second Extended Maturity Date, upon satisfaction of each and every one of the following conditions precedent (unless otherwise waived by Lender in its discretion):
(a) Borrower shall provide Lender with written notice of Borrower’s request to exercise the Second Option to Extend substantially in the form attached hereto as Exhibit C not less than sixty (60) days prior to the First Extended Maturity Date.
(b) As of the date of Borrower’s delivery of notice of request to exercise the Second Option to Extend, and as of the First Extended Maturity Date, no Event of Default or Mortgage Event of Default shall have occurred and be continuing beyond any applicable cure periods and Borrower shall so certify in writing if requested by Lender.
(c) Borrower shall execute or cause the execution of all documents reasonably required by Lender in a form reasonably satisfactory to Borrower and Lender to exercise the Second Option to Extend.
(d) Lender shall have received evidence that the Mortgage Loan is paid off (if permitted under the terms hereof and thereof) or shall have been or will simultaneously be extended to a date that is no earlier than the Second Extended Maturity Date.
(e) Intentionally omitted.
(f) Mortgage Lender shall have determined that Loan-to-Value Percentage as of the First Extended Maturity Date does not exceed 75.00%. To the extent Mortgage Lender determines that the Loan-to-Value Percentage exceeds 75.00% as of the First Extended Maturity Date, Borrower may deliver to Mortgage Lender and Lender, at Borrower’s expense, an Approved Appraisal confirming to the reasonable satisfaction of Mortgage Lender that the Loan-to-Value Percentage does not exceed 75.00%. Provided, however, in the event such fair market value is not adequate to meet the required Loan-to-Value Percentage, then Borrower may pay down the outstanding Principal Balance of the Loan and Mortgage Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) by an amount such that said Loan-to-Value Percentage requirement may be met. The valuation date of any Approved Appraisal delivered in connection with the Second Option to Extend shall be within ninety (90) days of the First Extended Maturity Date.
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(g) Borrower shall have entered into an (or extended the then-existing) Interest Rate Cap Agreement (or Substitute IRPA pursuant to the terms and conditions of Section 9.21 below, if applicable) which such Interest Rate Cap Agreement shall cap the Term SOFR Rate at a strike price equal to or less than 4.50% (unless a higher strike price is approved by Lender in its sole discretion) during the period from the First Extended Maturity Date through the Second Extended Maturity Date. As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all Borrower’s right, title and interest in and to any Interest Rate Cap Agreement and agrees to enter into any documentation or take such other action reasonably requested by Lender to establish, protect, perfect or enforce any such security interest granted to Lender pursuant to this Section.
(h) Borrower shall have delivered evidence satisfactory to Mortgage Lender that as of the First Extended Maturity Date the Property has achieved a Debt Yield Ratio of at least 7.00%, as reasonably calculated by Mortgage Lender; provided, however, in the event such required minimum Debt Yield Ratio is not achieved, then Borrower may pay down the outstanding Principal Balance of the Loan and Mortgage Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) such that said minimum Debt Yield Ratio is met as calculated by Mortgage Lender in Mortgage Lender’s reasonable discretion (unless otherwise waived by Mortgage Lender in its sole discretion).
(i) On or before the First Extended Maturity Date, Borrower shall pay to Lender an extension fee in the amount one quarter of one percent (0.25%) of the then-outstanding Principal Balance of the Loan.
Notwithstanding the provisions of clauses (f) and (h) of this Section 2.14 to the contrary, should: (1) Mortgage Lender waive its right to calculate the Loan-to-Value Percentage and/or Debt Yield Ratio, (2) Mortgage Lender waive its right to order an Approved Appraisal, and/or (3) Lender be able to provide evidence of manifest error in the calculation of the Loan-to-Value Percentage and/or Debt Yield Ratio, Lender shall have the right to determine the Loan-to-Value Percentage and/or Debt Yield Ratio, or order an Approved Appraisal, as applicable.
2.15 THIRD OPTION TO EXTEND. If Borrower shall have exercised the Second Option to Extend and the First Extended Maturity Date of the Note shall have been extended in accordance with the terms and provisions of this Agreement, Borrower shall have the option to further extend the term of the Loan (“Third Option to Extend”) from the Second Extended Maturity Date to the Third Extended Maturity Date, upon satisfaction of each and every one of the following conditions precedent (unless otherwise waived by Lender in its discretion):
(a) Borrower shall provide Lender with written notice of Borrower’s request to exercise the Third Option to Extend substantially in the form attached hereto as Exhibit C not less than sixty (60) days prior to the Second Extended Maturity Date.
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(b) As of the date of Borrower’s delivery of notice of request to exercise the Third Option to Extend, and as of the Second Extended Maturity Date, no Event of Default or Mortgage Event of Default shall have occurred and be continuing beyond any applicable cure periods and Borrower shall so certify in writing if requested by Lender.
(c) Borrower shall execute or cause the execution of all documents reasonably required by Lender in a form reasonably satisfactory to Borrower and Lender to exercise the Third Option to Extend.
(d) Lender shall have received evidence that the Mortgage Loan shall have been or will simultaneously be extended to a date that is no earlier than the Third Extended Maturity Date.
(e) Intentionally omitted.
(f) Mortgage Lender shall have determined that Loan-to-Value Percentage as of the Second Extended Maturity Date does not exceed 70.00%. To the extent Mortgage Lender determines that the Loan-to-Value Percentage exceeds 70.00% as of the Second Extended Maturity Date, Borrower may deliver to Mortgage Lender and Lender at Borrower’s expense an Approved Appraisal confirming to the reasonable satisfaction of Mortgage Lender that the Loan-to-Value Percentage does not exceed 70.00%. Provided, however, in the event such fair market value is not adequate to meet the required Loan-to-Value Percentage, then Borrower may pay down the outstanding Principal Balance of the Loan and Mortgage Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) by an amount such that said Loan-to-Value Percentage requirement may be met. The valuation date of any Approved Appraisal delivered in connection with the Third Option to Extend shall be within ninety (90) days of the Second Extended Maturity Date.
(g) Borrower shall have entered into an (or extended the then-existing) Interest Rate Cap Agreement (or Substitute IRPA pursuant to the terms and conditions of Section 9.21 below, if applicable) which such Interest Rate Cap Agreement shall cap the Term SOFR Rate at a strike price equal to or less than 4.50% (unless a higher strike price is approved by Lender in its sole discretion) during the period from the Second Extended Maturity Date through the Third Extended Maturity Date. As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all Borrower’s right, title and interest in and to any Interest Rate Cap Agreement and agrees to enter into any documentation or take such other action reasonably requested by Lender to establish, protect, perfect or enforce any such security interest granted to Lender pursuant to this Section.
(h) Borrower shall have delivered evidence satisfactory to Lender that as of the Second Extended Maturity Date the Property has achieved a Debt Yield Ratio of at least 7.25%, as reasonably calculated by Mortgage Lender; provided, however, in the event such required minimum Debt Yield Ratio is not achieved, then Borrower may pay down the outstanding Principal Balance of the Loan and Mortgage Loan (to be applied to each respective loan on a pro rata basis as calculated by Lender in its reasonable discretion) such that said minimum Debt Yield Ratio is met as calculated by Mortgage Lender in Mortgage Lender’s reasonable discretion (unless otherwise waived by Mortgage Lender in its sole discretion).
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(i) On or before the Second Extended Maturity Date, Borrower shall pay to Lender an extension fee in the amount one quarter of one percent (0.25%) of the then-outstanding Principal Balance of the Loan.
Notwithstanding the provisions of clauses (f) and (h) of this Section 2.15 to the contrary, should: (1) Mortgage Lender waive its right to calculate the Loan-to-Value Percentage and/or Debt Yield Ratio, (2) Mortgage Lender waive its right to order an Approved Appraisal, and/or (3) Lender be able to provide evidence of manifest error in the calculation of the Loan-to-Value Percentage and/or Debt Yield Ratio, Lender shall have the right to determine the Loan-to-Value Percentage and/or Debt Yield Ratio, or order an Approved Appraisal, as applicable.
Article 3. DISBURSEMENT and reserves
3.1 CONDITIONS PRECEDENT.
(a) Lender’s obligation to make the Loan on the Effective Date shall be subject at all times to the satisfaction or waiver of each and every one of the following conditions precedent on or prior to the Effective Date:
(i) No Defaults. No Event of Default shall occur upon Lender’s making of the Loan.
(ii) Documents. Receipt and approval by Lender of an executed original of this Agreement, each of the Loan Documents, and any and all other documents, instruments, policies and forms of evidence or other materials which are required pursuant to this Agreement or any of the other Loan Documents, each in form and content reasonably acceptable to Lender.
(iii) Pledge Agreement. The Pledge and Security Agreement is a valid lien upon the Collateral and is prior and superior to all other liens and encumbrances thereon except the Permitted Encumbrances.
(iv) Representations and Warranties. The representations and warranties contained in this Agreement are true and correct in all material respects.
(v) Borrower Cost Basis. Borrower represents and warrants to Lender as of the Effective Date that Mortgage Borrower’s cost-basis in the Property is equal to or greater than $158,000,000.00 as of the Effective Date.
(vi) Underwritten Net Operating Income. Borrower represents and warrants to Lender as of the Effective Date that Mortgage Borrower has calculated the Underwritten Net Operating Income of the Property to be equal to or greater than $4,150,000.00 in accordance with the terms and conditions of this Agreement and/or the Mortgage Loan Agreement.
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(vii) Organizational Documents; Good Standing. Lender shall have received: (a) copies of all the organizational documents for Borrower and any other related entity reasonably requested by Lender, (b) a resolution authorizing the Loan and execution and delivery of the Loan Documents, in form and substance reasonably acceptable to Lender, and (c) evidence that Borrower and any other entity reasonably required by Lender, is in good standing in its state of formation and states where it conducts business.
(viii) Leases; Material Agreements. Lender shall have received true, correct and complete copies of all commercial Leases (if any) and all Material Agreements within Borrower’s possession and control.
(ix) Lien Search Reports and Know Your Customer Information. Lender shall have received satisfactory reports of Uniform Commercial Code, tax lien, bankruptcy and judgment searches and any additional required know-you-customer information/reports conducted by a search firm acceptable to Lender with respect to the Property, Borrower and Guarantor (including Borrower’s immediate predecessor, if any), and any additional related Persons, such searches to be conducted in such locations as Lender shall have requested.
(x) Transaction Costs. Borrower shall have paid all transaction costs (or provided for the direct payment of such transaction costs by Lender from the proceeds of the Loan).
(xi) Insurance. Lender shall have received certificates of insurance for casualty insurance demonstrating insurance coverage in respect of the Property of types, in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in the Mortgage Loan Agreement.
(xii) Title. Lender shall have received a marked, signed commitment to issue, or a pro-forma version of, a Title Policy in respect of the Collateral, listing only Permitted Encumbrances. If the Title Policy is to be issued by, or if disbursement of the proceeds of the Loan are to be made through, an agent of the actual insurer under the Title Policy (as opposed to the insurer itself), the actual insurer shall have issued to Lender for Lender’s benefit a so-called “Insured Closing Letter.”
(xiii) Qualified Survey. Lender shall have received a Qualified Survey with respect to the Property.
(xiv) Zoning. Lender shall have received evidence satisfactory to Lender that the Property is in compliance with all applicable zoning requirements, or if not in compliance, is considered to be legal, non-conforming (including a zoning report, a zoning endorsement if obtainable and a letter from the applicable municipality if obtainable). To the extent the Property is considered to be legal, non-conforming, Borrower shall have delivered evidence of ordinance and law insurance coverage for the Property reasonably satisfactory to Lender and to the extent available to Borrower at commercially reasonable rates.
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(xv) Permits; Certificate of Occupancy. Lender shall have received a copy of all permits necessary for the use and operation of the Property and any existing certificate(s) of occupancy, if required, for the Property.
(xvi) Environmental Report. Lender shall have received the Environmental Report with respect to the Property in form and substance reasonably satisfactory to Lender which have been prepared within the six (6) months prior to the Effective Date, and that disclose no material environmental conditions with respect to the Property.
(xvii) Flood Certifications. Lender shall have received flood certifications and evidence of flood insurance with respect to the Property, if it is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the United States Federal Reserve System, in form and substance satisfactory to Lender.
(xviii) Consents, Licenses, Approvals, etc. Lender shall have received copies of all consents, licenses and approvals, if any, required in connection with the execution, delivery and performance by Borrower, and the validity and enforceability, of the Loan Documents, and such consents, licenses and approvals shall be in full force and effect.
(xix) Financial Information. Lender shall have received financial information relating to Borrower, Mortgage Borrower, Guarantor and the Property that accurately reflects the financial positions of Borrower, Mortgage Borrower, Guarantor and the Property in all material respects.
(xx) Opinions. Borrower has delivered to Lender, at Borrower’s expense, the opinions of legal counsel required by Lender in its reasonable discretion.
(xxi) Additional Matters. Lender shall have received such other certificates, documents and instruments relating to the Loan as may have been reasonably requested by Lender. All corporate and other proceedings, all other documents (including all documents referred to in this Agreement and not appearing as exhibits to this Agreement) and all legal matters in connection with the Loan shall be reasonably satisfactory in form and substance to Lender.
(xxii) Stub Interest. Borrower shall make a payment to Lender of any stub interest required pursuant to the terms of the Note.
(xxiii) Mortgage Loan. Borrower shall have delivered to Lender true, correct and complete copies of all of the Mortgage Loan Documents.
3.2 PLEDGE AND ASSIGNMENT AND DISBURSEMENT AUTHORIZATION. The proceeds of the Loan, when qualified for disbursement, shall be disbursed to or for the benefit or account of Borrower in accordance with the Loan Documents. As additional security for Borrower’s performance under the Loan Documents, Borrower hereby irrevocably pledges and assigns to Lender all monies at any time deposited in the Reserves and other Account Funds.
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3.3 DISBURSEMENTS. Borrower hereby authorizes Lender to disburse the proceeds of the Loan made by Lender or its Affiliate, and if applicable, funds in any Reserves, in accordance with the terms of the Loan Documents.
3.4 INTENTIONALLY OMITTED.
3.5 INTENTIONALLY OMITTED.
3.6 INTEREST AND CARRY RESERVE. Upon closing of the Loan, a total of $1,975,000.00 (the “Initial Carry Reserve Deposit”) shall be deposited into an Eligible Account held by Lender or Servicer as a reserve for the payment of Debt Service and/or Operating Expenses (collectively, the “Interest and Carry Reserve Account”). Amounts deposited into the Interest and Carry Reserve Account pursuant to this Section 3.6 are referred to herein as the “Interest and Carry Reserve Funds”.
(a) Provided (i) no Event of Default has occurred and is continuing, and (ii) no Cash Sweep Period then exists, the Borrower may request on a monthly basis that a disbursement be made from the Interest and Carry Reserve Account for the difference between (A) the total of the Debt Service payments on the Loan (net of any payments made to Borrower pursuant to any “in-the-money” Interest Rate Cap Agreement) in the immediately preceding month, and (B) the revenue from the Property for the immediately preceding month, as detailed in the applicable Monthly Operating Report delivered to Lender by Borrower (“Carry Cost Payment Deficiency”). Provided Borrower delivers documentation reasonably satisfactory to Lender to evidence any such Carry Cost Payment Deficiency, Lender shall promptly disburse to Borrower the applicable Carry Cost Payment Deficiency. For the sake of clarity, a Cash Sweep Period shall be in effect as of the Effective Date.
(b) Provided (i) no Event of Default has occurred and is continuing, but (ii) a Cash Sweep Period then exists, then Lender shall disburse directly to Lender any Interest and Carry Reserve Funds on deposit in the Interest and Carry Reserve Account on each Monthly Payment Date as necessary to satisfy any applicable Debt Service payments on the Loan.
(c) If at any time Lender reasonably determines that the amounts on deposit in the Interest and Carry Reserve Account are insufficient to cover the projected Carry Cost Payment Deficiency for the next successive six (6) calendar months, as calculated by Lender in its reasonable discretion, then Borrower shall deposit an amount reasonably determined by Lender to be sufficient to restore such six (6) calendar month buffer into the Interest and Carry Reserve Account not more than fifteen (15) Business Days after Borrower’s receipt of Lender’s written demand thereof (such amount, the “Interest and Carry Reserve Replenishment Deposit”). The failure of Borrower to deposit such funds as required pursuant to the preceding sentence shall constitute an Event of Default hereunder. Notwithstanding the foregoing, Borrower shall have no obligation to make any Interest and Carry Reserve Replenishment Deposit prior to the earlier of the following: (i) February 7, 2027 (the “Replenishment Deposit Date), and (ii) the date that the Replenishment Deposit is made by Borrower pursuant to the terms of Section 3.6(d) below.
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(d) On or before the earlier to occur of (i) the Replenishment Deposit Date and (ii) the occurrence and continuance of an Event of Default, Borrower shall deposit into the Interest and Carry Reserve Account an amount equal to $825,000.00 (the “Replenishment Deposit”).
(e) The Borrower hereby acknowledges and agrees that, except as expressly provided herein, the Borrower shall not have access to the funds in the Interest and Carry Reserve Account. Upon the occurrence and during the continuance of an Event of Default, Lender may disburse any amounts in the Interest and Carry Reserve Account in its sole discretion to the payment of the Loan.
3.7 INTENTIONALLY OMITTED.
3.8 INTENTIONALLY OMITTED.
3.9 INTENTIONALLY OMITTED.
3.10 TRANSFER OF RESERVE FUNDS UNDER MORTGAGE LOAN. If Mortgage Lender waives any reserves or escrow accounts required in accordance with the terms of the Mortgage Loan Agreement, or if the Mortgage Loan is repaid in full (and the Loan is not repaid in full simultaneously therewith) or is refinanced and reserve funds that are required under the Mortgage Loan Agreement are not required under any such new mortgage loan, then Borrower shall cause any and all amounts that would have been deposited into any reserves or escrow accounts in accordance with the terms of the Mortgage Loan Agreement to be transferred to and deposited with Lender (and Borrower shall enter into a clearing account agreement and, if applicable, a cash management agreement, for the benefit of Lender substantially similar to the arrangements entered into by Mortgage Borrower at the time of the closing of the Mortgage Loan). Borrower will execute all amendments and other documents necessary to give effect to the terms and conditions of this Section 3.10. All of the foregoing shall be at the sole cost and expense of Borrower.
3.11 GENERAL. Borrower shall pay to Lender all reasonable, out-of-pocket fees, costs and expenses actually paid or incurred by Lender from time to time in connection with any request of Borrower for a disbursement of funds from the Reserves. Borrower authorizes Lender to disburse directly to Lender, from the applicable Reserves or from funds to be disbursed to Borrower from the Reserves, such sums as may be necessary, at any time and from time to time, to pay all such fees, costs and expenses.
Article 4. cash management PROVISIONS
4.1 CASH MANAGEMENT ACCOUNT.
(a) Establishment of Certain Accounts. Borrower shall cause Mortgage Borrower to establish and maintain the Restricted Account pursuant to and in accordance with the applicable terms and conditions of the DACA-Restricted Account Agreement and the applicable terms and conditions of the Mortgage Loan Agreement. Other than as required pursuant to the Mortgage Loan Documents, Borrower shall not permit or cause Mortgage Borrower to further pledge, assign or grant any security interest in the Restricted Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any financing statements to be filed with respect thereto.
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(b) Cash Management Account. Borrower shall cause Mortgage Borrower to comply with the applicable terms and conditions of the Mortgage Loan Agreement relating to the Cash Management Account. Other than as required pursuant to the Mortgage Loan Documents, Borrower shall not permit or cause Mortgage Borrower to further pledge, assign or grant any security interest in the Cash Management Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any financing statements, except those naming Mortgage Lender as the secured party, to be filed with respect thereto. Mortgage Lender shall have the sole right to make withdrawals and/or direct disbursements from the Cash Management Account, to be applied in accordance with the terms and conditions of the Mortgage Loan Documents. All costs and expenses for establishing and maintaining the Cash Management Account shall be paid by Mortgage Borrower. Subject to the terms of the Mortgage Loan Documents, Lender may direct Mortgage Lender to make all distributions from the Cash Management Account that would, pursuant to the Mortgage Loan Documents, go to Mortgage Borrower, directly to Lender pursuant to written instructions provided by Lender, to pay any amounts owed to Lender by Borrower hereunder.
(c) Mortgage Lender Waiver. In the event Mortgage Lender waives the requirement for Mortgage Borrower to maintain the Restricted Account, the Cash Management Account or any of the Reserve Accounts, Borrower shall establish and maintain a lockbox account, cash management account and/or reserve accounts, as required by Lender in its sole discretion, that would operate similarly to the way in which the Restricted Account, the Cash Management Account and Reserve Accounts are intended to operate pursuant to the Mortgage Loan Agreement. In connection with the foregoing, Borrower shall cause Mortgage Lender to transfer any available balances in the applicable Accounts to Lender.
(d) Notwithstanding anything in this Article 4 to the contrary, and subject to the provisions of the Mortgage Loan Documents, no provision of this Article 4 shall limit in any way Lender’s rights and remedies upon the occurrence and during the continuance of an Event of Default under the Loan Documents, including, but not limited to, the right to (i) accelerate the Loan, (ii) seek the appointment of a receiver, (iii) foreclose on the Collateral, or (iv) apply any revenues collected from the Property to the outstanding obligations due under the terms of the Loan Documents in the reasonable discretion of Lender.
Article 5. INSURANCE
5.1 REQUIRED INSURANCE.
(a) Borrower shall cause Mortgage Borrower to maintain at all times during the term of the Loan the insurance required under Sections 5.1 and 5.2 of the Mortgage Loan Agreement, including, without limitation, meeting all insurer requirements thereunder. In addition, Borrower shall cause Lender to be named as loss payee on property coverages and named as an additional insured, together with Mortgage Lender, as their interest may appear, under such of the insurance policies required under of the Mortgage Loan Agreement as Lender shall require. Borrower shall also cause all insurance policies required under this Section 5.1 to provide for at least thirty (30) days prior notice to Lender in the event of policy cancellation or material changes. Not less than five (5) Business Days prior to the expiration dates of the Policies theretofore furnished to Lender pursuant to the terms hereof, certificates of insurance accompanied by evidence satisfactory to Lender of payment of the premiums due thereunder shall be delivered by Borrower to Lender; provided, however, that in the case of renewal Policies, Borrower may furnish Lender with certificates of insurance therefor to be followed by the original Policies when issued.
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(b) If at any time Lender is not in receipt of written evidence that all insurance required hereunder and under the Mortgage Loan Agreement is in full force and effect, Lender shall have the right, without notice to Borrower, to take such action as Lender deems necessary to protect its interest in the Collateral, including the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by the Pledge and Security Agreement and shall bear interest at the Default Rate.
(c) For purposes of this Agreement, Lender shall have the same approval rights over the insurance referred to above (including, without limitation, the insurers, deductibles and coverages thereunder, as well as the right to require other reasonable insurance pursuant thereto) as are provided in favor of the Mortgage Lender in the Mortgage Loan Agreement. The Policies delivered pursuant to the Mortgage Loan Agreement shall include endorsements pursuant to which Lender shall have the same rights as the Mortgage Lender as referred to in the Mortgage Loan Agreement.
(d) In the event that the Mortgage Loan has been paid in full:
(i) except during the continuance of an Event of Default, Borrower shall permit Mortgage Borrower to settle any insurance or condemnation claims with respect to the insurance proceeds or condemnation awards which in the aggregate are less than or equal to the Restoration Threshold.
(ii) Lender shall have the right to participate in and reasonably approve any settlement for insurance or condemnation claims with respect to the insurance proceeds or condemnation awards which in the aggregate are equal to or greater than the Restoration Threshold.
(iii) If an Event of Default shall have occurred and be continuing, Borrower hereby irrevocably empowers Lender, in the name of Mortgage Borrower as its true and lawful attorney in fact, to file and prosecute such claim and to collect and to make receipt for any such payment.
(e) Upon repayment in full of the Mortgage Loan, the provisions of Article 5 of Mortgage Loan Agreement shall be deemed incorporated into this Agreement in their entirety.
5.2 INTENTIONALLY OMITTED.
5.3 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
(a) Intentionally Omitted.
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(b) Borrower shall deliver, or shall cause Mortgage Borrower to deliver, to Lender all reports, plans, specifications, documents and other materials that are to be delivered to Mortgage Lender under the applicable terms and conditions of the Mortgage Loan Agreement in connection with a Restoration of the Property after a casualty or condemnation, simultaneously with any such delivery to Mortgage Lender. Subject only to the rights of Mortgage Lender pursuant to the Mortgage Loan Agreement, all Net Proceeds that are permitted by the terms of the Mortgage Loan Documents to be paid to Mortgage Borrower or otherwise distributed to Borrower or Mortgage Borrower (rather than being used to rebuild or improve the Property in accordance with the Mortgage Loan Documents) shall be immediately paid over to Lender and are hereby assigned to Lender as additional collateral security hereunder.
(c) Borrower shall (or shall cause Mortgage Borrower to) keep Lender timely informed of the progress of any Restoration and the status of any negotiations with insurers relating to any such casualty or condemnation. In addition, Borrower shall (or shall cause Mortgage Borrower to) provide Lender with any and all documentation reasonably requested by Lender relating to any casualty or condemnation or Restoration. If any Net Proceeds are to be disbursed by Mortgage Lender for Restoration, Borrower shall deliver or cause to be delivered to Lender copies of all written correspondence delivered to and received from Mortgage Lender that relates to the Restoration and release of the Net Proceeds. If, in connection with a Restoration, Mortgage Lender does not require the deposit by Mortgage Borrower of any Net Proceeds pursuant to the applicable terms and conditions of the Mortgage Loan Agreement, Lender shall have the right to demand that Borrower make a deposit of such Net Proceeds in accordance with those same terms and conditions, such Net Proceeds to then be governed by such terms and conditions as if each reference therein to “Lender” and “Borrower” referred to Lender and Borrower, respectively..
(d) Notwithstanding any provision in this Agreement to the contrary, all Net Proceeds will be made available to Mortgage Borrower in accordance with the Mortgage Loan Agreement. In the event the Mortgage Loan has been paid in full and Lender receives any Net Proceeds, Lender shall either apply such proceeds to the Debt or for the Restoration in accordance with the same terms and conditions contained in the Mortgage Loan Agreement. Upon repayment in full of the Mortgage Loan, the provisions of the Mortgage Loan Agreement governing Restoration and use of Net Proceeds shall be incorporated into this Agreement in their entirety.
Article 6. REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender’s entry into this Agreement, Borrower represents and warrants to Lender as of the Effective Date that:
6.1 AUTHORITY/ENFORCEABILITY. Borrower is in compliance with all Legal Requirements applicable to its organization, existence and transaction of business in all material respects and has all necessary rights and powers to borrow and own, improve and operate the Property as contemplated by the Loan Documents.
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6.2 BINDING OBLIGATIONS. Borrower is authorized to execute, deliver and perform its obligations under the Loan Documents, to which it is a party, and such obligations shall be valid and binding obligations of Borrower.
6.3 ORGANIZATION. Borrower is duly organized, validly existing and in good standing under the laws of the State of Delaware and is in good standing in each other jurisdiction where the conduct of its business requires it to be so, and Borrower has all power and authority under such laws and its organizational documents and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. The organizational chart contained in Exhibit E is true, correct and complete as of the Effective Date.
6.4 FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has delivered to Lender all of the relevant formation and organizational documents of Borrower, the partners, members, managers or joint venturers of Borrower (if any), and Guarantor. Borrower hereby certifies that: (i) the above documents are all of the relevant formation and organizational documents of Borrower; (ii) they remain in full force and effect; and (iii) they have not been amended or modified since they were delivered to Lender. Borrower shall promptly provide Lender with copies of any future amendments or modifications of the formation or organizational documents if requested by Lender.
6.5 NO VIOLATION. Borrower’s execution, delivery, and performance under the Loan Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other organizational document; (b) violate any Legal Requirements applicable to Borrower or the Collateral; (c) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower or the Collateral is bound or regulated; or (d) violate any other statute, law, regulation or ordinance, or any order of any Governmental Authority.
6.6 COMPLIANCE WITH LAWS; USE. Borrower has caused Mortgage Borrower to obtain all permits, licenses, exemptions, and approvals required to occupy, operate and market the Property in accordance with applicable Legal Requirements, and to be in compliance, in all material respects, with all Legal Requirements applicable to the Property and all other applicable statutes, laws, regulations and ordinances necessary for the lawful transaction of its business. Borrower shall not permit Mortgage Borrower to initiate a zoning change of the Property without prior notice to, and prior written consent from, Lender and Mortgage Lender (not to be unreasonably withheld, conditioned or delayed). Furthermore, Borrower shall not permit Mortgage Borrower to allow changes in the use of the Property for residential, retail and other commercial uses from that disclosed to Lender at the time of execution hereof without prior notice to, and prior written consent from, Lender and Mortgage Lender (not to be unreasonably withheld, conditioned or delayed).
6.7 LITIGATION. Except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or to Borrower’s knowledge, threatened in writing against Borrower, Mortgage Borrower, or any Guarantor or affecting the Property.
6.8 FINANCIAL CONDITION. All financial statements and information heretofore and hereafter delivered to Lender by Borrower, including, without limitation, information relating to the financial condition of the Collateral, the Borrower, Mortgage Borrower and/or the Guarantor fairly and accurately represent the financial condition of the subject thereof in all material respects and have been prepared (except as noted therein) in accordance with the Approved Accounting Method, and do not contain any intentional misrepresentation.
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6.9 NO MATERIAL ADVERSE CHANGE. There has been no material adverse change in the financial condition of Borrower, Mortgage Borrower or Guarantor since the dates of the latest financial statements furnished to Lender, which would be reasonably likely to affect Borrower’s, Mortgage Borrower’s or Guarantor’s ability to perform its obligations under the Loan Documents or the Mortgage Loan Documents, as applicable, and, except as otherwise disclosed to Lender in writing, neither Borrower nor Mortgage Borrower has entered into any material transaction which is not disclosed in such financial statements.
6.10 ACCURACY. All reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan, the Mortgage Loan or security for the Loan or Mortgage Loan or required by the Loan Documents or Mortgage Loan Documents are, to Borrower’s knowledge, accurate, and correct and sufficiently complete in all material respect to give Lender true and accurate knowledge of their subject matter, and do not contain any material misrepresentation or omission.
6.11 INTENTIONALLY OMITTED.
6.12 INTENTIONALLY OMITTED.
6.13 TAX LIABILITY. Borrower has filed, and has caused Mortgage Borrower to file, all required federal, state, county and municipal tax returns and has caused Mortgage Borrower to pay all Taxes owed and payable, and Borrower has no knowledge of any basis for any additional payment with respect to any such Taxes.
6.14 BUSINESS LOAN. The Loan is a business loan transaction in the stated amount solely for the purpose of carrying on the business of Borrower and none of the proceeds of the Loan will be used for the personal, family or agricultural purposes of the Borrower. No portion of the Property is used or will be used as a dwelling occupied by any individual Person with a direct ownership interest in the Borrower.
6.15 FULL FORCE AND EFFECT. The Note and other Loan Documents are in full force and effect without any defense, counterclaim, right or claim of set-off; all necessary action to authorize the execution and delivery of this Agreement by Borrower has been taken.
6.16 ENFORCEABLE OBLIGATIONS. This Agreement and the other Loan Documents have been duly executed and delivered by Borrower and constitute Borrower’s legal, valid and binding obligations, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower, including the defense of usury.
6.17 NO DEFAULT. No Event of Default nor Default will exist immediately following the making of the Loan. No Mortgage Event of Default nor Default (as defined in the Mortgage Loan Agreement) will exist immediately following the making of the Loan.
6.18 ERISA. Neither Borrower nor any ERISA Affiliate of Borrower has incurred or could be subjected to any liability under Title IV or Section 302 of ERISA or Section 412 of the Code or maintains or contributes to, or is or has been required to maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code. The consummation of the transactions contemplated by this Agreement will not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or substantially similar provisions under federal, state or local laws, rules or regulations.
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6.19 INVESTMENT COMPANY ACT. Borrower is not an “investment company”, or a company “controlled” by an “investment company”, registered or required to be registered under the Investment Company Act of 1940, as amended.
6.20 NO BANKRUPTCY FILING. Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property. Borrower does not have knowledge of any Person contemplating the filing of any such petition against it. During the ten (10) year period preceding the Effective Date, no petition in bankruptcy has been filed by or against Borrower or Guarantor.
6.21 LEASES; MATERIAL AGREEMENTS.
(a) Borrower has delivered (or caused Mortgage Borrower to deliver) to Lender true, correct and complete copies of all the existing commercial Leases. To Borrower’s knowledge, the Rent Roll is true, correct and complete in all material respects as of the Effective Date.
(b) Borrower has made available to Lender true, correct and complete copies of all Material Agreements.
(c) The Leases and Material Agreements are in full force and effect.
6.22 NOT FOREIGN PERSON. Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code.
6.23 LABOR MATTERS. Borrower is not a party to any collective bargaining agreements.
6.24 COLLATERAL.
(a) Borrower is the sole beneficial owner of, and has good and marketable title to, the Collateral, and no lien exists or will exist (except the liens and security interests created by the Loan Documents) upon the Collateral at any time, and no right or option to acquire the same exists in favor of any other Person.
(b) The Collateral is not and will not be subject to any contractual restriction upon the transfer thereof (except for any such restriction contained in the Pledge and Security Agreement, the Mortgage Loan Documents and the operating agreement of Mortgage Borrower).
(c) The office where Borrower keeps its records concerning the Collateral, and where such records will be located at all times, is the address specified in Section 13.2 hereof.
(d) There is no certificate or instrument evidencing or representing any of the Collateral other than the Ownership Certificates, which are being delivered to Lender on the date hereof.
(e) The Pledge and Security Agreement and the Financing Statement create a valid security interest in the Collateral, securing the payment of the Debt, and upon the filing in the appropriate filing office for the Financing Statement and delivery of the Ownership Certificates to Lender, such security interest will be perfected, first priority security interests and all filings and other actions necessary to perfect such security interest will have been duly taken. Upon the exercise of its rights and remedies under the Pledge and Security Agreement and the Financing Statement, Lender will succeed to all of the rights, titles and interest of Borrower in Mortgage Borrower without the consent of any other Person and will, without the consent of any other Person, be admitted as a member in Mortgage Borrower. Mortgage Borrower is not taxed as a corporation under the Code or any other applicable laws.
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(f) The Collateral is covered by a UCC insurance policy in the amount of the Loan, insuring that the Pledge and Security Agreement creates a valid and perfected first lien on the Collateral, and that Borrower is the sole owner of the Collateral, which (a) is in full force and effect, (b) is freely assignable to and will inure to the benefit of Lender and any successor or assignee of Lender, including the trustee in any Secondary Market Transaction, (c) has been paid in full, (d) has had no claims made against it, and (e) lists no exceptions.
(g) There are no prior assignments of the Collateral that are presently outstanding except in accordance with the Loan Documents.
6.25 INTENTIONALLY OMITTED.
6.26 PHYSICAL CONDITION. Except as expressly described in the Property Condition Report:
(a) To Borrower’s knowledge, the Property (including sidewalks, storm drainage system, roof, plumbing system, HVAC system, fire protection system, electrical system, equipment, elevators, exterior sidings and doors, irrigation system and all structural components) is in good condition, order and repair (ordinary wear and tear excepted) in all respects material to its use, operation or value.
(b) To Borrower’s knowledge, there are no material structural or other material defect or damages in the Property, whether latent or otherwise.
(c) Borrower has not received, nor has Mortgage Borrower informed Borrower of its receipt of, any written notice from any insurance company or bonding company of any defects or inadequacies in the Property that would, alone or in the aggregate, adversely affect in any material respect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.
6.27 FRAUDULENT CONVEYANCE. Borrower has not entered into the Loan or any of the Loan Documents with the actual intent to hinder, delay or defraud any creditor. Borrower has received reasonably equivalent value in exchange for its obligations under the Loan Documents. On the Effective Date, the fair salable value of Borrower’s aggregate assets is and will, immediately following the making of the Loan and the use and disbursement of the proceeds thereof, be greater than Borrower’s probable aggregate liabilities (including subordinated, unliquidated, disputed and contingent obligations). Borrower’s aggregate assets do not and, immediately following the making of the Loan and the use and disbursement of the proceeds thereof will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, incur debts and liabilities (including contingent obligations and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of Borrower).
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6.28 MANAGEMENT. Except for the Management Agreement and Asset Management Agreement, no property or asset management agreements are in effect with respect to the Property. The Management Agreement and Asset Management Agreement are in full force and effect and, to Borrower’s knowledge, there is no event of default thereunder by any party thereto, and no event has occurred that, with the passage of time and/or the giving of notice would constitute an event of default thereunder.
6.29 CONDEMNATION. Borrower has not received, nor has Mortgage Borrower informed Borrower of its receipt of, any written notice that condemnation has been commenced or is contemplated with respect to all or any material portion of the Property or for the relocation of roadways providing access to the Property.
6.30 ASSESSMENTS. There are no pending or, to Borrower’s knowledge, proposed in writing special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated Improvements to the Property that may result in such special or other assessments. No extension of time for assessment or payment by Borrower of any federal, state or local tax is in effect.
6.31 NO JOINT ASSESSMENT. Borrower has not allowed Mortgage Borrower to suffer, permit or initiate the joint assessment of the Property (i) with any other real property constituting a separate tax lot, or (ii) with any personal property, or any other procedure whereby the Lien of any Taxes that may be levied against such other real property or personal property shall be assessed or levied or charged to the Property as a single Lien.
6.32 SECURITIES COMPLIANCE. To Borrower’s knowledge, all equity investments made directly or indirectly in the Borrower have been completed in accordance with all applicable federal and/or state securities laws.
6.33 EB-5 PROGRAM. Borrower represents and warrants to Lender as of the Effective Date as follows:
(a) The EB-5 Program, including all EB-5 Offering Documents, has been conducted and offered in compliance with all applicable federal securities laws, state securities laws, and immigration laws, including the Immigration and Nationality Act, as amended, and all rules and regulations promulgated thereunder by USCIS.
(b) True, correct and complete copies of all EB-5 Offering Documents have been delivered to Lender prior to the Effective Date, and such EB-5 Offering Documents have not been amended or modified since delivery to Lender except as otherwise disclosed to Lender in writing.
(c) The Regional Center is a regional center designated by USCIS to participate in the EB-5 Program, such designation is in full force and effect, and to Borrower’s knowledge, no action has been taken or threatened by USCIS or any other Governmental Authority to terminate, suspend, revoke or adversely modify the Regional Center’s designation.
(d) All EB-5 Capital Contributions have been or will be made in accordance with the EB-5 Offering Documents and have been or will be properly escrowed, released and applied solely for the uses described in the EB-5 Offering Documents and the Job Creation Plan.
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(e) No EB-5 Investor has (i) withdrawn or attempted to withdraw any EB-5 Capital Contribution, (ii) made any claim for rescission, return, or refund of any EB-5 Capital Contribution, (iii) asserted any material claim or commenced any litigation against Borrower, any Affiliate of Borrower, or the Regional Center arising out of or relating to the EB-5 Program, or (iv) received a denial of any I-526, I-526E, or I-829 petition from USCIS, in each case except as disclosed in writing to Lender.
(f) The Job Creation Plan accurately reflects the jobs to be created by the investment of the EB-5 Capital Contributions, and Borrower reasonably believes that such jobs will be created within the time periods required by applicable immigration laws and USCIS regulations.
(g) No event has occurred and no condition exists that would reasonably be expected to result in a material adverse effect on the ability of Borrower, Block 40 or Mezzanine Borrower to perform their respective obligations under the EB-5 Offering Documents.
Article 7. SPECIAL PURPOSE ENTITY STATUS
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING SPECIAL PURPOSE ENTITY STATUS; FUTURE AND PAST ACTIVITIES. Borrower hereby represents, warrants and covenants to Lender, with regard to Borrower, as follows:
(a) Limited Purpose. The sole purpose to be conducted or promoted by Borrower since its organization is to engage in the following activities: (i) to own and hold the Collateral; (ii) to enter into and perform its obligations under the Loan Documents and its obligations under any prior loan received by Borrower; (iii) to sell, transfer, service, convey, dispose of, pledge, assign, borrow money against, or otherwise deal with the Collateral to the extent permitted under the Loan Documents or any other loan documents for any prior loans received by Borrower; and (iv) to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies organized under the laws of Delaware that are related or incidental to and necessary, convenient or advisable for the accomplishment of the above mentioned purposes.
(b) Limitations on Debt, Actions. Notwithstanding anything to the contrary in the Loan Documents or the Mortgage Loan Documents or in any other document governing the formation, management or operation of Borrower, Borrower shall not, without the prior written consent of Lender, (i) guarantee any obligation of any Person, including any Affiliate, or become obligated for the debts of any other Person or hold out its credit as being available to pay the obligations of any Person; (ii) engage, directly or indirectly, in any business other than as required or permitted to be performed under this Section; (iii) incur, create or assume any indebtedness other than (A) the Loan and (B) additional indebtedness from the Lender or an Affiliate of Lender approved by Lender in its reasonable discretion; (iv) make or permit to remain outstanding any loan to, or own or acquire any stock or securities of, any Person, except that Borrower may invest in those investments permitted under the Loan Documents; (v) to the fullest extent permitted by law, (A) engage in any dissolution, liquidation, consolidation, or merger, except as permitted under the Loan Documents, (B) divide the Borrower or enter into any plan of division pursuant to any applicable law, except as permitted under the Loan Documents, or (C) engage in any sale or other transfer of any of its assets outside the ordinary course of Borrower’s business; (vi) buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities); (vii) form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity, except as permitted under the Loan Documents; or (viii) own any asset or property other than the Collateral.
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(c) Separateness Covenants. In order to maintain its status as a separate entity and to avoid any confusion or potential consolidation with any Affiliate, Borrower represents and warrants that in the conduct of its operations since its organization will continue to observe the following covenants (collectively, the “Separateness Provisions”): (i) maintain books and records and bank accounts separate from those of any other Person except that Borrower’s assets may be included in a consolidated financial statement of its Affiliate so long as appropriate notation is made on such consolidated financial statements to indicate the separateness of Borrower from such Affiliate and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person; (ii) maintain its assets in such a manner that it is not costly or difficult to segregate, identify or ascertain such assets; (iii) comply with all organizational formalities necessary to maintain its separate existence; (iv) hold itself out to creditors and the public as a legal entity separate and distinct from any other entity; (v) maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person and not have its assets listed on any financial statement of any other Person except that Borrower’s assets may be included in a consolidated financial statement of its Affiliate so long as appropriate notation is made on such consolidated financial statements to indicate the separateness of Borrower from such Affiliate and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person; (vi) prepare and file its own tax returns separate from those of any Person to the extent required by applicable law, and pay any taxes required to be paid by applicable law except in the event that Borrower is a disregarded entity for federal income tax purposes; (vii) allocate and charge fairly and reasonably any common employee or overhead shared expenses with Affiliates (including, without limitation, shared office space); (viii) not enter into any transaction with any Affiliate, except in the ordinary course of business and on an arm’s-length basis on terms which are intrinsically fair, commercially reasonable and substantially similar to those that would be available for unaffiliated third parties, and pursuant to written, enforceable agreements; (ix) conduct business solely in its own name, and use separate invoices and checks bearing its own name; (x) hold all of its assets solely in its own name; (xi) not commingle its assets or funds with those of any other Person; (xii) not assume, guarantee or pay the debts or obligations of any other Person; (xiii) correct any known misunderstanding as to its separate identity; (xiv) not identify itself or any of its Affiliates as a division or part of the other; (xv) not permit any Affiliate to guarantee or pay its obligations (other than pursuant to the Loan Documents or the Mortgage Loan Documents); (xvi) not make loans or advances to any other Person; (xvii) pay its liabilities and expenses solely out of and to the extent of its own funds; provided, however, that the foregoing shall not require any owner of a direct or indirection ownership interest in the Borrower to make additional capital contributions to Borrower; (xviii) maintain a sufficient number of employees, if any, in light of its contemplated business purpose and pay the salaries of its own employees, if any, only from its own funds; (xix) intend to maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, that the foregoing shall not require any equity owner to make additional capital contributions to Borrower; (xx) cause the managers, officers, employees, agents and other representatives of Borrower to act at all times with respect to Borrower consistently and in furtherance of the foregoing and in the best interests of Borrower; (xxi) not acquire obligations or securities of its managers, partners, members or Affiliates, as applicable; (xxii) not fail to provide in its organizational documents that for so long as the Loan is outstanding pursuant to the Loan Documents, it shall not, without the unanimous written consent of all of its partners, members, shareholders and/or directors (including, without limitation the Independent Manager), as applicable: (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable state or federal insolvency,
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bankruptcy, liquidation or reorganization laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any action that might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors; and (xxiii) not fail at any time to have at least one (1) Independent Manager; (xxiv) without the prior unanimous written consent of all of its members, as applicable, and the consent of the Independent Manager, Borrower has not and shall not: (a) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any state or federal bankruptcy or insolvency laws, (b) seek or consent to the appointment of a receiver, liquidator or any similar official, (c) take any action that might cause such entity to become insolvent, or (d) make an assignment for the benefit of creditors; (xxv) not fail to have a limited liability company agreement of Borrower (the “LLC Agreement”) or resolution for and on behalf of the Borrower which directly or indirectly provides or requires that (A) upon the occurrence of any event that causes the last remaining member of Borrower (“Member”) to cease to be the Member of Borrower, any person executing the LLC Agreement as a “Special Member” shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower, automatically be admitted to Borrower (“Special Member”) and shall continue Borrower without dissolution and (B) Special Member may not resign from Borrower or transfer its rights as Special Member unless a successor Special Member has been admitted to Borrower as Special Member in accordance with requirements of Delaware law; and (xxvi) Borrower covenants and agrees that prior, and as a condition precedent, to the removal of an Independent Manager, Borrower shall provide Lender with written notice of such proposed removal no later than thirty (30) days’ prior to such removal, which notice shall include the identity and address of such replacement Independent Manager and an officer’s certificate certifying that such replacement Independent Manager complies with the definition of Independent Manager contained herein.
Failure of Borrower to comply with any of the covenants contained in this Section or any other covenants contained in this Agreement shall not affect the status of Borrower as a separate legal entity.
7.2 SPE COVENANTS IN BORROWER ORGANIZATIONAL DOCUMENTS. Borrower covenants and agrees to incorporate the provisions contained in Sections 7.1(a)-(c) above into Borrower’s organizational documents and Borrower agrees not to amend, modify or otherwise change its organizational documents with respect to such provisions without the prior written consent of Lender for so long as the Loan or any portion thereof remains unpaid (not to be unreasonably withheld, conditioned or delayed).
7.3 PAST ACTIVITIES. Borrower hereby represents and warrants to Lender that from the date of its formation to the Effective Date, Borrower:
(a) is and always has been duly formed, validly existing, and in good standing in the state of its formation and in all other jurisdictions where it is qualified to do business, except where the failure to do so has not had a material adverse effect on Borrower and has been cured;
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(b) has no tax judgments or tax liens of any nature against it that have not been paid except for tax liens not yet due;
(c) other than in connection with a tax appeal in connection with which all taxes have already been paid, is not currently involved in any dispute with any taxing authority except as disclosed to Lender in writing prior to the Effective Date;
(d) has paid all income and other material taxes which it owes, except such taxes Borrower is contesting in accordance with this Agreement;
(e) has never owned any property other than the Collateral and has never engaged in any business other than or in connection with the ownership of the Collateral;
(f) except as set forth on Schedule 7.3 hereof, is not now party to any lawsuit, arbitration, summons, or legal proceeding that is still pending as of the Effective Date, which is reasonably likely to have a material adverse effect on Borrower and not covered by insurance, or that resulted in a judgment against it that has not been paid in full;
(g) has not entered into any contract or agreement with any of its Affiliates, except upon terms and conditions that are no less favorable to it than those available in an arm’s-length transaction with an unrelated party;
(h) has paid all of its debts and liabilities that are due from its assets (including, without limitation, the Collateral) or from capital contributions from its equity owners;
(i) has done or caused to be done all material things necessary to observe all organizational formalities applicable to it and to preserve its existence;
(j) has maintained all of its books, records, financial statements and bank accounts separate from those of any other Person; provided, however, that the Borrower’s assets may have been included in a consolidated financial statement of its Affiliates provided that (A) appropriate notation was made on such consolidated financial statements to indicate the separateness of the Borrower and such Affiliates and to indicate that the Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (B) such assets shall be listed on Borrower’s Affiliate’s own separate balance sheet;
(k) intentionally omitted;
(l) has filed its own tax returns (except to the extent that it has been a tax-disregarded entity not required to file tax returns under applicable law);
(m) has been, and at all times has held itself out to the public as, a legal entity separate and distinct from any other Person (including any Affiliate);
(n) has corrected any known misunderstanding regarding its status as a separate entity;
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(o) has conducted all of its business;
(p) has not identified itself or any of its Affiliates as a division or part of the other;
(q) has maintained and utilized separate stationery, invoices and checks bearing its own name (if such items are used);
(r) has not maintained its assets in such a manner that will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(s) has not commingled its assets with those of any other Person;
(t) has not guaranteed or become obligated for the debts of any other Person;
(u) has not held itself out as being responsible for the debts or obligations of any other Person;
(v) except in connection with indebtedness discharged on or prior to the Effective Date, has not pledged its assets to secure the obligations of any other Person and no such pledge remains outstanding except in connection with the Loan;
(w) has intended to maintain adequate capital in light of its contemplated business operations;
(x) has maintained a sufficient number of employees (if any) in light of its contemplated business operations (taking into account then applicable circumstances) and has paid the salaries of its own employees (if any) from its own funds, in each case to the extent sufficient cash flow from the Property was made available to the Borrower; provided that the foregoing did not require the member or any other direct or indirect member of the Borrower to make any additional capital contributions to the Borrower;
(y) has not owned any subsidiary or any equity interest in any entity other than Mortgage Borrower;
(z) has not acquired obligations or securities of its managers, members or Affiliates, as applicable; and
(aa) has not had any of its obligations guaranteed by an Affiliate, except for guarantees that have been either released or discharged (or that will be discharged as a result of the closing of the Loan).
Article 8. HAZARDOUS MATERIALS
8.1 SPECIAL REPRESENTATIONS AND WARRANTIES, COVENANTS AND INDEMNITY. The terms and conditions of Section 1.1 through 1.7 of the Hazardous Materials Indemnity are incorporated herein as if fully set forth herein (“Environmental Covenants and Representations”). Borrower hereby covenants and agrees to perform all of its obligations under the Environmental Covenants and Representations and represents and warrants as to all matters detailed in the Environmental Covenants and Representations. Borrower’s obligations pursuant to this Article 8 are separate from Borrower’s obligations pursuant to the terms of the Hazardous Material Indemnity.
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Article 9. COVENANTS OF BORROWER
9.1 EXPENSES. Borrower shall promptly pay Lender upon demand all reasonable, out of pocket costs and expenses incurred by Lender in connection with: (a) the drafting, negotiation and administration of this Agreement, the other Loan Documents, and any other documents required by Lender for the term of the Loan (including in connection with any extension of the Maturity Date); and (b) the enforcement or satisfaction by Lender of any of Borrower’s or Guarantor’s obligations under this Agreement, the Guaranty, or the other Loan Documents. For all purposes of this Agreement, Lender’s costs and expenses shall include, without limitation, all reasonable, out-of-pocket appraisal fees, cost engineering and inspection fees, legal fees and expenses, environmental consultant fees, auditor fees, recording and filing fees, UCC filing fees and/or UCC vendor fees, flood certification vendor fees, tax service vendor fees, and the cost to Lender of any title insurance premiums, title surveys, mortgage registration taxes (if applicable), release, reconveyance, satisfaction and notary fees.
9.2 ERISA COMPLIANCE.
(a) Borrower shall not maintain or contribute to, or permit Mortgage Borrower to maintain or contribute to, or agree to maintain or contribute to, or permit Mortgage Borrower to maintain or contribute to, or permit any ERISA Affiliate of Borrower (or allow Mortgage Borrower to permit any ERISA Affiliate of Mortgage Borrower) to maintain or contribute to or agree to maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code.
(b) Borrower shall not, and shall not take any action to allow Mortgage Borrower to, engage in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code, or substantially similar provisions under federal, state or local laws, rules or regulations or in any transaction that would cause any obligation or action taken or to be taken hereunder (or the exercise by Lender of any of its rights under the Note, this Agreement, the Pledge and Security Agreement or any other Loan Document) to be a non-exempt prohibited transaction under such provisions.
(c) Borrower will do, or cause to be done, or cause Mortgage Borrower to do, all things necessary to ensure that neither it nor Mortgage Borrower will be deemed to hold Plan Assets at any time.
9.3 LEASING. Borrower shall use its best commercially reasonable efforts to cause Mortgage Borrower to maintain all leasable space in the Property leased at economic terms substantially similar to those currently being offered.
9.4 LEASE COVENANTS.
(a) All commercial Leases (and for the sake of clarity, excepting therefrom any Leases for residential Tenants executed in the normal course of business) of all or any part of the Property shall: (A) be upon terms and with tenants approved by Lender prior to the execution of any such Lease, which approval shall not be unreasonably withheld, conditioned or delayed; and (B) include estoppels, subordination, attornment and mortgagee protection provisions reasonably satisfactory to Mortgage Lender. All standard lease forms (if any) and any material deviation from any form of commercial lease shall be approved by Lender prior to execution of any such commercial Lease using such form. Lender’s failure to object to any request for approval of any commercial Lease and/or requests to amend any commercial Lease within ten (10) Business Days of written request from Borrower shall be deemed approval by Lender; provided, however, that during the continuation of an Event of Default, the ability to deem Lender approval shall be suspended and approval of any such requests must be delivered by Lender to Borrower in writing. Upon request by Lender, Borrower shall cause Mortgage Borrower to deliver (i) such additional subordination agreements (or subordination, attornment and non-disturbance agreements) executed by Borrower and any Tenant under any commercial Lease in form and substance reasonably acceptable to Lender, and (ii) within thirty (30) days after written request by Lender, but not more than once per year absent any Event of Default, estoppel certificates executed by Mortgage Borrower and by each of the requested Tenants under commercial Leases, certifying to certain matters in form and substance reasonably acceptable to Lender. Lender’s failure to object to any request for approval of any commercial Lease and/or requests to amend any commercial Lease within ten (10) Business Days of written request from Borrower shall be deemed approval by Lender; provided, however, that during the continuation of an Event of Default, the ability to deem Lender approval shall be suspended and approval of any such requests must be delivered by Lender to Borrower in writing.
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(b) Borrower shall cause Mortgage Borrower to (i) observe and punctually perform all the material obligations imposed upon the lessor under the Leases; (ii) enforce in a commercially reasonable manner all of the material terms, covenants and conditions contained in the Leases on the part of the Tenant thereunder to be observed or performed, short of termination thereof, except that Mortgage Borrower may terminate any Lease following a material default thereunder by the respective Tenant; (iii) not materially amend or modify any commercial Lease in any material respect without the prior written consent of Lender and Mortgage Lender (which consent shall not be unreasonably withheld, conditioned, or delayed); (iv) except for the first and last months’ rent and security deposits, not collect any of the rents thereunder more than one month in advance excluding any residential Leases for which Mortgage Borrower may collect more than one month in advance; (v) not execute any assignment of lessor’s interest in the Leases or associated rents other than pursuant to the Loan Documents; (vi) not cancel or terminate any guarantee of any of the commercial Leases without the prior written consent of Lender and Mortgage Lender, which consent shall not be unreasonably withheld, conditioned or delayed; and (vii) not permit any subletting of any space covered by a Lease or an assignment of the Tenant’s rights under a Lease, except in strict accordance with the terms of such Lease. Without in any way limiting the requirement of Lender’s and Mortgage Lender’s consent hereunder, any Lease Termination Payments in excess of $25,000 shall be (i) applied to reduce the outstanding balance of the Loan in the sole discretion of Mortgage Lender if an Event of Default or Mortgage Event of Default then exists (or in the sole discretion of Lender if the Mortgage Loan no longer exists), (ii) if a Cash Sweep Period then exists and is continuing, deposited in the Restricted Account and disbursed pursuant to the terms and conditions of Article 4 of the Mortgage Loan Agreement, or (iii) so long as no Cash Sweep Period then exists and is continuing, at Mortgage Borrower’s option, to reduce the outstanding balance of the Mortgage Loan or be deposited in the Capital Expenditures Reserve Account, and any such sums received by Mortgage Borrower shall be deposited promptly upon receipt thereof (or, if the Mortgage Loan no exists, at Borrower’s option, to reduce the outstanding balance of the Loan or be deposited in the Capital Expenditures Reserve Account, and any such sums received by Borrower shall be deposited promptly upon receipt thereof).
(c) Security deposits of Tenants under all Leases, whether held in cash or any other form, shall not be commingled with any other funds of Mortgage Borrower and, if cash, shall be deposited by Mortgage Borrower in an account under Borrower's control at such commercial or savings bank as may be reasonably satisfactory to Mortgage Lender.
(d) Borrower shall not allow Mortgage Borrower to cancel or terminate any Affiliate Lease without the prior written consent of Lender.
9.5 NO LIENS ON CONTROLLING INTEREST IN BORROWER. Other than Permitted Transfers, Borrower shall not permit the holder of any Controlling Interest in Borrower to suffer or permit any Lien on any such Controlling Interest.
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9.6 NO TRANSFER AND FURTHER ENCUMBRANCE. Other than Permitted Transfers (and subject to the terms and conditions of Section 9.11 below), Borrower shall not permit the Collateral or any part thereof or any interest therein, or in Borrower (directly or indirectly), to be sold, transferred (including, without limitation, through sale or transfer of the corporate stock or partnership interests, limited liability company or membership interests of Borrower to any other Person, including any other member or partner), mortgaged, assigned, pledged, further encumbered or leased, whether directly or indirectly, whether voluntarily, involuntarily or by operation of law, without the prior written consent of Lender. Additionally, subject to the rights of Borrower pursuant to Section 9.11 below, Borrower shall not permit any Lien on the Collateral or any part thereof other than Permitted Encumbrances. Notwithstanding anything to the contrary contained in this Section 9.6 or in any other provision of this Agreement or the other Loan Documents to the contrary, restrictions on Transfers set forth herein or in any other provision of this Agreement or the other Loan Documents shall not apply to the pledge by Borrower of its direct and/or indirect ownership interests in Mortgage Borrower as security for the Loan pursuant to the Loan Documents nor to any Transfer made in accordance with the terms and conditions of the Loan Documents.
9.7 NO MERGER, CONSOLIDATION AND TRANSFER OF ASSETS. Other than Permitted Transfers, Borrower shall not, without the prior written consent of Lender: (a) merge or consolidate with, or acquire any stock, obligations or securities of, or any other interest in, any other entity; (b) make any substantial change in the nature of Borrower’s business or structure; (c) acquire all or substantially all of the assets of any other entity; (d) divide or enter into a plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws); or (e) sell, lease, assign, encumber, pledge, hypothecate, mortgage or transfer or otherwise dispose of a material part of Borrower’s assets, except for Permitted Transfers or otherwise in the ordinary course of Borrower’s business.
9.8 NO CHANGE IN STRUCTURE OR MANAGEMENT; SINGLE PURPOSE ENTITY. Borrower will preserve its existence, and not make any material change in the nature or manner of its business activities. Without the prior consent of Lender (not to be unreasonably withheld, conditioned or delayed): (i) except for Permitted Transfers, Borrower shall not dissolve or liquidate, or merge or consolidate with or into any other entity, or turn over the management or operation of its property, assets or business to any other Person, nor shall any member or partner of Borrower voluntarily or involuntarily sell, transfer, pledge or encumber its membership or partnership interest in Borrower to any other person, including any other member or partner; and (ii) Borrower shall not own or acquire assets other than the Property and other assets incidental to the normal operation of the Property, such as bank accounts relating thereto.
9.9 NO ADDITIONAL DEBT AND NO SEPARATE GUARANTY. Except as expressly set forth in Section 7.1(b), Borrower shall not, without the prior written consent of Lender (i) incur any additional indebtedness or other material obligation; or (ii) directly or indirectly guaranty the obligations of any other Person.
9.10 EXISTENCE. If other than a natural Person, Borrower shall preserve and maintain its existence and all of its rights, privileges and franchises and conduct its business in an orderly, efficient, and regular manner in compliance with all Legal Requirements.
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9.11 TAXES AND OTHER LIABILITIES. Subject to its right to contest same as set forth below, Borrower shall, and shall cause Mortgage Borrower to, pay and discharge when due and prior to being delinquent any and all indebtedness, obligations (including all Operating Expenses), charges, assessments and Taxes, both real and personal, owed by or relating to Borrower, Mortgage Borrower and the Property (including federal and state income taxes). At Lender’s request, Borrower and/or Mortgage Borrower will deliver to Lender receipts for payment or other evidence reasonably satisfactory to Lender that any such Taxes and other charges have been so paid or are not then delinquent; provided, however, neither Borrower nor Mortgage Borrower is required to furnish such receipts for payment of Taxes in the event that such Taxes have been paid by Lender or Mortgage Lender or been paid from funds in the Tax Account or Mortgage Borrower has complied with its obligations under the Mortgage Loan Agreement to make deposits into the Tax Account. Subject to its right to contest same as set forth below, Borrower shall not suffer and shall promptly cause to be paid and discharged or fully bonded to the reasonable satisfaction of Lender any Lien or charge whatsoever which may be or become a Lien or charge against the Collateral, and shall promptly cause Mortgage Borrower to pay all utility services provided to the Property. After prior notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any Taxes, Liens or other charges, provided that (a) no Event of Default has occurred and is continuing; (b) such proceeding shall be permitted under, and be conducted in accordance with, the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable Legal Requirements; (c) neither the Collateral nor any part thereof or interest therein will be reasonably likely to be in danger of being sold, forfeited, terminated, cancelled or lost by reason of the institution or prosecution of such contest; (d) Borrower shall promptly upon final determination thereof pay the amount of any such Taxes, Liens or other charges, together with all costs, interest and penalties which may be payable in connection therewith; (e) such proceeding shall suspend the collection of such contested Taxes, Liens or other charges from the Collateral (except that if such Taxes, Liens or other charges must be paid sooner in order to avoid being delinquent, then Borrower shall cause the same to be paid (which payment may be made under protest) prior to delinquency, and upon making such payment prior to delinquency Borrower may continue such contest); and (f) Borrower shall furnish such security as may be required in the proceeding, or as may be reasonably requested by Lender, to insure the payment of any such contested Taxes, Liens or other charges, together with all interest and penalties thereon, if any. Lender may pay over any such cash deposit or part thereof held by Lender to the claimant entitled thereto at any time when, in the reasonable judgment of Lender, the entitlement of such claimant is established or the Collateral (or part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or lost, or there shall be any danger of the Lien of the Pledge and Security Agreement being primed by any related Lien.
9.12 NOTICE. Borrower shall promptly give notice in writing to Lender of: (a) any known litigation that is pending or threatened in writing against Borrower or Mortgage Borrower that is not fully covered by insurance and that is reasonably likely to have a material adverse effect on the Collateral, the Property, Borrower, or Mortgage Borrower; (b) any change in the name of Borrower, and in the case of a Borrower which is an organization, any change in its identity or organizational structure; (c) material loss to the Property through fire, theft, liability damage, or any other casualty, whether or not insured; (d) any actual or threatened (in writing) condemnation or eminent domain proceedings affecting the Property; (e) any termination or cancellation of any insurance policy which Borrower or Mortgage Borrower is required herein or in the Mortgage Loan Agreement to maintain to the extent Lender is not simultaneously notified of the same pursuant to the terms and conditions of such insurance policy; and (f) the occurrence of any Event of Default by Borrower pursuant to the terms of the Loan Documents or any Mortgage Event of Default by Mortgage Borrower pursuant to the terms of the Mortgage Loan Documents.
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9.13 FACILITIES. Borrower shall keep all of Borrower’s property useful or necessary to Borrower’s business in good repair and condition, ordinary wear and tear excepted, and from time to time make necessary repairs, renewals and replacements thereto so that Borrower’s property shall be fully and efficiently preserved and maintained in good condition and repair.
9.14 MANAGEMENT OF PROPERTY. Subject to the rights of Mortgage Lender under the Mortgage Loan Agreement, without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed, Borrower shall not permit Mortgage Borrower to (i) enter into any agreement providing for the management or operation of the Property other than the Management Agreement and Asset Management Agreement in effect as of the Effective Date, or (ii) materially amend and/or modify the Management Agreement or Asset Management Agreement. Borrower shall cause Mortgage Borrower to cause the Property to be operated, in all material respects, in accordance with any applicable property management agreement. In the event that any applicable property management agreement (including, but not limited to, the Management Agreement) expires or is terminated (without limiting any obligation of Borrower to obtain Lender’s consent to Mortgage Borrower’s termination or material modification of the Management Agreement in accordance with the terms and provisions of this Agreement), Borrower shall cause Mortgage Borrower to promptly enter into a replacement Management Agreement with a Property Manager approved by Lender in Lender’s reasonable discretion, such approval being subject to the rights of Mortgage Lender under the Mortgage Loan Agreement. Borrower shall cause Mortgage Borrower to: (i) perform and/or observe in all material respects all of the covenants and agreements required to be performed and observed by it under any Management Agreement (and the Asset Management Agreement) and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of the giving of any written notice by Property Manager to Borrower of any material default under any Management Agreement (or any material default under the Asset Management Agreement); (iii) intentionally omitted; (iv) enforce the performance and observance of all of the material covenants and agreements required to be performed and/or observed by Property Manager and/or Asset Manager under any Management Agreement and/or the Asset Management Agreement; and (v) not materially amend or materially modify any Management Agreement or the Asset Management Agreement without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed, and such consent being subject to the rights of Mortgage Lender under the Mortgage Loan Agreement. Subject to the rights of Mortgage Lender under the Mortgage Loan Agreement, Lender shall have the right to approve any replacement manager which is not affiliated with Borrower to manage the Property pursuant to a management agreement reasonably acceptable to Lender upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default or Mortgage Event of Default, (ii) if Property Manager shall be in default under the Management Agreement beyond any applicable notice and cure period, (iii) if Property Manager shall become insolvent or a debtor in any involuntary bankruptcy or insolvency proceeding that is not dismissed within ninety (90) days of the filing thereof, or any voluntary bankruptcy or insolvency proceeding, or (iv) if at any time Property Manager has engaged in gross negligence, fraud or willful misconduct. If at any time Lender consents to the appointment of a replacement Property Manager and/or the execution of a replacement management agreement under this Agreement, such replacement Property Manager and Mortgage Borrower shall, as a condition of Lender’s consent, execute an subordination of management fees substantially in the same form as the Subordination of Management Agreement (or in such other form and substance reasonably satisfactory to Lender).
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9.15 SUBDIVISION MAPS. Prior to recording any final map, plat, parcel map, lot line adjustment or other subdivision map of any kind covering any portion of the Property (“Subdivision Map”), Borrower shall, or shall cause Mortgage Borrower to, submit such Subdivision Map to Lender for Lender’s review and approval, which approval shall not be unreasonably withheld, conditioned or delayed.
9.16 FURTHER ASSURANCES. Upon Lender’s reasonable request and at Borrower’s sole cost and expense, Borrower shall, and shall cause any Person affiliated with Borrower to, execute, acknowledge and deliver any other instruments, including replacement promissory notes, guaranties or other loan documents, and perform any other acts necessary, as reasonably determined by Lender, to correct clerical errors or omissions in any loan closing documentation, to replace any lost or destroyed loan closing documentation, or to carry out the purposes of this Agreement and the other Loan Documents or to perfect and preserve any liens and security interests created by the Loan Documents so long as such actions shall not (i) modify or amend any economic term of the Loan (except in each instance to a de minimis extent), or (ii) increase the obligations, or decrease the rights, of Borrower or Guarantor under the Loan Documents (except in each instance to a de minimis extent). This obligation shall survive any foreclosure or assignment-in-lieu of foreclosure of the Collateral.
9.17 NO ASSIGNMENT. Without the prior written consent of Lender, Borrower shall not assign Borrower’s interest under any of the Loan Documents, or in any monies due or to become due thereunder, and any assignment without such consent shall be void.
9.18 SANCTIONS. (a) No Person within the Borrowing Group is or will be a Sanctioned Person; (b) no Person within the Borrowing Group is or will be controlled by or is acting on behalf of a Sanctioned Person; (c) no Person within the Borrowing Group is under investigation for an alleged breach of Sanction(s) by any Governmental Authority that enforces Sanctions; (d) no Person within the Borrowing Group will use any of the Loan proceeds for the purpose of: (i) providing financing to or otherwise making funds directly or indirectly available to any Sanctioned Person; or (ii) providing financing to or otherwise funding any transaction which would be prohibited by Sanctions or would otherwise cause the Lender or any other party to this Agreement, or any entity affiliated with any such party, to be in breach of any Sanction; (e) no Person within the Borrowing Group will fund any repayment of the Loan with proceeds derived from any transaction that would be prohibited by Sanctions or would otherwise cause the Lender or any other party to this Agreement, or any entity affiliated with any such party, to be in breach of any Sanction; (f) Borrower will ensure that appropriate controls and safeguards are in place to fully comply with this Section and the Borrower will notify the Lender in writing not more than two (2) Business Days after becoming aware of any breach of this Section.
9.19 DISTRIBUTIONS TO MEMBERS OF BORROWER. Borrower shall not declare or pay any distributions or dividends or purchase, redeem or otherwise acquire for value any member’s interest in Borrower (i) if any such action would cause an Event of Default, or (ii) at any time an Event of Default exists and is continuing.
9.20 INTEREST RATE CAP AGREEMENT. On the Effective Date, Borrower shall purchase an Interest Rate Cap Agreement providing for a cap of the Term SOFR Rate at a strike price equal to or less than 4.50% (or such higher strike price as approved by Lender in its sole discretion) through the Original Maturity Date (August 7, 2028) (the “Initial Rate Cap Agreement”). As security for payment of the Loan and the performance by Borrower of all other terms, conditions and provisions of the Loan Documents, Borrower, as debtor, hereby pledges and assigns to Lender, and grants to Lender a security interest in, all of Borrower’s right, title and interest in and to any Interest Rate Cap Agreement and agrees to enter into any documentation or take such other action deemed necessary by Lender to establish, protect, perfect or enforce any such security interest granted to Lender pursuant to this Section 9.20 (including but not limited to a collateral assignment in form and substance reasonably acceptable to Lender).
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9.21 INTEREST RATE CAP AGREEMENT COVENANTS. Borrower shall comply with all of its obligations under the terms and provisions of any such Interest Rate Cap Agreement required pursuant to the terms of this Agreement. During the continuation of a Cash Sweep Period, all amounts paid by the provider of any Interest Rate Cap Agreement under the terms of the Interest Rate Cap Agreement to Borrower or Lender shall be deposited immediately, at Lender’s discretion, with Lender or Servicer. Borrower shall take all commercially reasonable actions requested by Lender to enforce Lender’s rights under the Interest Rate Cap Agreement in the event of a default by the provider of the Interest Rate Cap Agreement and shall not waive, amend or otherwise modify any of its rights thereunder without Lender’s prior written consent (not to be unreasonably withheld, conditioned or delayed). In the event of any downgrade, withdrawal or qualification of the rating of the provider of the Interest Rate Cap Agreement by any Ratings Agency such that it is no longer rated at least “A-” by S&P or “A3” by Moody’s, Borrower shall replace the Interest Rate Cap Agreement with a replacement Interest Rate Cap Agreement not later than fifteen (15) Business Days following receipt of written notice from Lender of such downgrade, withdrawal or qualification. In the event that Borrower fails to purchase and deliver to Lender any Interest Rate Cap Agreement within such fifteen (15) Business Day period or fails to otherwise maintain any Interest Rate Cap Agreement in accordance with the terms and provisions of this Agreement, Lender may purchase the Interest Rate Cap Agreement and Borrower shall reimburse Lender for the reasonable, out-of-pocket cost incurred by Lender in purchasing such Interest Rate Cap Agreement within fifteen (15) Business Days after written demand for such amounts is made on Borrower, and if Borrower fails to reimburse Lender within such fifteen (15) Business Day period, interest will accrue thereon at the Default Rate from the date such cost was incurred by Lender until such cost is reimbursed by Borrower to Lender. Notwithstanding anything to the contrary contained in this Section 9.21 or elsewhere in this Agreement, if, at any time, Borrower is unable to obtain and/or maintain the Interest Rate Cap Agreement required pursuant to the terms hereof because such product no longer is commercially available, then:
(a) within 20 days after written notice thereof to Borrower, Borrower shall enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of, a Substitute IRPA; and
(b) in lieu of satisfying the condition described in Section 2.13, Section 2.14, and Section 2.15 with respect to any extension period not then yet commenced, Borrower shall instead enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of a Substitute IRPA on or prior to the first day of such extension period.
(c) As used herein, “Substitute IRPA” means an interest rate protection agreement that satisfies all of the requirements for an Interest Rate Cap Agreement set forth in Section 9.20 and Section 9.21, as well as all of the following requirements:
(i) it has a term expiring no earlier than, in the case of clause (a) above, the then stated Maturity Date and, in the case of clause (b) above, the last day of the requested extension period;
(ii) has a notional amount equal to the then outstanding Principal Balance;
(iii) it provides that the only obligation of Borrower thereunder is the making of a single payment to the counterparty thereunder upon the execution and delivery thereof; and
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(iv) it provides to Lender and Borrower (as determined by Lender in its reasonable discretion), for the term of the Substitute IRPA, a hedge against rising interest rates that is no less beneficial to Borrower and Lender than (A) in the case of clause (a) above, that which was provided by the Interest Rate Cap Agreement being replaced by the Substitute IRPA and (B) in the case of clause (b) above, that which was intended to be provided by the Interest Rate Cap Agreement that, but for the operation of Section 9.21(b), would have been required pursuant to Section 2.13(g), Section 2.14(g), and Section 2.15(g) above as a condition to the requested extension period.
9.22 CONTROLLED SUBSTANCES.
(a) Management of Leases and Property. Borrower shall not permit Mortgage Borrower to engage in any Drug-Related Activities and shall cause Mortgage Borrower to use reasonable efforts to prohibit any use or occupancy of the Property for Drug-Related Activities. Without limiting the generality of the foregoing, Borrower shall not permit Mortgage Borrower to enter into, consent to or permit any Lease which allows Drug-Related Activities at the Property, and shall cause Mortgage Borrower to expressly prohibit in all Leases entered into after the Effective Date any Controlled Substances Use and Drug-Related Activities on any portion of the Property. To the extent Borrower should nonetheless become aware or have actual knowledge of any Drug-Related Activities occurring at the Property, Borrower shall, within ten (10) days of becoming aware or gaining such knowledge, cause Mortgage Borrower to take all commercially reasonable steps as permitted under the Lease to cease such Drug-Related Activities occurring at the Property.
(b) Payments to Lender. Borrower shall not make any payments to Lender, and shall not permit Mortgage Borrower to make any payments to Mortgage Lender, from funds derived from Drug-Related Activities.
(c) Supersedes Local Law. The provisions of this Section are intended and shall apply notwithstanding any state or local law permitting the Controlled Substances Uses or Drug-Related Activities.
9.23 MATERIAL AGREEMENTS. Borrower shall require Mortgage Borrower to obtain Mortgage Lender’s prior written approval of any and all new Material Agreements entered into on or after the Effective Date, affecting the Property, to which Mortgage Borrower is a party, which approval shall not be unreasonably withheld, conditioned or delayed. Borrower shall not permit Mortgage Borrower to materially amend any Material Agreement without the prior written consent of Mortgage Lender, such consent not to be unreasonably withheld, conditioned or delayed. Borrower shall cause Mortgage Borrower to (i) observe and perform all the material obligations imposed upon Borrower under any Material Agreement; (ii) use commercially reasonable efforts to enforce all of the material terms, covenants and conditions contained in any Material Agreement thereunder to be observed or performed in a commercially reasonable manner, short of termination thereof; (iii) not voluntarily terminate any Material Agreement (other than any that are no longer necessary for the operation of the Property or that are replaced with a new agreement on commercially reasonable terms for the same service or in connection with its exercise of remedies thereunder) without the prior written consent of Mortgage Lender, which consent shall not be unreasonably withheld, conditioned, or delayed; (iv) not execute any assignment of Borrower’s interest in any Material Agreement other than pursuant to the Mortgage Loan Documents; (v) not voluntarily cancel or terminate any guarantee of any Material Agreement (if any) during the term of such Material Agreement without the prior written consent of Mortgage Lender, which consent shall not be unreasonably withheld, conditioned, or delayed; (vi) give Lender and Mortgage Lender prompt written notice of any default (beyond any applicable notice and cure periods) which occurs with respect to any Material Agreement, whether the default be that of Mortgage Borrower or an additional party and of which Borrower is actually aware; and (vii) deliver to Lender and Mortgage Lender fully executed, counterpart copies of each and every Material Agreement and any material modifications or amendments thereto if requested to do so by Lender or Mortgage Lender in writing.
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9.24 COMPLIANCE WITH LAWS. Borrower shall not permit Mortgage Borrower to initiate or acquiesce to a material zoning change of the Property without prior notice to, and prior written consent from, Lender (not to be unreasonably withheld, conditioned or delayed). Furthermore, Borrower shall not permit Mortgage Borrower to allow material changes in the stated fundamental use of the Property from that disclosed to Lender as of the Effective Date without prior notice to, and prior written consent from, Lender. Borrower further covenants and agrees (a) to cause Mortgage Borrower to keep the Property and Collateral (as defined in the Mortgage Loan Agreement) in good condition and repair (ordinary wear and tear excepted); (b) not to permit Mortgage Borrower to remove or demolish the Property or Collateral (as defined in the Mortgage Loan Agreement) or any part thereof, subject to Mortgage Borrower’s right to replace items of personal property with items of comparable utility and value (or to not replace same if such items are deemed to be obsolete); (c) to cause Mortgage Borrower to comply in all material respects with all Legal Requirements applicable to the Property or Collateral (as defined in the Mortgage Loan Agreement); and (d) not to permit Mortgage Borrower to intentionally commit or knowingly permit any waste of the Property or Collateral (as defined in the Mortgage Loan Agreement).
9.25 ADDITIONAL LOAN PROVISIONS.
(a) Pledge of Equity. Notwithstanding anything to the contrary contained in this Agreement, the pledge by Borrower of the Pledged Company Interests to Lender pursuant to the Loan Documents, as security for the Loan shall be permitted and shall not be deemed to be a Transfer.
(b) Notices of Default. Borrower shall deliver to Lender promptly after the receipt or delivery, a copy of any written notice of default received or sent by Mortgage Borrower with respect to the Mortgage Loan.
(c) Intercreditor Agreement. Borrower hereby acknowledges and agrees that any intercreditor agreement entered into between Lender and Mortgage Lender (including the Intercreditor Agreement) will be solely for the benefit of Lender and Mortgage Lender, and that neither Borrower nor Mortgage Borrower shall be third-party beneficiaries (intended or otherwise) of any of the provisions therein, have any rights thereunder (except as expressly set forth therein, if any), or be entitled to rely on any of the provisions contained therein. Lender and Mortgage Lender have no obligation to disclose to Borrower or Mezzanine Borrower the contents of any such intercreditor agreement (including the Intercreditor Agreement). Borrower’s obligations hereunder are and will be independent of any such intercreditor agreement (including the Intercreditor Agreement) and shall remain unmodified by the terms and provisions thereof.
(d) Payments to Lender. Notwithstanding anything to the contrary contained in this Agreement, the Loan Documents, and/or the Mortgage Loan Documents, the parties hereto acknowledge and agree that, as to any clause or provision contained in this Agreement, the other Loan Documents, and/or the Mortgage Loan Documents to the effect that payments, distributions, or other similar effect are to be made by Mortgage Borrower to Lender or applied to the Loan, such clause or provision shall be deemed to mean, and shall be construed as meaning, that Mortgage Lender shall pay to Mortgage Borrower, and Mortgage Borrower shall then immediately distribute such to Borrower, its member, pursuant to and in accordance with the organizational documents of Borrower and the organizational documents of Mortgage Borrower, and applicable law, which distribution shall be immediately payable to Lender, and any such clause or provision shall not be construed as meaning that Borrower and/or Mortgage Borrower is acting on behalf of, holding out its credit for, or paying the obligations of, Borrower, as applicable, directly or in any other manner that would violate any of the single purpose entity covenants contained in this Agreement or other similar covenants contained in Borrower’s organizational documents or Mortgage Borrower’s organizational documents, respectively.
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(e) Mortgage Loan Acquisition. Neither Borrower, nor any Guarantor, nor any Affiliate of any of them, nor any Person acting at any such Person’s request or direction, shall acquire any interest in the Mortgage Loan, or any portion thereof or any interest therein, or any direct or indirect ownership interest in the holder of the Mortgage Loan, via purchase, participation, transfer, exchange, operation of law or otherwise, and any breach of this provision that is not cured within ten (10) days of Borrower or any Guarantor obtaining actual knowledge of such breach shall constitute an Event of Default hereunder.
(f) Actions of Lender. If any action, proposed action or other decision is consented to or approved by the Mortgage Lender, such consent or approval shall be reasonably considered by Lender but shall not be binding or controlling on the Lender. Borrower hereby acknowledges and agrees that (i) the risks of Mortgage Lender in making the Mortgage Loan are different from the risks of the Lender in making the Loan, (ii) in determining whether to grant, deny, withhold or condition any requested consent or approval the Mortgage Lender and the Lender may reasonably reach different conclusions, and (iii) except as expressly provided in the Loan Documents, the Lender has an independent right to reasonably grant, delay, deny or condition any requested consent or approval in accordance with the Loan Documents, based on its own point of view. Notwithstanding anything to the contrary contained in this Agreement, all consents and approvals required by Lender under this Agreement (i) shall not be unreasonably withheld, conditioned, delayed or denied, and (ii) shall be subject to the Deemed Approval Requirements.
(g) Mortgage Loan Amendments. Without obtaining the prior written consent of the Lender, Borrower shall not cause or knowingly permit Mortgage Borrower or any Guarantor or affiliate of Borrower to (i) amend or modify any of the Mortgage Loan Documents to (1) increase the interest rate payable or the principal amount of the Loan (other than protective advances made by Lender in accordance with the terms of the Loan Documents or accrued and unpaid interest on the Mortgage Loan), (2) extend or shorten the scheduled maturity date of the Mortgage Loan (other than pursuant to the extension conditions set forth in the Mortgage Loan Documents) or (3) increase in any material respect any monetary obligations of Mortgage Borrower under the Mortgage Loan Documents; (ii) grant any additional collateral to, or incur any guaranty, indemnity or other obligation on account of the Mortgage Loan in favor of the Mortgage Lender, except for collateral, guaranties, indemnities and other obligations required to be delivered as of the date hereof; or (iii) refinance or prepay in full or in part the Mortgage Loan unless such refinancing or prepayment occurs while no Event of Default then exists and such prepayment is derived from Mortgage Borrower’s own funds (and not from revenue derived from the Property). Subject to the foregoing, Borrower shall deliver to Lender a copy of any amendment or modification to the Mortgage Loan Documents within five (5) Business Days after the execution thereof.
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(h) Mortgage Loan Prepayment. In the event that Mortgage Borrower prepays the Mortgage Loan in full pursuant to the terms and conditions of the Loan Documents and Mortgage Loan Documents, then Borrower shall not permit or allow Mortgage Borrower to borrow additional mortgage debt without Lender’s prior written consent. In making any determination as to whether to approve any such proposed mortgage loan, Lender shall have approval rights, to be reasonably exercised, over all aspects of the proposed mortgage loan, including, without limitation, any administrative agent and the lenders party thereto, the terms and conditions of the mortgage loan, including, without limitation, the structure, principal amount(s), payment terms, maturity date, interest rate, other fees and charges, guarantees, and collateral, the mortgage loan documents and the form and content of the intercreditor agreement.
(i) Curing. Lender shall have the right, but shall not have the obligation, to exercise Borrower’s rights under the LLC Agreement (a) to cure a Mortgage Event of Default and (b) to satisfy any liens, claims or judgments against the Property (except for liens permitted by the Mortgage Loan Documents), in the case of either (a) or (b), unless Borrower or Mortgage Borrower shall be diligently pursuing remedies to cure to Lender’s reasonable satisfaction. Borrower shall reimburse Lender on demand for any and all costs incurred by Lender in connection with curing any such Mortgage Event of Default or satisfying any such liens, claims or judgments against the Property.
(j) Intentionally Omitted.
(k) General Covenants.
(i) Borrower shall cause Mortgage Borrower to comply with all obligations with which Mortgage Borrower has covenanted to comply under the Mortgage Loan Agreement and all other Mortgage Loan Documents (the “Compliance Requirement”) whether or not the Mortgage Loan has been repaid or such Mortgage Loan Document has been otherwise terminated, and regardless of whether Mortgage Lender is requiring such compliance. Notwithstanding the foregoing, Borrower may request that Lender waive the Compliance Requirement, and approval of any such request (1) shall not be unreasonably withheld, conditioned, denied, or delayed and (2) shall be subject to the Deemed Approval Requirements.
(ii) In the event of any conflict between the requirements of this Agreement or the other Loan Documents and the requirements of the Mortgage Loan Agreement or the other Mortgage Loan Documents, the requirements of the Mortgage Loan Agreement and/or the other Mortgage Loan Documents, as applicable, shall control and Borrower shall cause Mortgage Borrower to comply therewith.
(iii) Borrower agrees that there shall be no distributions to any of its direct or indirect owners (legal or beneficial) until Borrower satisfies all of its then current due and payable obligations hereunder and under the other Loan Documents, including without limitation, Borrower’s obligation to pay Debt Service, deposits into Reserve Accounts, and maintenance costs.
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(iv) Following the occurrence and during the continuance of a Cash Sweep Period, Borrower shall not make any distributions.
9.26 ALTERATIONS. Lender’s prior approval shall be required in connection with any material alterations performed by Mortgage Borrower to the Property or any part thereof (a) the cost of which (including any related alteration, improvement or replacement) is reasonably anticipated to exceed the Alteration Threshold and (b) which affects the structural elements of the Property, the roof of the Property, or any building system of the Property, which approval, in either case, shall not be unreasonably withheld, conditioned or delayed, and shall be subject to the right of Mortgage Lender under the Mortgage Loan Agreement.
9.27 LIVE LOCAL ACT. Unless otherwise approved or waived by Lender and Mortgage Lender in their sole discretion, Borrower hereby covenants and agrees to: (a) cause Mortgage Borrower to cause the Property to qualify as an affordable multifamily development under the Live Local Act; (b) cause Mortgage Borrower to operate and lease the Property in compliance with the Live Local Act in all material respects, including but not limited to satisfying all criteria under the Live Local Act such that the LLA Qualifying Units remain qualified for tax exemption pursuant to the Live Local Act; (c) cause Mortgage Borrower to apply for and secure the ad valorem tax exemption applicable pursuant to the Live Local Act by March 1st of each calendar year and obtain the annual required certification of qualified property from the Florida Housing Finance Corporation (FHFC) (or other applicable Governmental Authority) and timely file such certification with the applicable property appraiser for the Property; (d) cause Mortgage Borrower to deliver to Lender and Mortgage Lender, within forty-five (45) days following the end of each calendar year, (i) a certified rent roll for the Property explicitly identifying the LLA Qualifying Units, (ii) tenant income certifications verifying eligibility, (iii) a copy of the approved annual FHFC certification, (iv) a copy of the accepted property tax exemption confirmation from the applicable appraiser for the Property, and (v) such additional documentation and information related to the Live Local Act and the Property as requested by Lender and/or Mortgage Lender in their reasonable discretion; (e) not permit Mortgage Borrower to amend, terminate, release or otherwise modify any recorded Live Local Covenant (if applicable) or any underlying regulatory agreements related to the Live Local Act and the Property, (f) not to permit Mortgage Borrower to convert any portion of the residential units at the Property to commercial units, short-term rentals, or transient lodging that would result in the Property no longer being in compliance with (or eligible for) the Live Local Act and the tax exemption provided thereunder.
9.28 TITLE TO THE COLLATERAL. Borrower will warrant and defend the validity and priority of Lender’s security interest in the Collateral.
9.29 TITLE INSURANCE PROCEEDS. Borrower covenants, subject to the rights of Mortgage Lender under the Mortgage Loan Documents, to remit (or cause the Mortgage Borrower to remit) to Lender all title insurance proceeds paid by the Title Company insuring Mortgage Borrower’s title to the Property upon the occurrence of any loss under the Title Policy; provided however, in no event shall such title insurance proceeds paid to Lender exceed, in the aggregate, the outstanding amount of the Debt.
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9.30 POST-CLOSING OBLIGATIONS.
(a) Code Violations. Borrower hereby covenants and agrees that on or before the date that is four (4) months following the Effective Date (unless otherwise extended by Lender in its reasonable discretion), Borrower shall have delivered, or caused Mortgage Borrower to deliver, evidence reasonably acceptable to Lender that Borrower has remedied the fire code violations at the Property as described in that certain Zoning Analysis Report dated July 1, 2026, issued by AEI Consultants, as Project No. 531369.
9.31 EB-5 PROGRAM COVENANTS. Borrower hereby covenants and agrees as follows:
(a) Maintenance of Regional Center Designation. Borrower shall cause Mortgage Borrower to use commercially reasonable efforts to cause the Regional Center to maintain its designation as a regional center with USCIS throughout the term of the Loan. Borrower shall promptly notify Lender in writing (and in no event later than five (5) Business Days) upon Borrower’s knowledge of (i) the termination, suspension, or revocation of the Regional Center’s designation, (ii) any notice or communication from USCIS indicating an intent to terminate, suspend, or revoke such designation, or (iii) any material adverse change in the Regional Center’s standing with USCIS.
(b) USCIS Compliance. Borrower shall cause Mortgage Borrower to, and cause Mortgage Borrower to cause its Affiliates to, comply in all material respects with all applicable USCIS regulations, policies, and procedures governing the EB-5 Program, including without limitation all filing, reporting, and record-keeping requirements applicable to the Regional Center and any new commercial enterprise or job-creating entity.
(c) EB-5 Investor Reporting. Borrower shall cause Mortgage Borrower to provide or cause to be provided to EB-5 Investors all reports, notices, and other communications required to be delivered to such investors under the EB-5 Offering Documents and applicable law. Upon Lender’s reasonable request (but not more frequently than annually), Borrower shall, or shall cause Mortgage Borrower to, provide Lender with copies of any annual or periodic reports delivered to EB-5 Investors and a summary of the status of I-526, I-526E, and I-829 petitions filed by EB-5 Investors to the extent such information is within Borrower’s possession or control.
(d) No Unauthorized Modifications. Without the prior written consent of Lender, Borrower shall not permit Mortgage Borrower to, and shall not permit Mortgage Borrower to permit any of its Affiliate to, (i) amend, modify, supplement, or waive any material provision of the EB-5 Offering Documents, (ii) materially modify the organizational structure of any new commercial enterprise or job-creating entity formed in connection with the EB-5 Program, (iii) materially modify the Job Creation Plan, (iv) change the use of EB-5 Capital Contributions from that contemplated in the EB-5 Offering Documents, or (v) take any action that would reasonably be expected to result in a material adverse effect on the EB-5 Program or the immigration benefits available to EB-5 Investors.
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(e) Job Creation. Borrower shall cause Mortgage Borrower to, and shall cause Mortgage Borrower to cause its Affiliates to, use commercially reasonable efforts to create and maintain the jobs described in the Job Creation Plan within the time periods required by applicable immigration laws and USCIS regulations. Borrower shall provide, or shall cause Mortgage Borrower to provide, Lender with annual updates on job creation progress upon Lender’s reasonable request.
(f) Notification of EB-5 Matters. Borrower shall promptly notify Lender in writing (and in no event later than ten (10) Business Days after Borrower’s knowledge thereof) of: (i) any withdrawal or attempted withdrawal of any EB-5 Capital Contribution; (ii) any material claim, demand, or litigation asserted by any EB-5 Investor against Borrower, any Affiliate of Borrower, or the Regional Center; (iii) any denial of an I-526, I-526E, or I-829 petition filed by any EB-5 Investor; (iv) any request for return of EB-5 Capital Contributions that has not been satisfied; (v) any material default or breach under the EB-5 Offering Documents; or (vi) any inquiry, investigation, enforcement action, or proceeding by USCIS, the SEC, or any other Governmental Authority relating to the EB-5 Program.
(g) EB-5 Capital Structure. Without the prior written consent of Lender, Borrower shall not, and shall not permit Mortgage Borrower to, (i) redeem, repurchase, or return any EB-5 Capital Contribution, except as required by the EB-5 Offering Documents upon satisfaction of the applicable sustainment period and completion of the applicable immigration process, (ii) make any distribution or payment to any EB-5 Investor except in accordance with the EB-5 Offering Documents and applicable law, (iii) incur any additional indebtedness, or grant any additional security interests, secured by or payable from EB-5 Capital Contributions, or (iv) permit any EB-5 Investor to obtain any Lien on the Property or any direct or indirect interest in Borrower.
Article 10. reserved
Article 11. FINANCIAL STATEMENTS
11.1 BORROWER AND GUARANTOR FINANCIAL STATEMENTS. Borrower shall deliver to Lender, as soon as available, but in no event later than one hundred twenty (120) days after Borrower’s fiscal year end, a current financial statement (including, without limitation, an income and expense statement and balance sheet) of the Borrower, and a financial statement for each Guarantor in substantially the same form delivered to Lender in connection with Lender’s approval of the Loan, each to be certified as true and correct by the party (or officer with respect thereto) in all material respects providing such statements prepared in accordance with the Approved Accounting Method. Such statements of Borrower shall cover Mortgage Borrower and the Property for such fiscal year and contain an income statement for Borrower, Mortgage Borrower, and the Property and a balance sheet for Borrower and Senior Borrower. Such statements of Borrower shall set forth the financial condition and the results of operations for the Property for such fiscal year, and shall include, but not be limited to, amounts representing annual Net Operating Income, Gross Income, and Operating Expenses. Borrower's annual financial statements shall be accompanied by (i) a comparison of the budgeted income and expenses and the actual income and expenses for the prior fiscal year and (ii) an Officer's Certificate certifying that each annual financial statement fairly presents the financial condition and the results of operations of Borrower, Mortgage Borrower, and the Property in all material respects subject to such reporting, and that such financial statements have been prepared in accordance with the Approved Accounting Method and as of the date thereof whether there exists an event or circumstance which constitutes an Event of Default under the Loan Documents executed and delivered by, or applicable to, Borrower, and if such Event of Default exists, the nature thereof, the period of time it has existed and the action then being taken to remedy the same. The annual financial statement for each Guarantor shall include a certification from each Guarantor detailing the Guarantor’s Tangible Net Worth and Liquid Assets.
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11.2 MONTHLY PROPERTY REPORTING. Within thirty (30) days following the end of each calendar month, Borrower shall deliver to Lender an operating report for the Property for the immediately preceding calendar month, which contains the following: (a) a monthly income statement (with trailing 12 month calculation) (detailed for the commercial and residential space); (b) an updated Rent Roll (including delinquency report); (c) a statement of Operating Expenses (if not separately detailed in the income statement); (d) a leasing status update (brokerage prospective tenant report); (e) an update on accounts payable for Borrower, (f) property management report describing any planned or in-process Capital Improvements and/or Tenant Improvements at the Property; and (g) balance sheet (a “Monthly Operating Report”). Borrower shall also participate in a monthly call with Lender, summarizing operations at the Property at a time reasonably acceptable to each such party.
11.3 BOOKS AND RECORDS. Borrower shall maintain and cause any Property Manager to maintain complete books of account and other records for the Property and for disbursement and use of the proceeds of the Loan and the Reserves, and the same shall be available for inspection by Lender at any time upon five (5) Business Days’ notice to Borrower or Property Manager, as applicable.
11.4 OTHER INFORMATION.
(a) From time to time, upon Lender’s delivery to Borrower and/or Guarantor of at least ten (10) Business Days prior written notice, Borrower shall deliver (or shall cause Guarantor to deliver) to Lender such other information with regard to Borrower, principals of Borrower, Guarantor, or the Property as Lender may reasonably request in writing (including additional financial statements for Guarantor with an updated certification detailing the then applicable Tangible Net Worth and Liquid Assets of Guarantor). If audited financial information is prepared, Borrower shall deliver to Lender copies of the most recent audited financial information within fifteen (15) days after request.
(b) Simultaneously with their delivery to Mortgage Lender (or any other permitted lender), Borrower shall provide Lender with copies of all reports, financial statements, compliance certificates, notices, and other written information required to be delivered under the Mortgage Loan or other permitted financing documents.
11.5 FORM, WARRANTY. Borrower agrees that all financial statements to be delivered to Lender pursuant to this Article 11 shall, to Borrower’s knowledge: (a) be complete and correct in all materials respects; (b) present fairly the financial condition of the party; (c) disclose all liabilities that are required to be reflected or reserved against under the Approved Accounting Method; and (d) be prepared in accordance with the Approved Accounting Method.
11.6 TAX RETURNS. Borrower shall deliver Borrower’s annual federal income tax return including all schedules for the preceding taxable year as filed with the Internal Revenue Service which shall be delivered to the Lender on or before the 15th day following the date such tax returns were filed with the Internal Revenue Service.
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11.7 BUDGET. For the partial year period commencing on the date hereof, and for each fiscal year thereafter, Borrower shall submit to Lender an Annual Budget not later than thirty (30) days prior to the commencement of such fiscal year in form reasonably satisfactory to Lender. Lender shall have the right to approve each Annual Budget (which approval shall not be unreasonably withheld, conditioned or delayed), and each Annual Budget approved by Lender, including the initial Annual Budget, shall hereinafter be referred to as an “Approved Annual Budget”. In the event that Lender objects to a proposed Annual Budget submitted by Borrower which requires the approval of Lender hereunder, Lender shall advise Borrower of such objections within fifteen (15) days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise such Annual Budget and resubmit the same to Lender. Until such time as an Annual Budget is approved for the current year, the previously Approved Annual Budget shall be used with each line item increased by five percent (5%) (except for Taxes and Insurance Premiums which shall be the actual amounts incurred and charged to Borrower) and subject to reasonable adjustments for utility, weather-related expenses, or other non-controllable expenses incurred by Borrower. Lender’s failure to object to any request for approval of any proposed Annual Budget and/or requests to amend any approved Annual Budget within fifteen (15) Business Days of written request from Borrower shall be deemed approval by Lender.
11.8 INTENTIONALLY OMITTED.
11.9 INTENTIONALLY OMITTED.
11.10 FINANCIAL STATEMENTS/AUDIT. In the event Borrower fails to furnish any of the foregoing financial statements required pursuant to this Article 11 within thirty (30) days after written notice to Borrower, the same shall be an Event of Default and in addition to any other remedies available to Lender, the Lender may cause an audit to be made of the respective books and records at the sole cost and expense of the Borrower. Notwithstanding the foregoing, Lender shall have the right, at any time and for any reason, at its expense, to cause a third-party audit or review of Property financials and reporting.
Article 12. DEFAULTS AND REMEDIES
12.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following shall constitute an event of default (each an “Event of Default”) under this Agreement and the other Loan Documents:
(a) Monetary. Borrower’s failure to pay: (i) any sums due and payable on any Monthly Payment Date under the Note or any of the other Loan Documents within five (5) Business Days after any such Monthly Payment Date (except for any sums due and payable on the Maturity Date), (ii) any sums due and payable under the Note or any of the Loan Documents on or prior to the Maturity Date, or (iii) any other sums due and payable under the terms of the Loan Documents when due (subject to any notice and/or cure period expressly set forth in the Loan Documents, if any), or to the extent no notice, grace and/or cure periods are expressly provided, subject to a ten (10) day cure period after receipt of written demand for such sums from Lender.
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(b) Performance of Specified Obligations. Any (i) failure to comply with any obligations and/or covenants (after the expiration of any applicable notice and cure periods), or (ii) breach of any representations and/or warranties in any of the following (subject to any notice and/or cure period detailed in any of the following): Sections 9.5 (No Liens on Controlling Interest in Borrower), 9.6 (No Transfer and Further Encumbrance), 9.7 (No Merger, Consolidation and Transfer of Assets), 9.8 (No Change in Structure or Management; Single Purpose Entity), 9.17 (No Assignment), 9.18 (Sanctions), and 9.19 (Distributions to Members of Borrower).
(c) Performance of Obligations. Borrower’s and/or Guarantor’s failure to perform any other obligation, covenant or condition under this Agreement, the Note, the Guaranty or any of the other Loan Documents not otherwise specified in this Section 12.1, whether direct or indirect, absolute or contingent and such breach or failure is not cured within thirty (30) days after written notice of such failure has been provided to Borrower; provided, however, if such breach or failure is of a nature that it cannot be cured within such thirty (30) day period, Borrower shall have up to thirty (30) additional days to cure the same as long as Borrower and/or Guarantor commences the cure within such initial thirty (30) day period and diligently pursues the same; provided, however, that if a different cure period is provided under any Loan Document or under any provision of the Loan Documents for the remedy of such breach or failure, the specific Loan Document or provision controls, and Borrower and/or Guarantor will have no more time to cure the breach or failure than is allowed under the specific Loan Document or provision as to such failure or breach.
(d) Attachment. The sequestration or attachment of, or any levy or execution upon any of the Collateral, any other collateral provided by Borrower under any of the Loan Documents, or any substantial portion of the other assets of Borrower in violation of the Loan Documents, which sequestration, attachment, levy or execution is not released, expunged or dismissed prior to the earlier of sixty (60) days or the sale of the assets affected thereby.
(e) Representations and Warranties. The failure of any representation or warranty of Borrower in any of the Loan Documents or the Guarantor in the Guaranty to be true and correct in all material respects when made, or the material inaccuracy of any report, certificate, financial statement or other instrument or document at any time furnished to Lender.
(f) Bankruptcy; Insolvency; Dissolution. (i) The filing by Borrower or Guarantor of a petition for relief under the Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law; (ii) the filing against Borrower or Guarantor of an involuntary proceeding under the Bankruptcy Code or other debtor relief law by a party other than Lender or an Affiliate of Lender and the failure of Borrower or Guarantor to effect a full dismissal of such proceeding within ninety (90) days after the date of filing such proceeding; (iii) a general assignment by Borrower or Guarantor for the benefit of creditors; or (iv) Borrower or any Guarantor, applying for, or the appointment of, a receiver, trustee, custodian or liquidator of Borrower or Guarantor of any of its property.
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(g) Death or Incapacity. A Guarantor who is an individual dies or there is a judicial determination of incompetency (an “Exiting Guarantor”), unless: (1) the remaining Guarantor(s) continue to satisfy the Guarantor Financial Covenants; or (2) within sixty (60) days after such death or judicial determination of incompetency, (i) the Exiting Guarantor is replaced by a Replacement Guarantor or Replacement Guarantors, (ii) the remaining Guarantor (if any) delivers evidence reasonably satisfactory to Lender that the Guarantor (including any proposed Replacement Guarantor(s)), in the aggregate, is then in compliance with the Guarantor Financial Covenants, and (iii) the Guarantor (including any proposed Replacement Guarantor(s)) agrees in writing to maintain the Guarantor Financial Covenants.
(h) Loss of Priority. The failure at any time of the Pledge and Security Agreement to be a valid first lien upon the Collateral or any portion thereof, other than as a result of any release of the Pledge and Security Agreement with respect to all or any portion of the Collateral pursuant to the terms and conditions of this Agreement.
(i) Other Loan Documents. Any Event of Default shall occur under any of the other Loan Documents, in each case, beyond the expiration of any applicable notice and/or cure period provided in such Loan Document.
(j) Legal Requirements. If Borrower fails to cure any violations of any Legal Requirements, statutes, laws and regulations affecting all or any portion of the Property or Borrower within thirty (30) days after Borrower first receives written notice of any such violations; provided, however, if any such violation is reasonably susceptible of cure, but not within such thirty (30) day period, then Borrower shall be permitted up to an additional sixty (60) days to cure such violation provided that Borrower commences a cure within such initial thirty (30) day period and thereafter diligently and continuously pursues such cure.
(k) Taxes. Subject to the rights of Borrower to contest the same as set forth in Section 9.11 above, if any of the Taxes are not paid prior to the date upon which any interest or late charges shall begin to accrue thereon.
(l) Tangible Net Worth – Guarantor. Guarantor (in the aggregate) fails to maintain at all times Tangible Net Worth of at least $75,000,000.00 (“Net Worth Covenant”), to be tested pursuant to the financial statements and other related financial documents of the Guarantor to be provided to Lender from time to time pursuant to the terms hereof; provided that if there is a failure to satisfy the Net Worth Covenant, such failure shall not be an Event of Default if within thirty (30) days following notice thereof to Borrower, Borrower provides a Replacement Guarantor such that the Guarantor(s) collectively (including the Replacement Guarantor) satisfy the Net Worth Covenant.
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(m) Liquid Assets - Guarantor. Guarantor (in the aggregate) fails to maintain at all times Liquid Assets of at least $1,500,000.00 (“Liquid Asset Covenant” and collectively with the Net Worth Covenant, the “Guarantor Financial Covenants”), to be tested pursuant to the financial statements and other related financial documents of the Guarantor to be provided to Lender from time to time pursuant to the terms hereof; provided that if there is a failure to satisfy the Liquid Asset Covenant, such failure shall not be an Event of Default if within thirty (30) days following notice thereof to Borrower, Borrower provides a Replacement Guarantor such that the Guarantor(s) collectively (including the Replacement Guarantor) satisfy the Liquid Asset Covenant.
(n) Judgment Against Borrower or Guarantor. If a final, non-appealable judgment is entered by a court of competent jurisdiction against Borrower or Guarantor for an amount in excess of $1,000,000.00 that in the commercially reasonable discretion of Lender would have a material adverse effect on the ability of Borrower or Guarantor to perform their respective obligations under the Loan Documents and such judgment is not fully covered by insurance to the reasonable satisfaction of Lender or otherwise satisfied within sixty (60) days after the final entry thereof.
(o) Insurance Policies. If the Policies are not delivered to Lender upon request or Borrower has not delivered, or has not caused Mortgage Borrower to deliver, evidence of the renewal of the Policies at least ten (10) days prior to their expiration as provided in this Agreement.
(p) Guarantor Matters. Guarantor shall be (i) indicted or convicted of, or plead guilty or no contest to, a violation of the Patriot Act, (ii) found by a court of competent jurisdiction to have committed, or been under indictment or have been indicted for a felony, fraud or crime of moral turpitude under any applicable law; or (iii) found by a Governmental Authority to have violated, or is then being investigated by a Governmental Authority for a violation of, any federal or state securities laws or regulations.
(q) Live Local Act. Any applicable Governmental Authority shall determine that the Property (and the LLA Qualifying Units) are not eligible or fail to qualify for the Live Local Act tax exemption.
(r) Mortgage Default. A Mortgage Event of Default shall occur or any other event or condition shall occur the effect of which is to accelerate or permit Mortgage Lender to accelerate all or any portion of the Mortgage Loan.
(s) EB-5 Program. The occurrence of any of the following:
(i) the termination, suspension, or revocation of the Regional Center’s designation by USCIS, or the failure of the Regional Center to maintain its designation as a regional center with USCIS, in each case unless a replacement regional center reasonably acceptable to Lender assumes administration of the EB-5 Program within sixty (60) days;
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(ii) a material violation of USCIS regulations, policies, or procedures governing the EB-5 Program by Borrower, any Affiliate of Borrower, or the Regional Center, which violation is not cured within thirty (30) days after written notice thereof from Lender or the earlier occurrence of any enforcement action by USCIS;
(iii) a final determination by USCIS or a court of competent jurisdiction that the EB-5 Program, as structured, fails to satisfy the requirements for job creation under applicable immigration laws and USCIS regulations, and such failure is not cured or remedied within ninety (90) days after such determination;
(iv) a final, non-appealable judgment or arbitration award entered in favor of one or more EB-5 Investors against Borrower, any Affiliate of Borrower, or the Regional Center granting rescission of their investment, return of EB-5 Capital Contributions, or damages in excess of $1,000,000.00 in the aggregate, in each case arising out of litigation or arbitration commenced by such EB-5 Investors, which judgment or award is not vacated, satisfied, stayed pending appeal, or bonded within sixty (60) days after entry thereof;
(v) any amendment, modification, or waiver of the EB-5 Offering Documents, or any material modification to the Job Creation Plan or the organizational structure of any new commercial enterprise or job-creating entity, without the prior written consent of Lender as required under Section 9.31(d); or
(vi) any redemption, repurchase, or return of any EB-5 Capital Contribution, or any distribution or payment to any EB-5 Investor, in violation of Sections 9.31(g).
(t) If Borrower fails to make the Replenishment Deposit in accordance with the terms of Section 3.6(d).
12.2 ACCELERATION UPON EVENT OF DEFAULT; REMEDIES. Upon the occurrence and during the continuance of any Event of Default specified in this Article, Lender may, at its sole option, declare all sums owing to Lender under the Note, this Agreement and the other Loan Documents immediately due and payable, after which such sums shall, at Lender’s option, bear interest at the Default Rate. Upon such acceleration, (i) Lender may, in addition to all other remedies permitted under the Note, this Agreement and the other Loan Documents and at law or equity, apply any sums in the Reserve Accounts and any other Accounts then applicable to the sums owing under the Loan Documents; and (ii) any and all obligations of Lender to fund disbursements under the Loan shall terminate at Lender’s sole option.
12.3 ACCELERATION UPON LOSS OF SECURITY. If at any time the Pledge and Security Agreement ceases to be a valid first lien upon the Collateral, all sums remaining unpaid and owing to Lender under the Note and the other Loan Documents shall, at Lender’s option, be immediately due and payable and Lender’s obligation to disburse the remaining portion of the Loan which is then undisbursed, if any, shall terminate.
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12.4 DISBURSEMENTS TO THIRD PARTIES. Upon the occurrence and during the continuance of an Event of Default occasioned by Borrower’s failure to pay money to a third party as required by this Agreement, Lender may but shall not be obligated to make such payment from the Loan proceeds, other funds of Lender or any amounts in deposit accounts maintained by Borrower with Lender. If such payment is made from proceeds of the Loan or from any Account, Borrower shall immediately deposit with Lender upon demand an amount equal to such payment. If such payment is made from funds of Lender, Borrower shall immediately repay such funds upon written demand of Lender. In either case, the Event of Default with respect to which any such payment has been made by Lender shall not be deemed cured until such deposit or repayment (as the case may be) has been made by Borrower to Lender.
12.5 SET OFF. Upon the occurrence and during the continuance of an Event of Default, Lender may set off any and all amounts due by Borrower against any indebtedness or obligation of Lender to Borrower.
12.6 COLLATERAL PROCEEDINGS.
(a) Subject to the terms and provisions of the Pledge and Security Agreement, Lender may institute proceedings, judicial or otherwise, for the complete or partial foreclosure of the Pledge and Security Agreement or the complete or partial sale of the Collateral under power of sale or under any applicable provision of law. In connection with any such proceeding, Lender may sell the Collateral as an entirety or in parts and at such times and place (at one or more sales) and upon such terms as it may deem expedient unless prohibited by law from so acting.
(b) Subject to the terms and provisions of the Pledge and Security Agreement, Lender may exercise with respect to the Collateral, each right, power or remedy granted to a secured party under the UCC as enacted in the state or states applicable to any of the Collateral, including the right to foreclose upon the Collateral. Any notice of sale, disposition or other intended action by Lender with respect to the Collateral sent to Borrower in accordance with the provisions hereof at least ten (10) days prior to such action shall constitute reasonable notice to Borrower
12.7 RIGHTS CUMULATIVE; NO WAIVER. All of Lender’s rights and remedies provided in this Agreement, the Guaranty and the other Loan Documents, together with those granted by law or at equity, are cumulative and may be exercised by Lender at any time. Lender’s exercise of any right or remedy shall not constitute a cure of any Event of Default unless all sums then due and payable to Lender under the Loan Documents are repaid and Borrower has cured all other Events of Default. No waiver shall be implied from any failure of Lender to take, or any delay by Lender in taking, action concerning any Event of Default or failure of condition under the Loan Documents, or from any previous waiver of any similar or unrelated Event of Default or failure of condition. Any waiver or approval under any of the Loan Documents must be in writing and shall be limited to its specific terms.
Article 13. MISCELLANEOUS PROVISIONS
13.1 INDEMNITY. Borrower agrees to indemnify and hold harmless, and on demand defend (with counsel REASONABLY acceptable to Lender), any of the Indemnitees for any ACTUAL loss or expense which may arise or be created by the acceptance in good faith by the Lender of instructions for making the Loan or disbursing the proceeds thereof. The Borrower further agrees to defend (with counsel REASONABLY acceptable to Lender), protect, indemnify, and hold harmless any of the Indemnitees from and against any and all ACTUAL liabilities, obligations, losses, damages, penalties, actions,
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judgments, suits, claims, costs, expenses and disbursements of any kind, and arising at any time, based on the Loan, the Loan Documents, or the use or intended use of the proceeds of the Loan, the Lender’s performance or administration of the Loan, or otherwise on account of the Loan. The obligations of the Borrower under this Section shall survive any termination of any of the Loan Documents, including this Agreement. BORROWER’S DUTY AND OBLIGATION TO DEFEND, INDEMNIFY AND HOLD HARMLESS INDEMNITEES SHALL SURVIVE CANCELLATION OF THE NOTE AND THE RELEASE OF THE PLEDGE AND SECURITY AGREEMENT OR OTHER LOAN DOCUMENTS. NOTWITHSTANDING THE FOREGOING, BORROWER SHALL NOT HAVE INDEMNIFICATION OBLIGATIONS OR BE LIABLE FOR THE PAYMENT OF ANY LOSSES, COSTS AND EXPENSES TO THE EXTENT THE SAME ARISE BY REASON OF THE GROSS NEGLIGENCE, ILLEGAL ACTS, FRAUD OR WILLFUL MISCONDUCT OF LENDER. NOTWITHSTANDING THE FOREGOING, BORROWER SHALL NOT HAVE ANY LIABILITY FOR ANY OF THE OBLIGATIONS GUARANTEED UNDER THIS SECTION 13.1 TO THE EXTENT THAT SUCH LIABILITY ARISES OUT OF ANY ACTIONS, EVENTS, CONDITIONS OR FACTS FIRST ARISING OR FIRST OCCURRING AFTER THE DATE ON WHICH LENDER, OR ITS NOMINEES AND/OR ASSIGNS, ACQUIRES 100% MEMBERSHIP INTEREST IN MORTGAGE BORROWER AS A RESULT OF THE EXERCISE OF ITS RIGHTS UNDER THE TERMS AND CONDITIONS OF THE LOAN DOCUMENTS, UNLESS SUCH ACTIONS, EVENTS, CONDITIONS OR FACTS WE RE CAUSED BY BORROWER (WHILE ANY GUARANTOR MAINTAINS A CONTROLLING INTEREST IN BORROWER) AND/OR GUARANTOR.
13.2 NOTICES. All notices, demands, or other communications under this Agreement and the other Loan Documents shall be in writing and shall be delivered to the appropriate party at the addresses set forth below (subject to change from time to time by written notice to all other parties to this Agreement as provided below). All notices, demands or other communications shall be considered as properly given if delivered (i) personally or sent by first class United States Postal Service mail, postage prepaid, (ii) by Overnight Express Mail (i.e., USPS Priority Mail Express), (iii) by overnight commercial courier service, charges prepaid or (iv) email with a copy of such notice to follow sent by any method as set forth in (i)–(iii) above. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal to accept delivery; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be:
| Borrower: |
Block 40 Holdco LLC c/o Stewards, Inc. 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Attn: Katy Murless, Chief Financial Officer Email: [email protected]
With a copy to: Scott Doney, Esq. 3651 Lindell Rd Ste D121 Las Vegas, NV 89103 Email: [email protected]
|
| Lender: |
1818 Mezz Lender LLC c/o CCL Capital 420 Lexington Avenue, Suite 2100 New York, NY 10170 Attn: Adam Budgor Email: [email protected]
With a copy to:
Windels Marx Lane & Mittendorf LLP 156 West 56th Street New York, New York 10019 Attn: Wayne S. Cook, Jr., Esq. Email: [email protected] |
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Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth hereinabove. Notices, demands, and communications provided by legal counsel on behalf of any party to this Agreement pursuant to this Section 13.2 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
13.3 RELATIONSHIP OF PARTIES. The relationship of Borrower and Lender under the Loan Documents is, and shall at all times remain, solely that of borrower and lender, and Lender neither undertakes nor assumes any responsibility or duty to Borrower or to any third party with respect to the Property, except as expressly provided in this Agreement and the other Loan Documents.
13.4 ATTORNEYS’ FEES AND EXPENSES; ENFORCEMENT. If any attorney is engaged by Lender to enforce or defend any provision of this Agreement, any of the other Loan Documents, or as a consequence of any Default or Event of Default under the Loan Documents, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding or in connection with any appeal of a lower court decision, then Borrower shall pay to Lender, within ten (10) Business Days of written demand, the amount of all reasonable, out of pocket attorneys’ fees and expenses and costs actually incurred in connection therewith, including all trial and appellate proceedings in any legal action, suit, bankruptcy or other proceeding, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the Principal Balance of the Note as specified therein. In the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and not by jury and shall be included in any judgment obtained by Lender. This provision is separate and several and shall survive merger into judgment.
13.5 NO WAIVER. No previous waiver and no failure or delay by Lender in acting with respect to the terms of the Note or this Agreement shall constitute a waiver of any breach, default, or failure of condition under the Note, this Agreement or the obligations secured thereby. A waiver of any term of the Note, this Agreement or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.
13.6 IMMEDIATELY AVAILABLE FUNDS. Unless otherwise expressly provided for in this Agreement, all amounts payable by Borrower to Lender shall be (a) payable only in United States currency in immediately available funds; and (b) received by Lender at the address specified in the Note, or at other such places as may be designated in writing by Lender, no later than 4 PM Central Time. Any amounts received after such time shall be credited the next Business Day.
13.7 LENDER’S AGENTS. Lender may, at Borrower’s expense, designate an agent or independent contractor to exercise any of Lender’s rights under this Agreement and any of the other Loan Documents. Any reference to Lender in any of the Loan Documents shall include Lender’s agents, employees or independent contractors.
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13.8 WAIVER OF RIGHT TO TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
13.9 SEVERABILITY. If any provision or obligation under this Agreement and the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from this Agreement and the other Loan Documents and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of this Agreement and the other Loan Documents; provided, however, that if the rate of interest or any other amount payable under the Note or this Agreement or any other Loan Document, or the right of collectability therefore, are declared to be or become invalid, illegal or unenforceable, Lender’s obligations to make advances under the Loan Documents shall not be enforceable by Borrower.
13.10 HEIRS, SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided under the terms and conditions herein, the terms of the Loan Documents shall bind and inure to the benefit of the heirs, executors, administrators, nominees, successors and assigns of the parties hereto.
13.11 INTENTIONALLY OMITTED.
13.12 INTENTIONALLY OMITTED.
13.13 TIME. Time is of the essence of each and every term herein.
13.14 GOVERNING LAW AND CONSENT TO JURISDICTION. Notwithstanding the place of execution of this instrument, the parties to this instrument have contracted for New York law to govern this instrument and it is agreed that this instrument is made pursuant to and shall be construed and governed by the laws of the State of New York without regard to the principles of conflicts of law. The Borrower submits and consents to personal jurisdiction of the Courts of the State of New York and Courts of the United States of America sitting in such State for the enforcement of this instrument and waives any and all personal rights under the laws of any state or the United States of America to object to jurisdiction in the State of New York. Litigation may be commenced in any state court of general jurisdiction for the State of New York, or the United States District Court located in such state, at the election of the Lender. Nothing contained herein shall prevent Lender from bringing any action against any other party or exercising any rights against any security given to Lender, or against the Borrower personally, or against any property of the Borrower, within any other state. Commencement of any such action or proceeding in any other state shall not constitute a waiver of consent to jurisdiction or of the submission made by the Borrower to personal jurisdiction within the State of New York.
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13.15 USA PATRIOT ACT NOTICE, COMPLIANCE. The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, Lender may from time-to-time request, and Borrower shall provide to Lender, Borrower’s name, address, tax identification number and/or such other identification information as shall be necessary for Lender to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.
13.16 JOINT AND SEVERAL LIABILITY. The liability of all parties named as Borrower under this Agreement shall be joint and several.
13.17 INTENTIONALLY DELETED.
13.18 NO THIRD PARTIES BENEFITED. No Person other than Lender and Borrower and their permitted successors and assigns shall have any right of action under any of the Loan Documents.
13.19 ACTIONS. Borrower agrees that Lender, in exercising the rights, duties or liabilities of Lender or Borrower under the Loan Documents, may commence, appear in or defend any action or proceeding purporting to affect the Collateral or the Loan Documents and Borrower shall promptly reimburse Lender upon demand for all such reasonable expenses so incurred or paid by Lender, including, without limitation, reasonable attorneys’ fees and expenses and court costs.
13.20 ASSIGNMENT OF LOAN DOCUMENTS. In connection with the payment in full of the Loan pursuant to a refinancing by Borrower, upon Borrower’s written request, Lender agrees to reasonably cooperate with the assignment of the Note and Pledge and Security Agreement to the Lender. If Lender cannot locate the original Note, Lender agrees to deliver the Florida statutory lost note affidavit together with a copy of the Note, at no cost to the Lender.
13.21 HEADINGS. All article, section or other headings appearing in this Agreement and any of the other Loan Documents are for convenience of reference only and shall be disregarded in construing this Agreement and any of the other Loan Documents.
13.22 ELECTRONIC TRANSMISSION OF DATA. Lender and Borrower agree that certain data related to the Loan (including confidential information, documents, applications and reports) may be transmitted electronically, including transmission over the Internet. This data may be transmitted to, received from or circulated among agents and representatives of Borrower and/or Lender and their affiliates and other Persons involved with the subject matter of this Agreement.
13.23 COUNTERPARTS. To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.
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13.24 POWERS OF ATTORNEY. The powers of attorney granted by Borrower to Lender in this Agreement shall be unaffected by the disability of the principal so long as any portion of the Loan remains unpaid or unperformed. Lender shall have no obligation to exercise any of the foregoing rights and powers in any event.
13.25 BROKERAGE COMMISSIONS. Borrower agrees to pay all commissions and fees due any broker claiming a commission due from the Borrower in connection with the placement of the Loan and Borrower agrees to pay and shall indemnify Lender from any liability, claims or losses arising by reason of any broker claiming such a fee or commission due from Borrower. This provision shall survive the repayment of the Loan and shall continue in full force and effect so long as the possibility of such liability, claims or losses exists.
13.26 RULES OF CONSTRUCTION. The word “Borrower” as used herein shall include both the named Borrower and any other Person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term “Person” as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Agreement is executed by more than one Person, the term “Borrower” shall include all such Persons. The word “Lender” as used herein shall include Lender, its successors, assigns and affiliates.
13.27 USE OF SINGULAR AND PLURAL; GENDER. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
13.28 EXHIBITS, SCHEDULES AND RIDERS. All exhibits, schedules, riders and other items attached hereto are incorporated into this Agreement by such attachment for all purposes.
13.29 INCONSISTENCIES. In the event of any inconsistencies between the terms of this Agreement and the terms of any of the other Loan Documents, the terms of this Agreement shall prevail.
13.30 INTEGRATION; INTERPRETATION. The Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Lender in writing.
13.31 ASSUMPTION OF LOAN. Lender may permit the assignment and assumption of the Loan by a new borrower in Lender’s sole discretion. Lender’s decision to approve any such assignment or assumption shall be based, in part, upon (a) the new borrower and all key principals and potential guarantors meeting Lender’s then current underwriting standards, and (b) payment to Lender of an assumption fee equal to one percent (1.00%) of the total commitment amount of the Loan (whether disbursed or undisbursed) in immediately available funds unless otherwise waived by Lender in connection with the assignment and assumption of the Loan by an affiliate borrower of any Borrower, and (c) a full release of claims from Borrower and Guarantor in form and substance acceptable to Lender in its sole discretion. Unless otherwise waived by Lender in connection with the assignment and assumption of the Loan by an affiliate borrower of any Borrower, if any assumption is approved by Lender in its sole discretion, the Prepayment Fee shall be recalculated based on a new Prepayment Period which shall be the period of time from the effective date of such assumption and on or before 728 days from such effective date. Borrower shall immediately pay Lender upon demand all costs and expenses incurred by Lender in connection with any assumption of the Loan, including any reasonable attorney’s fees.
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13.32 INTENTIONALLY OMITTED.
13.33 INTENTIONALLY OMITTED.
13.34 SERVICER
(a) At the option of Lender, the Loan may be serviced by a master servicer, primary servicer, special servicer and/or trustee (any such master servicer, primary servicer, special servicer and trustee, together with its agents, designees or nominees, collectively, “Servicer”) selected by Lender and Lender may delegate all or any portion of its responsibilities under the Loan Documents to the Servicer pursuant to a pooling and servicing agreement, servicing agreement, special servicing agreement and/or other agreement providing for the servicing of one (1) or more mortgage loans (collectively, the “Servicing Agreement”) between Lender and Servicer. Borrower shall pay (i) any out-of-pocket, actual fees and expenses of Servicer (including, without limitation, reasonable attorneys’ fees and disbursements) payable pursuant to the Servicing Agreement in connection with any release of the Property, any prepayment, defeasance, assumption, amendment or modification of the Loan, any documents or other matters requested by Borrower or Guarantor, any special servicing or workout of the Loan or enforcement of the Loan Documents, including, without limitation, advances made by Servicer and interest on such advances, any liquidation fees in connection with the exercise of any or all remedies permitted under this Agreement, and all reasonable fees, charges, costs and expenses in connection with the Accounts, including, without limitation, any monthly or annual fees or charges as may be assessed by or against Lender or Servicer in connection with the administration of the Accounts, (ii) the costs payable pursuant to the Servicing Agreement of all property inspections and/or appraisals of the Property (or any updates to any existing inspection or appraisal) that a Servicer may be required to obtain (other than the cost of regular annual inspections required to be borne by Servicer under the Servicing Agreement), and (iii) an annual servicing fee of $10,000, payable monthly; provided, however, that Borrower shall not be responsible for payment of any fees or expenses required to be borne by, and not reimbursable to, Servicer. Without limiting the generality of the foregoing, Servicer shall be entitled to reimbursement of costs and expenses as and to the same extent (but without duplication) as Lender is entitled thereto pursuant to the terms of the Loan Documents.
(b) Upon written notice thereof from Lender to Borrower, Servicer shall have the right to exercise all rights of Lender and enforce all obligations of Borrower and Guarantor under the Loan Documents.
(c) Provided Borrower shall have received written notice from Lender of Servicer’s address, Borrower shall deliver, and cause to be delivered, to Servicer duplicate originals of all written notices and other documents and instruments which Borrower and/or Guarantor deliver to Lender pursuant to the Loan Documents. No delivery of any such notices or other documents shall be of any force or effect unless delivered to Lender and Servicer as provided in this Section 13.34(c).
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13.35 SECONDARY MARKET PROVISIONS.
(a) General; Borrower Cooperation. Subject to Section 13.37, Lender shall have the right at any time and from time to time (a) to sell or otherwise transfer the Loan or any portion thereof or the Loan Documents or any interest therein to one or more investors, (b) to sell participation interests in the Loan to one or more investors or (c) to securitize the Loan or any portion thereof in a single asset securitization or a pooled loan securitization of rated single or multi-class securities (the “Securities”) secured by or evidencing ownership interests in the Note and the Pledge and Security Agreement (each such sale, assignment, participation and/or securitization is referred to herein as a “Secondary Market Transaction”, and the transactions referred to in clause (c) shall be referred to herein as a “Securitization”). In connection with any Secondary Market Transaction, Borrower shall reasonably cooperate in good faith with Lender and otherwise assist Lender in satisfying the market standards to which Lender customarily adheres or which may be reasonably required in the marketplace or by the Rating Agencies in connection with any such Secondary Market Transactions, including: (i) to (A) provide such financial and other information with respect to the Property, the Collateral, Borrower, Mortgage Borrower, Guarantor, Property Manager (to the extent not privileged or subject to a confidentiality agreement and in Borrower’s possession), (B) provide business plans and budgets relating to the Property and (C) perform or permit or cause to be performed or permitted such site inspection, appraisals, surveys, market studies, environmental reviews and reports, engineering reports and other due diligence investigations of the Property, as may be reasonably requested from time to time by Lender or, if applicable, the Rating Agencies in each case to the extent necessary or appropriate in connection with a Secondary Market Transaction or Exchange Act requirements (the items provided to Lender pursuant to this clause (i) being called the “Provided Information”), together, if customary, with appropriate verification of and/or consents to the Provided Information through letters of auditors or opinions of counsel of independent attorneys acceptable to Lender and, if applicable, the Rating Agencies; (ii) cause counsel to render opinions as to non-consolidation and any other opinion customary in securitization transactions with respect to the Property, Borrower and its affiliates, which counsel and opinions shall be reasonably satisfactory to Lender and, if applicable, the Rating Agencies; (iii) make such representations and warranties as of the date hereof of any Secondary Market Transaction with respect to the Property, the Collateral, Borrower, Mortgage Borrower, and the Loan Documents as are customarily provided in such transactions and as may be reasonably requested by Lender or, if applicable, the Rating Agencies and consistent with the facts covered by such representations and warranties as they exist on the date thereof, including the representations and warranties made in the Loan Documents; (iv) provide current certificates of good standing and qualification with respect to Borrower and members owning a direct or indirect interest in Borrower from appropriate Governmental Authorities; and (v) execute such amendments to the Loan Documents and Borrower’s organizational documents, as may be reasonably requested by Lender or, if applicable, the Rating Agencies or otherwise to effect a Secondary Market Transaction, provided that nothing contained in this clause (v) shall result in an economic change in the transaction, a reduction of Borrower’s rights, or an increase in Borrower’s obligations (except in each instance to a de minimis extent). Borrower’s cooperation obligations set forth herein shall continue until the Loan has been paid in full.
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(b) Use of Information. Borrower understands that all or any portion of the Provided Information and the financial statements and records required to be provide pursuant to the terms of this Agreement (the “Required Records”) may be included in disclosure documents in connection with a Secondary Market Transaction, including a prospectus or private placement memorandum (each, a “Disclosure Document”) and may also be included in filings with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or provided or made available to investors or prospective investors in the Securities, the Rating Agencies, and service providers or other parties relating to the Secondary Market Transaction. If the Disclosure Document is required to be revised, Borrower shall cooperate with Lender in updating the Provided Information or Required Records for inclusion or summary in the Disclosure Document or for other use required in connection with a Secondary Market Transaction by providing all current information pertaining to Borrower, Property Manager and the Property necessary to keep the Disclosure Document accurate and complete in all material respects with respect to such matters.
(c) Confidentiality. Lender hereby agrees that any materials related to the Loan (including any Provided Information) provided to any potential purchaser, transferee, assignee, participant or investor in connection with any Secondary Market Transaction shall contain a legend or notice indicating that such materials are confidential and not to be used for any purpose other than evaluating the merits of an investment in such Secondary Market Transaction.
13.36 SEVERANCE OF LOAN AND REGISTERED NOTE.
(a) Severance of Loan. Subject to Section 13.37, Lender, without in any way limiting Lender’s other rights hereunder, shall have the right, at any time (whether prior to, in connection with, or after any Secondary Market Transaction), with respect to all or any portion of the Loan, to modify, split and/or sever all or any portion of the Loan as hereinafter provided. Without limiting the foregoing, Lender may (a) cause the Note and the Pledge and Security Agreement to be split into a first and second mortgage/deed of trust loan, (b) create one or more senior and subordinate notes (i.e., an A/B or A/B/C structure), or (c) create multiple components of the Note (and allocate or reallocate the principal balance of the Loan among such components), in each such case described in clauses (a) through (c) above, in whatever proportion and whatever priority Lender determines, and (d) modify the Loan Documents with respect to the newly created notes or components of the Note such that the pricing and marketability of the Securities and the size of each class of Securities and the rating assigned to each such class by the Rating Agencies shall provide the most favorable rating levels and achieve the optimum rating levels for the Loan. In connection with any severance of the Loan as detailed in the preceding sentence, (i) Borrower acknowledges and agrees that any unfunded portion of the Loan (“Unfunded Loan Proceeds”) and any funded Loan proceeds may be held by two or more Persons as a result of any such severance of the Loan and Borrower shall make required payments on the funded Loan proceeds regardless of whether or not any Unfunded Loan
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Proceeds are advanced after such severance and/or note division/bifurcation, and (ii) Borrower shall have no right to off-set claims against the holders of one portion of the Note against the holders of another portion of the Note. Notwithstanding the foregoing, no such amendment described above shall (i) modify or amend any economic or any material non-economic term of the Loan, or (ii) increase the obligations, or decrease the rights, of Borrower under the Loan Documents; provided, further, in each such instance the outstanding Principal Balance of all the notes evidencing the Loan (or components of such notes) immediately after the effective date of such modification equals the outstanding Principal Balance of the Loan immediately prior to such modification and the weighted average of the interest rates for all such note(s) (or components thereof) immediately after the effective date of such modification equals the Contract Rate (as applicable) immediately prior to such modification and the scheduled monthly payments for all such note(s) (or components thereof) immediately after the effective date of such modification equals the scheduled monthly payments under the Loan immediately prior to such modification (provided, however, that it is agreed that partial prepayments of principal, including resulting from a prepayment based on a casualty at or condemnation of the Property may cause the weighted average interest rate to change over time due to the non-pro rata allocation of such prepayments between any such separate notes, participations or counterparts). If requested by Lender, Borrower (and Borrower’s constituent members, if applicable) and Guarantor shall execute within ten (10) Business Days after such request, such documentation as Lender may reasonably request to evidence and/or effectuate any such modification or severance. At Lender’s election, each note comprising the Loan may be subject to one or more Securitizations.
(b) Registered Note. Lender, acting solely for this purpose as an agent of Borrower, will maintain at one of its offices in the United States of America, a register for the recordation of the names and addresses of the Lender, and the commitment of, and principal amounts (and stated interest) of the advances owing to the Lender, pursuant to the terms hereof from time to time (the “Register”). The entries in the Register will be conclusive, absent manifest error, and Borrower may treat each Person whose name is recorded in the Register pursuant to the terms hereof as the Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register will be available for inspection by Borrower at any reasonable time and from time to time upon reasonable prior notice. The Note is intended to be in “registered form” within the meaning under Section 1.871-14(c) of the United States Treasury Regulations. Accordingly, the Note will be registered to the Lender in the Register. The Borrower shall treat the Lender (and any other Lender identified in the Register as a Lender) as the absolute owner thereof (unless the Borrower has been given notice of the transfer of the Note as permitted in accordance with the terms of this Agreement and there has been a surrender of the existing instrument and the reissuance by Borrower to the new holder of an instrument or a replacement instrument, in accordance with the provisions of the following sentence) for all purposes, including the right to receive payments of Principal of, and Interest (each as defined in the Note) on, the Note. The right to receive the Principal of, and Interest on, the Note may be transferred only upon the delivery to the Borrower of written notice of such transfer, duly executed by the registered owner of the Note containing information sufficient to enable the Borrower to identify each owner of an interest in the Note and the surrender of the existing instrument and the reissuance by the Borrower to the new holder of such instrument or a replacement instrument. Each permitted transfer of ownership of an interest in the Note shall be reflected by an entry by Lender in the Register. Upon request, the Lender agrees to provide Borrower with current tax documents to certify any Lender’s entitlement to an exemption from, or reduction in, United States withholding tax. Borrower authorizes the Lender to disclose to any participant or purchaser of the Note (each a “Transferee”) and any prospective Transferee any and all information in such Lender’s possession.
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13.37 COSTS AND EXPENSES. Notwithstanding anything to the contrary contained in Section 13.35 and 13.36, Borrower shall not be required to incur any costs or expenses in the performance of its obligations under Sections 13.35 and 13.36, other than expenses of Borrower’s and/or Guarantor’s counsel, accountants and consultants.
13.38 EXCULPATION.
(a) Subject to the qualifications below, Lender shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in the Note, this Agreement, the Pledge and Security Agreement or the other Loan Documents by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Lender to enforce and realize upon its interest under the Note, this Agreement, the Pledge and Security Agreement, the other Loan Documents, or in the Collateral, pursuant to the Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower's interest in the Collateral, and Lender shall not sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Pledge and Security Agreement or the other Loan Documents. The provisions of this Section 13.38 shall not, however: (i) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents (including but not limited to any indemnity or guaranty); (ii) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure and sale under the Pledge and Security Agreement; (iii) affect the validity or enforceability of any of the Loan Documents or any guaranty made in connection with the Loan or any of the rights and remedies of Lender thereunder; (iv) impair the rights of Lender to (A) obtain the appointment of a receiver and/or (B) enforce its rights and remedies provided in Articles 3 and 4 hereof; (v) intentionally omitted; (vi) constitute a prohibition against Lender to seek a deficiency judgment against Borrower in order to fully realize the security granted by the Pledge and Security Agreement or to commence any other appropriate action or proceeding in order for Lender to exercise its remedies against the Collateral; or (vii) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any Losses (as defined in the Limited Guaranty) incurred by Lender (including attorneys’ fees and costs reasonably incurred) arising out of or in connection with any of the Recourse Carve-Out Events (as defined in the Limited Guaranty).
(b) Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan Documents, (i) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt or to require that the Collateral shall continue to secure all of the Debt owing to Lender in accordance with the Loan Documents, and (ii) Lender’s agreement not to pursue personal liability of Borrower as set forth above SHALL BECOME NULL AND VOID and shall be of no further force and effect, and the Debt shall be fully recourse to Borrower in the event that one or more Full Recourse Events (as defined in the Limited Guaranty) shall occur.
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13.39 INTENTIONALLY OMITTED.
13.40 INTERCREDITOR AGREEMENT. Lender and Mortgage Lender will be parties to the Intercreditor Agreement memorializing their relative rights and obligations with respect to the Loan, the Mortgage Loan, Borrower, Mortgage Borrower, the Property and the Collateral. Borrower hereby acknowledges and agrees that (i) such Intercreditor Agreement is intended solely for the benefit of Lender and Mortgage Lender and (ii) neither Borrower nor Mortgage Borrower are intended third-party beneficiaries of any of the provisions therein and shall not be entitled to rely on any of the provisions contained therein. Lender and Mortgage Lender shall have no obligation to disclose to Borrower the contents of the Intercreditor Agreement. Borrower’s obligations hereunder are independent of, and separate and distinct from, such Intercreditor Agreement and remain unmodified by the terms and provisions thereof.
[Signature Page(s) to Follow]
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IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the date first written above.
LENDER
1818 MEZZ LENDER LLC,
a Delaware limited liability company
By: /s/ Neil Hohmann
Name: Neil Hohmann
Its: Authorized Signatory
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BORROWER
BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
By: /s/ Shaun A. Quin
Name: Shaun A. Quin
Its: Authorized Signatory
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EXHIBIT A
LEGAL DESCRIPTION
ALL THAT CERTAIN LOT OR PARCEL OF LAND SITUATE IN THE COUNTY OF BROWARD, STATE OF FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1:
LOTS 1, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
PARCEL 2:
LOTS 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 AND 14, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
LESS AND EXCEPT THEREFROM THAT CERTAIN PROPERTY CONVEYED TO THE CITY OF HOLLYWOOD BY THAT CERTAIN DEED RECORDED IN OFFICIAL RECORDS BOOK 3476, PAGE 399, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF LOT 6, BLOCK 40, OF THE SUBDIVISION OF THE TOWN OF HOLLYWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 1, AT PAGE 21, IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA; RUN EAST ON AND ALONG THE SOUTH LINE OF LOTS 6, 7 AND 8 FOR A DISTANCE OF 65.36 FEET TO THE POINT OF BEGINNING. SAID POINT OF BEGINNING BEING THE POINT OF CURVATURE OF A CURVE CONCAVE TO THE NORTHWEST AND HAVING THE FOLLOWING PROPERTIES: R=30.0 FEET, DELTA=123 DEGREES 06 MINUTES 46 SECONDS, ARC LENGTH=64.46 FEET; THENCE RUN NORTHEASTERLY ON SAID CURVE FOR A DISTANCE OF 64.46 FEET TO THE POINT OF INTERSECTION WITH THE EAST PROPERTY LINE OF LOT 8 OF SAID BLOCK 40. THENCE RUN SOUTHEASTERLY ON THE EAST LINE OF LOT 8, SAID EAST LINE BEING A CURVE HAVING THE FOLLOWING PROPERTIES: R=492.0 FEET, DELTA=9 DEGREES 52 MINUTES 51 SECONDS, ARC LENGTH=84.85 FEET, EXTENDED TO A POINT OF INTERSECTION WITH THE SOUTH LINE OF LOTS 6, 7 AND 8 EXTENDED EASTERLY; THENCE RUN WESTERLY ON AND ALONG THE EXTENSION OF LOTS 6, 7 AND 8 TO THE POINT OF BEGINNING.
PARCEL 3:
THAT CERTAIN 13.00 FOOT ALLEY LYING IN BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS VACATED AND MORE PARTICULARLY DESCRIBED BY THAT CERTAIN ORDINANCE NO. 0-2005-16 RECORDED IN OFFICIAL RECORDS BOOK 47110, PAGE 253, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA
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EXHIBIT B
LOAN DOCUMENTS
1. LOAN DOCUMENTS.
1.1 This Agreement.
1.2 The Note.
1.3 The Pledge and Security Agreement.
1.4 The Guaranty.
1.5 The Hazardous Materials Indemnity.
1.6 The Subordination of Management Agreement.
1.7 The Subordination of Asset Management Agreement.
1.8 Collateral Assignment of Interest Rate Cap Agreement of even date herewith executed by Borrower in favor of Lender.
1.9 Uniform Commercial Code National UCC Financing Statement (Form UCC1) of even date herewith, naming Borrower as Debtor and Lender as Secured Party.
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EXHIBIT C
OPTION TO EXTEND REQUEST LETTER FROM BORROWER
1818 Mezz Lender LLC
c/o CCL Capital
420 Lexington Avenue
Suite 2100
New York, NY 10170
RE: 1818 Park - $10,000,000.00 Loan (“Loan”)
Pursuant to the terms of that certain Loan Agreement dated as of July 24, 2026 (“Loan Agreement”), BLOCK 40 HOLDCO LLC, a Delaware limited liability company (“Borrower”), hereby exercises Borrower’s option to extend the maturity date of the Loan described therein from _______________ to _______________. The Borrower hereby certifies that there is no Event of Default under the Loan Documents. Borrower further certifies that all conditions precedent to such extension as set forth in the Loan Agreement have been satisfied.
BORROWER
BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
By:
Name: ______________________________
Its: _________________________________
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EXHIBIT D
RESERVED
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EXHIBIT E
ORGANIZATIONAL CHART
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SCHEDULE 7.3
LITIGATION
· Fallah Construction LLC v. Block 40 Property LLC, Case Number CACE-26-008543 filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Circuit Civil Division.
· Elias v. Stewards, Inc., Block 40, LLC et al., Case Number CACE-26-008644 filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Circuit Civil Division.
· Mila and Mikhail Williams v. Block 40, LLC, Case Number CACE-25-078892 filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Circuit Civil Division.
· SINO-US INVESTMENT AND MANAGEMENT CONSULTING LIMIT and A&J Capital, INC. v. Block 40, LLC, Case Number CACE-25-078892 filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, Circuit Civil Division.
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MEZZANINE PROMISSORY NOTE
$10,000,000.00
Date: July 24, 2026
1. PROMISE TO PAY. FOR VALUE RECEIVED, the undersigned BLOCK 40 HOLDCO LLC, a Delaware limited liability company (“Borrower”), hereby unconditionally promises to pay to 1818 MEZZ LENDER LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”), by such means or at such places as may be designated in writing by Lender, the principal sum of up to Ten Million and 00/100 Dollars ($10,000,000.00) or so much thereof as may from time to time be owing under this Mezzanine Promissory Note (as the same may be further amended, supplemented, restated, replaced or otherwise modified from time to time, this “Note”) by reason of Advances by Lender to or for the benefit or account of Borrower, with Interest (as defined below) thereon, per annum, at the rate or rates of Interest hereinafter set forth payable in the following manner and on the following terms. All sums owing hereunder are payable in lawful money of the United States of America, in immediately available funds without offset, deduction or counterclaim of any kind.
Definitions. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Loan Agreement. For purposes of this Note the following terms shall have the following meanings:
“Benchmark” shall have the meaning given to such term in the definition of “Term SOFR Rate.”
“Board” shall mean the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Business Day” means any day, except a Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized or required by law to close.
“Contract Rate” shall have the meaning ascribed to it in Section 2.1 below.
“Default Rate” shall have the meaning ascribed to it in Section 2.2 below.
“Effective Date” shall have the meaning ascribed to it in the Loan Agreement.
“Margin Change Date” shall mean the date that Borrower makes the Replenishment Deposit pursuant to Section 3.6 of the Loan Agreement.
“Loan Agreement” shall mean that certain Mezzanine Loan Agreement of even date herewith between Borrower and Lender, as the same may be amended, modified, supplemented or replaced from time to time.
“Loan Documents” shall have the meaning ascribed to it in the Loan Agreement.
“Principal” shall mean the sums of money disbursed by the Lender pursuant to this Note and the terms and conditions of the Loan Agreement and any additional Loan Document from time to time.
“Principal Balance” shall mean the amount of Principal remaining unpaid from time to time.
“Rate Change Date” shall mean the seventh (7th) day of each calendar month.
“SOFR” means the secured overnight financing rate which is published by the Board or any committees convened by the Board.
“Term SOFR” means a forward-looking term rate based on SOFR and recommended by the Board.
“Term SOFR Administrator’s Website” means the website or any successor source for Term SOFR identified by CME Group Benchmark Administration Ltd. (or a successor administrator of Term SOFR).
“Term SOFR Margin” means 1,200 basis points (12.00%)); provided, however, that from and after the Margin Change Date, the Term SOFR Margin shall be reduced to 1,050 basis points (10.50%).
“Term SOFR Rate” means the greater of (a) three and one-half percent (3.50%) and (b) the one-month forward-looking term rate based on SOFR quoted by Lender from the Term SOFR Administrator’s Website (or other commercially available source providing such quotations as may be selected by Lender from time to time), which shall be that one-month Term SOFR rate in effect two (2) Business Days prior to the Rate Change Date; provided that if the Term SOFR rate is not published on such Business Day due to a holiday or other circumstance that Lender deems in its sole discretion to be temporary, the applicable Term SOFR rate shall be the Term SOFR rate last published prior to such Business Day. If the initial advance under this Note occurs other than on the Rate Change Date, the initial one-month Term SOFR rate shall be that one-month Term SOFR rate in effect two (2) Business Days prior to the later of (a) the immediately preceding Rate Change Date and (b) the Effective Date, which rate shall be in effect until the next Rate Change Date. If Lender has determined in its sole but reasonable discretion that (i) the administrator of Term SOFR, or any relevant agency or authority for such administrator of Term SOFR (or any substitute index which replaces Term SOFR (Term SOFR or such replacement, the “Benchmark”)), has announced that such Benchmark will no longer be provided, (ii) any relevant agency or authority has announced that such Benchmark is no longer representative of Lender’s costs to maintain the Loan, or (iii) that any circumstance exists such that such Benchmark has become unavailable, is no longer representative of Lender’s costs to maintain the Loan, or has ceased to exist, in Lender’s sole but reasonable discretion, Lender will replace such Benchmark with a replacement rate in a manner consistent with Lender’s treatment of other similarly situated loans. In the case of a replacement rate other than Term SOFR, Lender may add a spread adjustment and/or adjust the Term SOFR Margin, as selected by the Lender, taking into consideration any selection or recommendation of a replacement rate by any other relevant agency or authority, and evolving or prevailing market practice. The replacement benchmark shall be deemed to be “Term SOFR Rate” for purposes of determining the Contract Rate and Default Rate pursuant to Section 2 herein from and after the immediately succeeding Rate Change Date following the date on which Lender gives written notice to Borrower thereof. In connection with the selection and implementation of any such replacement rate, Lender may make any technical, administrative or operational changes that Lender decides in good faith may be appropriate to reflect the adoption and implementation of such replacement rate and consistent with evolving or prevailing market practices. Lender does not warrant or accept any responsibility for the administration or submission of, or any other matter related to, Term SOFR or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation whether any such alternative, successor or replacement rate will have the same value as, or be economically equivalent to, Term SOFR. Lender’s internal records of applicable interest rates shall be determinative in the absence of manifest error.
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2. INTEREST RATE. The Principal Balance of this Note outstanding at the close of each day shall bear interest (“Interest”) at the following per annum rate of interest based on a 360-day year and charged on the basis of actual days elapsed:
2.1 Contract Rate. Subject to Section 2.2 below, the Loan will bear interest at a per annum rate equal to the sum of (i) the Term SOFR Rate, which interest rate shall change on each Rate Change Date and shall apply to all interest accrued on and after such Rate Change Date until changed at the next successive Rate Change Date, plus (ii) the Term SOFR Margin (“Contract Rate”); provided however that prior to the Margin Change Date, the Contract Rate shall never be less than fourteen and one-half percent (14.50%), and from and after the Margin Change Date, the Contract Rate shall never be less than fourteen percent (14.00%) which will apply regardless of fluctuations in Term SOFR Rate that would otherwise cause the Contract Rate to be less than such floor rates..
2.2 Default Rate. From and after the Maturity Date (as may be extended pursuant to the terms of the Loan Agreement), and/or upon the occurrence and during the continuance of an Event of Default (as defined in the Loan Agreement) under the Loan Agreement or under any of the other Loan Documents, then at the option of Lender, all sums owing on this Note shall bear interest at a rate per annum equal to the lesser of (i) the maximum lawful rate of interest permitted to be paid on the Loan or (ii) ten percent (10.00%) plus the applicable Contract Rate (“Default Rate”) whether or not the Lender has exercised its option to accelerate the maturity of the Loan and declare the entire Principal Balance due and payable. To the extent permitted by law, the Default Rate shall apply both before and after any judgment on the Indebtedness (hereinafter defined).
3. TERMS OF PAYMENT. This Note shall be payable as follows:
3.1 Interest-Only Payments. Borrower shall make a payment to Lender of Interest only on the Effective Date for the period from (and including) the Effective Date through (and including) the sixth (6th) day of the calendar month immediately following the Effective Date; provided, however, if the Effective Date is the seventh (7th) day of a calendar month, no such separate payment of Interest shall be due. Commencing on September 7, 2026, and continuing on the seventh (7th) day of each month thereafter (or the first Business Day thereafter if the seventh (7th) calendar day of such month is not a Business Day) through and including the Maturity Date (as may be extended pursuant to the terms of the Loan Agreement) (each a “Monthly Payment Date”), Borrower shall pay an amount equal to the Interest then accrued and unpaid on the Principal Balance computed at the interest rate described in Section 2 above.
3.2 Maturity Date. On the Maturity Date, as may be extended pursuant to the terms of the Loan Agreement, the entire Principal Balance plus accrued Interest and all other charges and sums due under this Note shall be due and payable in full.
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4. EXIT FEE. In addition to all required Principal and Interest payments on this Note, Borrower shall also pay to Lender the Exit Fee in accordance with the terms of the Loan Agreement.
5. SECURED NOTE. This Note is secured by, among other things, that certain Pledge and Security Agreement (as defined in the Loan Agreement), and the other Loan Documents.
6. LATE CHARGE. If any interest or principal payment required hereunder (other than the payment of the Principal Balance on the Maturity Date or upon acceleration) is not received by Lender (whether by direct debit or otherwise) on or before the fifth (5th) Business Day following each Monthly Payment Date, Borrower shall pay, at Lender’s option, a late or collection charge equal to four and five-tenths percent (4.50%) of the amount of such unpaid payment (“Late Charge”); provided, however, no such Late Charge shall be due as a result of Lender's failure to attempt to auto-debit from an applicable Reserve Account despite sufficient funds being available or during the continuance of a Cash Sweep Period in such applicable Reserve Account.
7. PREPAYMENT. The Principal Balance of the Note may be prepaid, in whole, subject to the terms of the Loan Agreement.
8. ACCELERATION. Upon the occurrence and during the continuance of an Event of Default, Lender may, at its sole option, declare all sums owing under this Note immediately due and payable; provided, however, that if any Loan Document provides for automatic acceleration of payment of sums owing hereunder, all sums owing hereunder shall be automatically due and payable in accordance with the terms of that Loan Document.
9. MISCELLANEOUS.
9.1 Notices. All notices or other communications required or permitted to be given pursuant to this Note shall be given to the parties at the address and in the manner provided for in the Loan Agreement.
9.2 Waiver of Right to Trial By Jury. TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, EACH PARTY TO THIS NOTE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS NOTE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
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9.3 Waivers.
(i) Borrower hereby waives presentment for payment, protest, notice of non-payment and notice of dishonor.
(ii) Borrower hereby consents, without affecting its liability, to the Lender granting, with written notice, any extension of time for payment of any sum or sums due hereunder or under the Loan Documents or for the performance of any covenant, condition or agreement contained herein or therein, or to the Lender taking or releasing or subordinating any security for the Loan evidenced hereby, or to Lender’s acceptance of additional security of any kind, or to Lender’s release of, or resort to, any party liable for payment hereof, and agrees that such action will in no way release or discharge the liability of Borrower, whether or not granted or done with the consent of Borrower.
(iii) Borrower hereby waives and renounces, to the extent permitted by applicable law, all rights to the benefits of any statute of limitations and any moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead now provided, or which may hereafter be provided, by the Constitution or laws of the United States of America or the State of Florida, both as to itself and in and to all of its property, real and personal, against the enforcement and collection of the obligations evidenced by this Note and the Loan Documents.
9.4 Time. Time is of the essence of each and every term herein.
9.5 Governing Law and Consent to Jurisdiction. This Note shall be governed in accordance with the terms and provisions of Section 13.14 of the Loan Agreement.
9.6 Commercial Use; Maximum Rate Permitted By Law. Borrower hereby represents that the Loan is for commercial use and not for personal, family or household purposes. Borrower agrees to an effective rate of Interest that is the rate stated in this Note plus any additional rate of Interest resulting from any other charges in the nature of Interest within the meaning of applicable state statutes paid or to be paid by or on behalf of Borrower, or any benefit received or to be received by Lender, in connection with this Note. It is the specific intent of Borrower and Lender that this Note bear a lawful rate of interest, and if any court of competent jurisdiction should determine that the rate herein provided for exceeds that which is statutorily permitted for the type of transaction evidenced hereby, the interest rate shall be reduced to the highest rate permitted by applicable law, with any excess interest heretofore collected being applied against Principal or, if such Principal has been fully repaid, returned to Borrower on demand.
9.7 Lender’s Damages. Borrower recognizes that the occurrence and continuance of any Event of Default hereunder or under any other Loan Document, will require Lender to incur additional expense in servicing and administering the Loan, in loss to Lender of the use of the money due and in frustration to Lender in meeting its other financial and loan commitments and that the damages caused thereby would be extremely difficult and impractical to ascertain. Borrower agrees (a) that an amount equal to the Late Charge (if applicable) plus the accrual of Interest at the Default Rate is a reasonable estimate of the damage to Lender in the event of a late payment, and (b) that the accrual of Interest at the Default Rate following the occurrence and during the continuance of any Event of Default is a reasonable estimate of the damage to Lender in the event of such other Event of Default, regardless of whether there has been an acceleration of the Loan. Nothing in this Note shall be construed as an obligation on the part of Lender to accept, at any time, less than the full amount then due hereunder, or as a waiver or limitation of Lender’s right to compel prompt performance.
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9.8 Intentionally Omitted.
9.9 Costs of Collection. Borrower agrees to pay to Lender, upon written notice from Lender, all actual, out-of-pocket costs, expenses, disbursements, escrow fees, title charges, appraisal fees, and reasonable, out of pocket legal fees and expenses incurred by Lender and its counsel in connection with: (a) the collection, attempted collection, or negotiation and documentation of any settlement or workout of any payment due hereunder, and (b) any suit or proceeding whatsoever in regard to this Note or the protection or enforcement of the lien of any instrument securing this Note, including, without limitation, in connection with any litigation, mediation, arbitration, bankruptcy or administrative proceeding, and including any appellate proceeding or judicial or non-judicial foreclosure proceeding in connection therewith. This provision is separate and several and shall survive merger into judgment.
9.10 Successors and Assigns. The provisions of this Note shall be binding upon Borrower and its successors and assigns and shall inure to the benefit of any Lender and its successors and assigns.
9.11 Use of Singular and Plural; Gender. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
9.12 Exhibits, Schedules and Riders. All exhibits, schedules, riders and other items attached hereto (if any) are incorporated into this Note by such attachment for all purposes.
9.13 Inconsistencies. In the event of any inconsistencies between the terms of this Note and the terms of any of the other Loan Documents related to the Loan, the terms of the Loan Agreement shall prevail.
9.14 Borrower Not Released. No delay or omission of Lender to exercise any of its rights and remedies under this Note or any other Loan Document at any time following the occurrence and during the continuance of an Event of Default shall constitute a waiver of the right of Lender to exercise such rights and remedies at a later time by reason of such Event of Default or by reason of any subsequently occurring and continuing Event of Default. The acceptance by Lender of payment of any sum payable hereunder after the due date of such payment shall not be a waiver of Lender’s right to either require prompt payment when due of all other sums payable hereunder or to declare an Event of Default for failure to make prompt payment.
9.15 Intentionally Omitted.
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9.16 Savings Clause. It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Lender to contract for, charge, take, reserve, or receive a greater amount of Interest than permitted under state law) and that this Section 9.16 shall control every other covenant and agreement in this Note and any other Loan Documents delivered in connection herewith. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or under any other Loan Documents, or contracted for, charged, taken, reserved, or received with respect to the indebtedness evidenced by this Note (“Indebtedness”), or if Lender’s exercise of the option to accelerate the maturity of this Note, or if any prepayment by Borrower results in Borrower having paid any Interest in excess of that permitted by applicable law, then it is Borrower’s and Lender’s express intent that all excess amounts theretofore collected by Lender shall be credited on the Principal Balance of this Note and all other Indebtedness (or, if this Note and all other Indebtedness have been or would thereby be paid in full, refunded to Borrower), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Indebtedness shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Indebtedness until payment in full so that the rate or amount of Interest on account of the Indebtedness does not exceed the maximum lawful rate from time to time in effect and applicable to the Indebtedness for so long as the Indebtedness is outstanding.
9.17 Severability. The parties hereto intend and believe that each provision of this Note comports with all applicable local, state and federal laws and judicial decisions. However, if any provision or any portion of any provision contained in this Note is held by a court of law to be invalid, illegal, unlawful, void or unenforceable as written in any respect, then it is the intent of all parties hereto that such portion or provision shall be given force to the fullest possible extent that it is legal, valid and enforceable, that the remainder of this Note shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion or provision was not contained therein, and the rights, obligations and interests of Borrower and Lender under the remainder of this Note shall continue in full force and effect.
9.18 Intentionally Omitted.
10. EXCULPATION. Any provision of this Note to the contrary notwithstanding, the limitations on liability set forth in Section 13.38 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.
[Signature Page(s) to follow]
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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first written above.
BORROWER:
BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
By: /s/ Shaun A. Quin
Name: Shaun A. Quin
Title: Authorized Signatory
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PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this “Agreement”), dated as of July 24, 2026 is made by BLOCK 40 HOLDCO LLC, a Delaware limited liability company, having an address at c/o Stewards, Inc., 4300 N. University Drive, Suite D105, Lauderhill, FL 33351 (“Borrower”), to 1818 MEZZ LENDER LLC, a Delaware limited liability company, having an address at c/o CCL Capital, 420 Lexington Avenue, Suite 2100, New York, NY 10170 (together with its successors and assigns, “Lender”).
Recitals:
1. Pursuant to that certain Mezzanine Loan Agreement of even date herewith between Lender and Borrower (the “Loan Agreement”), Lender agreed to make a Loan to Borrower in the amount of $10,000,000.00 (the “Loan”). The Loan is evidenced by a Mezzanine Promissory Note (the “Note”) of even date herewith in the principal amount of the Loan from Borrower to Lender. The Loan Agreement, Note, this Agreement and all other documents and instruments existing now or after the date hereof that evidence, secure or otherwise relate to the Loan, any security agreements, financing statements, other guaranties, indemnity agreements (including environmental indemnity agreements), letters of credit, or escrow/holdback or similar agreements or arrangements, together with all amendments, modifications, substitutions or replacements thereof, are sometimes herein collectively referred to as the “Loan Documents” or each individually as a “Loan Document.”
2. Block 40 Property, LLC, a Delaware limited liability company (the “Mortgage Borrower”), owns the Property, and is the borrower under that certain Loan Agreement, dated as of the date hereof, by and between VMC CRE Master Lending Upper REIT LLC, a Delaware limited liability company (“Mortgage Lender”) and Mortgage Borrower (the “Mortgage Loan Agreement”), the loan made pursuant to which is secured by, among other things, that certain Amended and Restated Mortgage, Security Agreement, Assignment of Leases and Rents, Fixture Financing Statement and Notice of Future Advance, dated as of the date hereof, made by Mortgage Borrower in favor of Mortgage Lender (the “Security Instrument”), encumbering the Property.
3. Mortgage Borrower is referred to herein as the “Pledged Entity”.
4. To secure Borrower’s obligations under the Loan Documents and to ensure the timely payment of the Loan and the performance of Borrower’s other obligations under and in accordance with the Loan Documents, Borrower is required, among other things, to pledge, and by this Agreement does pledge, among other things, all of its right, title and interest in, to and under the Pledged Company Interests (as defined below).
NOW, THEREFORE, in consideration of the foregoing and in order to induce Lender to make the Loan, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE
1
Defined Terms
Section 1.1 Defined Terms. Unless otherwise provided herein, all capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed thereto in the Loan Agreement and, for the purposes of this Agreement, in addition to the terms defined above, the following terms shall have the following meanings:
(a) “Article 8 Matter” means any action, decision, determination or election by the Pledged Entity or its equity holders that its Equity Interests be, or cease to be, a “security” as defined in and governed by Article 8 of the Uniform Commercial Code, and all other matters related to any such action, decision, determination or election.
(b) “Article 8 Interests” has the meaning set forth in Article 9.
(c) “Cash Distributions” has the meaning set forth in Section 5.3.
(d) “Certificated Securities” has the meaning set forth in Section 2.2.
(e) “Collateral” has the meaning set forth in Section 2.1.
(f) “Distributions” has the meaning set forth in Section 5.3.
(g) “Equity Interests” means, as applicable, (i) partnership interests (whether general or limited) in an entity that is a partnership; (ii) limited liability company interests in an entity that is a limited liability company; (iii) the shares or stock interests in an entity that is a corporation; or (iv) the beneficial ownership interests in any entity that is a trust.
(h) “Event of Default” has the meaning set forth in Article 6.
(i) “Governing Documents” means for an entity, the organizational documents of such entity, including: (i) the operating agreement and articles of organization for a limited liability company; (ii) the partnership agreement and articles of limited partnership for a limited partnership; (iii) the bylaws and articles of incorporation for a corporation; and (iv) the trust agreement for a trust.
(j) “Mortgage Loan” shall have the meaning set forth in the Loan Agreement.
(k) “Mortgage Loan Documents” shall have the meaning set forth in the Loan Agreement.
(l) “Non-Cash Distributions” has the meaning set forth in Section 5.1.
(m) “Obligations” has the meaning set forth in Section 2.1.
(n) “Pledged Company Interests” means one hundred percent (100%) of the limited liability company interests in Mortgage Borrower.
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(o) “Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Company Interests, collections thereon or distributions with respect thereto.
(p) “Securities Act” means the Securities Act of 1933, as amended.
(q) “Strict Foreclosure Agreement” has the meaning set forth in Section 7.11.
(r) “Strict Foreclosure Proposal” has the meaning set forth in Section 7.11.
(s) “UCC” means the Uniform Commercial Code as in effect in the State of New York, as amended, modified, revised or restated from time to time; provided, that, if, by reason of mandatory provisions of law, the validity or perfection of Lender’s security interest in the Collateral or any part thereof is governed by the Uniform Commercial Code or other similar law as in effect in a jurisdiction other than New York, the “UCC” means the Uniform Commercial Code or such similar law as in effect in such other jurisdiction for purposes of the provisions hereof relating to such validity or perfection.
Section 1.2 Principles of Construction. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise. All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. 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.
Section 1.3 Definition Conflicts. Unless otherwise defined herein or the context otherwise requires, each term defined in the UCC is used in this Agreement with the same meaning; provided that, if the definition given to such term in the Loan Agreement conflicts with the definition given to such term in the UCC, the Loan Agreement definition shall control to the extent legally allowable; and if any definition given to such term in Article 9 of the UCC conflicts with the definition given to such term in any other chapter of the UCC, the Article 9 definition shall prevail.
ARTICLE
2
Grant of Security Interest
Section 2.1 Collateral. As security for the full and punctual payment and performance of the Debt (whether at the stated maturity, by acceleration, or otherwise), each obligation of Borrower contained herein, each obligation of Borrower contained in the Loan Agreement and any other Loan Document, and each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement or any other Loan Document (collectively, the “Obligations”), Borrower hereby grants, pledges, hypothecates, transfers and assigns to Lender a first priority and continuing lien on, and first priority security interest in, all of Borrower’s right, title, ownership, equity or other interests in and to the following, whether now owned or hereafter acquired, now existing or hereafter arising, and wherever located (collectively, the “Collateral”):
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(a) all Pledged Company Interests and all other ownership interests of Borrower in Pledged Entity;
(b) all securities, moneys or property representing dividends or interest on any of the Pledged Company Interests, or representing a distribution in respect of the Pledged Company Interests, or resulting from a split-up, revision, reclassification or other like change of the Pledged Company Interests or otherwise received in exchange therefor, and any subscription warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged Company Interests;
(c) any policy of insurance payable by reason of loss or damage to the Pledged Company Interests and any other Collateral;
(d) all “securities,” “accounts,” “general intangibles,” “instruments” and “investment property” (in each case as defined in the UCC) constituting or relating to the foregoing;
(e) the Governing Documents of Pledged Entity and any other agreement or instrument relating to the Pledged Company Interests, including, without limitation, (i) all rights of Borrower to receive moneys or distributions with respect to the Pledged Company Interests due and to become due under or pursuant to such Governing Documents, (ii) all rights of Borrower to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Pledged Company Interests, (iii) all claims of Borrower for damages arising out of or for breach of or default under such Governing Documents, (iv) any right of Borrower to perform under such Governing Documents and to compel performance and otherwise exercise all rights and remedies thereunder, and (v) all of the right, title and interest of Borrower as an equity holder to participate in the operation or management of Pledged Entity and all of Borrower’s ownership interests under the Governing Documents of Pledged Entity; and
(f) all Proceeds of any of the foregoing property of Borrower, including, without limitation, any proceeds of insurance thereon.
Section 2.2 Perfection of Security Interest. On or before the Closing Date, Borrower shall (a) deliver to Lender for filing one or more financing statements in connection with the Collateral in the form required to properly perfect Lender’s security interest in the Collateral in all jurisdictions deemed appropriate by Lender, to the full extent that such security interest in the Collateral may be perfected by such a filing, (b) with respect to any Equity Interest in a Pledged Entity that is represented by a partnership certificate, member certificate or stock certificate, or any other instrument, note, chattel paper or certificate qualifying as investment property (“Certificated Securities”), deliver to Lender such Certificated Securities in the Pledged Entity in the form of Exhibit D attached hereto, duly endorsed or subscribed in blank, or accompanied by appropriate stock powers or other instruments of transfer, pledge or assignment, or enter into such other arrangement, as necessary to give control of any such investment property to Lender within the meaning of Section 8-106 of the UCC (in each case, if Lender so requests, with signature guaranteed), and (c) promptly take all other actions reasonably required to perfect the security interest of Lender in the Collateral under applicable law.
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Section 2.3 Retention of Rights. So long as no Event of Default shall have occurred and be continuing beyond the expiration of any applicable cure and/or grace period set forth under the Loan Documents and subject to the terms and provisions of the Loan Agreement, Borrower shall have the right to collect and retain any and all moneys, payment intangibles or property due and to become due to Borrower now or in the future in respect of the Pledged Company Interests, or to which Borrower may now or in the future be entitled to in its capacity as a member of Borrower(s), whether by way of a dividend, distribution, return of capital, or otherwise.
Section 2.4 Post-Closing Collateral. After the Closing Date, Borrower shall concurrently take the actions contemplated by clauses (a) through (c) of Section 2.2 above with respect to any and all additional collateral acquired by Borrower (including, without limitation, any newly issued Equity Interests of a Pledged Entity, any conversion of a pre-existing Equity Interest, and any Non-Cash Distributions, as applicable).
Section 2.5 Borrower Remains Liable. Anything herein to the contrary notwithstanding: (a) Borrower shall remain liable under the Governing Documents of Pledged Entity to the extent set forth therein and shall perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by Lender of any of the rights hereunder shall not release Borrower from any of its duties or obligations under any of such Governing Documents; and (c) Lender shall not have any obligation or liability under any of such Governing Documents by reason of this Agreement, nor shall Lender be obligated to perform any of the obligations or duties of Borrower thereunder or to take any action to collect or enforce any claim for payment assigned hereunder; provided that, upon foreclosure thereof, Lender and any other transferee of the Collateral shall take the same subject to such Governing Documents.
ARTICLE
3
Powers of Borrower Prior to an Event of Default
Section 3.1 Pre-Default Powers. Unless an Event of Default has occurred, and subject to the terms of the Loan Documents, Borrower shall be entitled to (a) receive the profits, losses, income, surplus, return on capital and any other Distributions allocable to the Collateral, and (b) exercise (but only in a manner that will not (i) violate or be inconsistent with the terms hereof or of any other Loan Document, or (ii) have the effect of impairing the position or interests of Lender) the voting, consent, administration, management and all other powers, rights and remedies of Borrower with respect to the Collateral under the Governing Documents of the Pledged Entity (including all other rights and powers thereunder which are pledged hereunder).
Section 3.2 Termination of Powers.
(a) Upon the occurrence and during the continuance of an Event of Default, Lender shall have all powers, rights and remedies of Borrower which are conditionally permitted pursuant to Section 3.1, and Borrower shall cease to have all such powers, rights and remedies and the provisions of Section 5.3 and Article 7 shall apply, and without limiting the generality of the foregoing:
(i) all rights of Borrower to receive the Distributions, Proceeds and other payments which it would otherwise be authorized to receive and retain shall cease, and Lender shall thereupon have the sole right to receive and hold as Collateral such Distributions and other payments;
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(ii) all Distributions, Proceeds and other payments which are received by Borrower contrary to the provisions of this Section 3.2 shall be received in trust for the benefit of the Lender, shall be segregated from other funds of the Borrower and shall be forthwith paid over to the Lender as Collateral in the same form as so received (with any necessary endorsement);
(iii) Lender shall, after providing written notice to Borrower and Pledged Entity, (A) have the exclusive right to vote or give consents with respect to the Pledged Company Interests, and (B) have all rights that Borrower had under the Governing Documents of Pledged Entity to operate and manage Pledged Entity, including all rights relating to voting, consent, administration, management and all other powers, rights and remedies of Borrower under such Governing Documents, whether in Borrower’s name or otherwise, including the right to appoint officers, directors, managers and other similar positions and the right to exercise Borrower’s rights, if any, of conversion, exchange, or subscription, or any other rights, privileges or options pertaining to any of the Pledged Company Interests, including the right to exchange, at Lender’s discretion, any and all of the Pledged Company Interests upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Pledged Entity, all without liability, except to account for property actually received by Lender.
(b) All amounts advanced by, or on behalf of, Lender in exercising its rights under this Section 3.2 (including, but not limited to, reasonable legal expenses and actual out-of-pocket disbursements incurred in connection therewith), together with interest thereon from the date of each such advance at the Default Rate as set forth in the Note, shall be deemed made pursuant to contract, shall be payable by Borrower to Lender on demand and shall be deemed part of the Debt and secured by the Collateral.
ARTICLE
4
Representations, Warranties
and Covenants of Borrower
Borrower hereby covenants with Lender, and represents and warrants to Lender, as of the Closing Date as follows:
Section 4.1 No Conflict. The exercise by Lender of its rights and remedies hereunder does not violate any provision of the organizational documents of Borrower or the Governing Documents of Pledged Entity, or any agreement or instrument to which Borrower or Pledged Entity is a party or by which Borrower or Pledged Entity or any of their respective property is bound, and upon Lender’s exercise of its remedies, under such documents, Lender is entitled to (a) automatically become a member, partner, stockholder or other owner, as applicable, of the Pledged Entity and exercise all rights and powers of a member, partner, stockholder or other owner, as applicable, under the Governing Documents of Pledged Entity, to the same effect as Borrower was entitled prior to Lender’s exercise of its remedies, (b) receive all Distributions to the same effect as Borrower was entitled prior to Lender’s exercise of its remedies, and (c) control and manage the Pledged Entity, to the same effect as Borrower was entitled prior to Lender’s exercise of its remedies.
Section 4.2 Percentage Ownership. Borrower owns the Pledged Company Interests, which consists of one hundred percent (100%) of the limited liability company interests in the Mortgage Borrower.
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Section 4.3 Defense of Title. Borrower shall defend Lender’s right, title and interest in and to the Collateral against the claims and demands of all other Persons.
Section 4.4 Perfected Security Interest. Giving effect to this Agreement and upon the proper filing of a financing statement relating to the Collateral, Lender has, with respect to all Collateral owned by Borrower on the Closing Date, and will have with respect to any other property at any time hereafter acquired by Borrower and pledged to Lender as Collateral hereunder, a valid, perfected and continuing first lien upon and security interest in the Collateral. All instruments of transfer are duly executed and provide the Lender the authority they purport to confer. The grant and perfection of the security interests in the Pledged Company Interests and other Collateral for the benefit of Lender, in accordance with the terms hereof, are not made in violation of the registration requirements of the Securities Act, any applicable provisions of other federal securities laws, state securities or “blue sky” laws, foreign securities law, or applicable general corporation law or any other applicable law.
Section 4.5 No Financing Statements. Except for financing statements filed or to be filed in favor of Lender as secured party, or such other financing statements expressly permitted with Lender’s prior written consent, which may be withheld in Lender’s sole discretion, there are not now, and will not in the future be, any financing statements under the UCC covering any or all of the Collateral, and no such financing statements are, or will be, filed in any public office.
Section 4.6 Certificated Securities.
(a) Borrower represents and warrants that all of the Equity Interests in Pledged Entity are issued in the form of Certificated Securities that constitute “security certificates” as defined in the UCC. Borrower further covenants and agrees that it shall not permit the Pledged Entity to convert existing Equity Interests, or issue new Equity Interests, other than as Certificated Securities satisfying the foregoing requirements. Notwithstanding the foregoing, Borrower shall promptly notify Lender if any Equity Interest with respect to a Pledged Entity (whether now owned or hereafter acquired by Borrower) is not evidenced by a Certificated Security, and shall promptly thereafter take all actions required to perfect the security interest of Lender in such Equity Interest under applicable law as required herein. Borrower further agrees to take such additional actions as Lender deems necessary or desirable to effect the foregoing and to permit Lender to exercise any of its rights and remedies hereunder, and agrees to provide an opinion of counsel satisfactory to Lender with respect to any such pledge of Equity Interests which are not Certificated Securities promptly upon the written request of Lender.
(b) The parties acknowledge and agree that the Pledged Company Interests constitute “securities” (as defined in Section 8-102(a)(15) of the UCC), and Borrower covenants and agrees that (i) the Pledged Company Interests are not and will not be dealt in or traded on securities exchanges or securities markets; (ii) the terms of the Pledged Company Interests are not and will not be “investment company securities” within the meaning of Section 8-103 of the UCC; (iii) the Pledged Company Interests constitute “certificated securities” within the meaning of Section 8-102(a)(4) of the UCC; (iv) the Pledged Company Interests shall at all times be certificated and evidenced by certificates in a form reasonably acceptable to Lender (including, without limitation, that such certificates state that the Pledged Company Interests are “securities”, as defined in Section 8-102(a)(15) of the UCC); (v) Lender may perfect its security interest in the Pledged Company Interests by taking delivery thereof under Section 8-301 of the UCC, as applicable; and (vi) the Governing Documents of the Pledged Entity shall at all times state that the Pledged Company Interests are “securities” (as defined in Section 8-102(a)(15) of the UCC). For the avoidance of doubt, the public trading of stock in Guarantor shall not be considered a breach of the representation and covenant contained in subclause (b)(i) above.
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(c) By executing and delivering this Agreement, the parties hereto intend to establish Lender’s control over the Collateral for purposes of Article 8 of the UCC.
Section 4.7 Fully Paid and Non-Assessable. All of the Pledged Company Interests have been duly authorized and validly issued and are fully paid and non-assessable. Borrower is not, and shall not become, a party to or otherwise be or become bound by any agreement, other than this Agreement other than the Mortgage Loan Agreement and any other Mortgage Loan Documents, which restricts in any manner the rights of any present or future holder of any of the Pledged Company Interests with respect thereto.
Section 4.8 Change in Location of Principal Place of Business. Borrower shall not relocate its chief executive office and/or principal place of business to a new location without first notifying Lender by giving at least ten (10) days’ prior written notice.
Section 4.9 Preservation of Related Collateral. Borrower shall not allow any default for which it is responsible to occur under and in respect of the Collateral, and shall fully perform or cause to be performed when due all of its obligations under and in respect of the Collateral in all material respects.
Section 4.10 Papers; Records and Files.
(a) Borrower shall acquire and shall assemble, maintain and have available a complete file relating to the Equity Interests, including all statements and other information delivered to Borrower pursuant to the Governing Documents of Pledged Entity or otherwise. Borrower shall maintain all such papers, records and files not in the possession of Lender in good and complete condition and shall preserve them against loss.
(b) Subject to the terms and conditions of the Loan Agreement and upon reasonable advance notice from Lender and during regular business hours, Borrower shall make any or all such papers, records or files available to Lender in order that Lender may examine any such papers, records and files, either by its employees or by its agents or contractors, or both, and make copies of all or any portion thereof.
Section 4.11 Prohibition on Transfers, Additional Liens and Amendments to Governing Documents. Borrower shall not:
(a) except for the lien effected by this Agreement, cause, permit or suffer to exist, and shall defend the Collateral against and take such other action as is reasonably necessary to remove or unwind, any Sale or Pledge (as hereinafter defined) of the Collateral or any part thereof, including entering into any lock-up or any other arrangement with respect to the Collateral, in all cases other than in accordance with the terms and conditions of the Loan Agreement or any other Loan Document, and (i) any Sale or Pledge made in violation of the foregoing (A) shall be an immediate Event of Default without hereunder without notice or opportunity to cure, (B) shall be void and of no force or effect, and (C) upon demand of Lender, shall forthwith be cancelled or satisfied by an appropriate instrument in writing, and (ii) if Borrower fails to do so, Lender may, but shall be under no obligation to, without waiving or releasing any obligation or liability of Borrower hereunder or any Event of Default, at any time thereafter make any necessary payment or any part thereof, obtain any necessary discharge, or otherwise defend Borrower’s title to the Collateral. As used herein, “Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options with respect to, or any other transfer or disposition (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) of a legal or beneficial interest, which is in violation of the Loan Agreement or any of the Loan Documents;
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(b) permit Pledged Entity to issue any replacement Equity Interest certificate without the prior written consent of Lender;
(c) vote to enable, or take any other action to permit, Pledged Entity to issue, or fail to take any available action to prevent Pledged Entity from issuing, any Equity Interests in Pledged Entity or issuing any other securities convertible into or granting the right to purchase or exchange for any Equity Interests in Pledged Entity;
(d) cause or permit Pledged Entity to terminate Pledged Entity’s “opt in” election under Article 8 of the UCC; or
(e) cause or permit an amendment, modification or other change to the Governing Documents of Pledged Entity, without the prior written consent of Lender.
Section 4.12 Notices. Borrower shall, and insofar as it is able, cause Pledged Entity to, as appropriate, promptly give Lender:
(a) written notice of any default or event of default under any contractual obligation of Pledged Entity that could be reasonably expected to have a material adverse effect upon the Pledged Company Interest, the Collateral, Borrower, or the Loan, or any litigation, investigation or proceeding which may exist at any time between Pledged Entity and any Governmental Authority or any other Person, which, if not cured or if adversely determined, as the case may be, could reasonably be expected to result in a material adverse effect;
(b) written notice of a change in the business, operations, property or financial or other condition or prospects of Borrower or Pledged Entity which could result in a material adverse effect; and
(c) a copy of any notice or other communication sent by Pledged Entity to Borrower or to any other members of Pledged Entity related to any Article 8 Matter.
Section 4.13 Additional Consents. Borrower shall, and insofar as it is able, cause Pledged Entity to, (a) consent to (i) the pledge by Borrower to Lender of the Equity Interests pursuant to the terms and conditions hereof, (ii) the transfer of the Equity Interests and the right of Lender to exercise all voting and management rights appurtenant or relating to that Equity Interest in each case, by or in lieu of, foreclosure of the pledge (it being agreed that Lender may, in its discretion, foreclose solely on the voting or management rights) in any event in accordance with the terms and conditions of this Agreement and any of the other Loan Documents, and (iii) upon the aforesaid transfer of the Equity Interests, the change in control of Pledged Entity, (b) acknowledge and agree that the foreclosure of the Equity Interests by Lender or other transfer of the Equity Interests in lieu of foreclosure, shall not constitute a prohibited transfer under any of the Governing Documents of Pledged Entity and (c) execute and deliver, contemporaneously with Borrower’s execution and delivery of this Agreement, an Acknowledgement and Consent substantially in the form of Exhibit A attached hereto. Further, to better assure the perfection of the security interest of Lender in the Pledged Company Interests, concurrently with the execution and delivery of this Agreement, Borrower shall send written instructions in the form of Exhibit B hereto to the Pledged Entity, and shall cause the Pledged Entity to, and the Pledged Entity shall, deliver to Lender the Confirmation Statement and Instruction Agreement in the form of Exhibit C hereto pursuant to which the Pledged Entity will confirm that it has registered the pledge effected by this Agreement on its books and agrees to comply with the instructions of Lender in respect of the Pledged Company Interests without further consent of Borrower or any other Person. Notwithstanding anything in this paragraph, neither the written instructions provided for on Exhibit B nor the Confirmation Statement and Instruction Agreement provided for on Exhibit C shall be construed as expanding the rights of Lender to give instructions with respect to the Collateral beyond such rights set forth in this Agreement.
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ARTICLE
5
Distributions
Section 5.1 Non-Cash Distributions. Lender shall be entitled to receive directly, and to retain as further Collateral, the following non-cash distributions with respect to the Equity Interests of the Pledged Entity (“Non-Cash Distributions”):
(a) all Equity Interests, or other securities or property (other than cash) paid or distributed by way of dividend or distribution in respect of the Collateral;
(b) all other or additional Equity Interests or other securities or property (other than cash) paid or distributed in respect of the Collateral by way of split, spin-off, split-up, recapitalization, reclassification, combination of Equity Interests, or similar rearrangement; and
(c) all other or additional Equity Interests or other securities or property which may be paid in respect of the Collateral by reason of any consolidation, merger, exchange, exchange offers, conveyance of assets, exercise of options, contribution of capital, liquidation or similar reorganization.
Section 5.2 Non-Cash Distribution Held in Trust. If Borrower shall receive from the Pledged Entity any Non-Cash Distribution as an addition to, on account of, in substitution of, or in exchange for the Collateral or any part thereof, Borrower shall hold the same as the agent and in trust for Lender, and shall immediately deliver it to Lender in the exact form received, with Borrower’s endorsement or assignment or other instrument as Lender may deem appropriate, to be held by Lender, subject to the terms hereof, as further Collateral.
Section 5.3 Cash Distributions Held in Trust. Upon the occurrence of any Event of Default, any cash distributions, dividends, interests and other cash payments payable to Borrower with respect to the Collateral then held or thereafter received by Borrower (“Cash Distributions”, and collectively with Non-Cash Distributions “Distributions”), shall immediately be remitted to Lender for application to the Debt, and until so remitted shall be received and held by Borrower in trust for Lender.
ARTICLE
6
Events of Default
An event of default (“Event of Default”) shall occur under this Agreement if: (a) Borrower fails to fully and timely perform any obligation under this Agreement when due (and without reference to any notice or cure permitted under the Loan Agreement or any other Loan Document), or (b) an “Event of Default” as that term is defined under the Loan Agreement has occurred and remains uncured.
ARTICLE
7
Remedies; Sales of Collateral
Section 7.1 Remedies. If an Event of Default shall occur and be continuing, in addition to the remedies contained in the Loan Agreement and other Loan Documents and subject to the terms and conditions of this Agreement the other Loan Documents:
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(a) Lender shall have the right, at any time and from time to time during the continuance of an Event of Default, to effect the transfer of any or all of the Collateral, subject only to the provisions of the UCC and any other applicable statute which, in accordance with such statute, cannot be waived, in any one or more of the following ways:
(i) Register the Collateral in the name of, or transfer to, Lender, a nominee or nominees, or designee or designees, of Lender;
(ii) Sell, resell, assign and deliver, in Lender’s discretion, any or all of the Collateral or any other security for Borrower’s obligations under the Loan Documents (whether in whole or in part and at the same or different times) and all right, title and interest, claim and demand therein and right of redemption thereof, at public or private sale, for cash or upon credit bid (by Lender only); and
(iii) Proceed by a suit or suits at law or in equity to foreclose all or any part of the security interests in the Collateral and sell the Collateral, or any portion thereof, under a judgment or decree of a court of competent jurisdiction, retaining during the duration of such judicial enforcement all other rights, including all rights under applicable law and all rights made under this Agreement, with respect to the Collateral.
(b) Lender may exercise, either by itself or by its nominee or designee, including in the name of Borrower, at Lender’s discretion, the rights, powers and remedies granted to Lender hereunder and under the other Loan Documents in respect of the Collateral at any time prior to effecting the transfer of such Collateral to Lender or its nominee or designee, or any third party purchasers, as contemplated in Subsections 7.1(a)(i) and (ii) above, and whether or not any judicial action as contemplated in Subsection 7.1(a)(iii) above has been commenced or is continuing prior to a final non-appealable judgment. Such rights and remedies shall include, without limitation, and Borrower hereby grants to Lender, the right to exercise, by delivering notice to Borrower and the Pledged Entity, (i) all voting, consent, managerial and other rights relating to the Pledged Company Interests, whether in Borrower’s name or otherwise, and (ii) the right to exercise Borrower’s rights, if any, of conversion, exchange, or subscription, or any other rights, privileges or options pertaining to any of the Pledged Company Interests, including, without limitation, the right to exchange, at Lender’s discretion, any or all of the Pledged Company Interests upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Pledged Entity, all without liability, except to account for property actually received by Lender. Borrower irrevocably authorizes and directs the Pledged Entity, on receipt of any such notice (A) to deem and treat Lender or its nominee in all respects as a member, partner or shareholder, as applicable (and not merely an assignee of a member, partner or shareholder) of the Pledged Entity, entitled to exercise all the rights, powers and privileges (including, without limitation, the right to vote on or take any action with respect to the Pledged Entity matters pursuant to the Governing Documents thereof) to receive all distributions, to be credited with the capital account and to have all other rights, powers and privileges pertaining to such member, partner or shareholder interest, as applicable, to which Borrower would have been entitled had Borrower not executed this Agreement, and (B) to file an amendment to the Governing Documents of the Pledged Entity admitting Lender or such nominee(s) as a member, partner or shareholder in place of Borrower.
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(c) Lender may (but shall not be obligated or required to):
(i) ask for, demand, collect, sue for, recover, compromise, receive and give acquittances and receipts for monies due or to become due under or in respect of any of the Collateral and hold the same as part of the Collateral, or apply the same to any of the Debt in such manner as the Lender may determine in its discretion;
(ii) receive, endorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (i) above (including, without limitation, all instruments representing dividends, interest payments or other Distributions or any part thereof and give full discharge for the same);
(iii) file any claims or take any actions or institute any proceedings that Lender may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce compliance with the rights of the Lender with respect to any of the Collateral;
(iv) enter into any extension, subordination, reorganization, deposit, merger, or consolidation agreement, or any other agreement relating to or affecting the Collateral, and in connection therewith deposit or surrender control of such Collateral thereunder, and accept other property in exchange therefor and hold and apply such property or money so received in accordance with the provisions hereof; and
(v) discharge any taxes or liens levied on the Collateral or otherwise pay for the maintenance and preservation of the Collateral.
(d) Lender may at such time and from time to time thereafter, without notice to, or consent of, Borrower or any other Person, but without affecting any of Borrower’s obligations under the Loan Documents, in the name of Borrower or in the name of Lender: (i) notify any other party to make payment and performance directly to Lender; (ii) extend the time of payment and performance of, compromise or settle for cash, credit or otherwise, and upon any terms and conditions, any obligations owing to Borrower, or claims of Borrower under any Governing Documents of the Pledged Entity, as applicable; (iii) file any claims, commence, maintain or discontinue any actions, suits or other proceedings deemed by Lender reasonably necessary or advisable for the purpose of collecting upon or enforcing any Governing Documents of the Pledged Entity; and (iv) execute any instrument and do all other things deemed reasonably necessary and proper by Lender to protect, preserve, or realize upon the Collateral or any portion thereof and to protect and preserve the other rights contemplated hereby.
(e) Lender shall have the right, without notice to or consent of Borrower, to become, or to designate its nominee, designee, agent or assignee to become, a partner, member, officer or director, as applicable, of the Pledged Entity, in substitution of any existing Person serving in such capacity.
(f) Lender may exercise all of the rights and remedies of a secured party under the UCC. Except as otherwise expressly provided in the Loan Documents or the UCC, Lender may enforce its rights hereunder without any other notice and without compliance with any other condition precedent now or hereunder imposed by statute, rule of law or otherwise (all of which are hereby expressly waived by Borrower, to the fullest extent permitted by law). Lender may buy any part or all of the Collateral at any public sale conducted in accordance with the UCC and as set forth herein.
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(g) Lender shall have the right, but not the obligation, to take any appropriate action as it may deem necessary to (i) cure any Event of Default, (ii) cause any term, covenant, condition or obligation required under this Agreement or other Loan Document to be promptly performed or observed on behalf of Borrower, or (iii) protect the Collateral and any other security obtained pursuant to the other Loan Documents. All amounts advanced by, or on behalf of, Lender in exercising its rights under this Article 7 (including, without limitation, reasonable legal expenses and out-of-pocket disbursements incurred in connection therewith), together with interest thereon at the Default Rate from the date of any such advance, shall be payable by Borrower to Lender within five (5) days of written demand therefor and shall be secured by the Collateral.
Section 7.2 Power of Attorney.
(a) Upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably authorizes and empowers Lender, and assigns and transfers to Lender, and constitutes and appoints Lender and any of its assigns, as its true and lawful attorney-in-fact and as its agent with full power of substitution for Borrower to proceed from time to time in Borrower’s name, in order to more fully vest in Lender the rights and remedies provided for herein, in any statutory or non-statutory legal or other proceeding, including any bankruptcy proceeding affecting Borrower, the Pledged Entity, or the Collateral.
(b) Lender and any of its assigns, or their respective nominees, may either pursuant to such power-of-attorney or otherwise, take any action and execute any instrument which Lender determines necessary or advisable to accomplish the purposes of this Agreement, including without limitation: (i) execute and file proof of claim with respect to any or all of the Collateral against the Pledged Entity and vote such claims with respect to all or any portion of such Collateral (A) for or against any proposal or resolution, (B) for a trustee or trustees or for a receiver or receivers or for a committee of creditors, and/or (C) for the acceptance or rejection of any proposed arrangement, plan of reorganization, composition or extension; (ii) receive, endorse and collect all drafts, checks and other instruments for the payment of money made payable to Borrower representing any interest, payment of principal or other distribution payable in respect of the Collateral; (iii) execute endorsements, assignments or other instruments of conveyance or transfer in respect of any other property which is or may become a part of the Collateral hereunder; and (iv) execute releases and negotiate settlements as appropriate, including on account of, or in exchange for, any or all of the Collateral or any payment or distribution received by Borrower, or by Lender on Borrower’s behalf.
(c) The foregoing power-of-attorney is irrevocable and coupled with an interest, and any similar or dissimilar powers previously given by Borrower in respect of the Collateral or the Pledged Entity to any Person other than Lender are hereby revoked. The power-of-attorney granted herein shall terminate automatically upon the payment in full of the Debt.
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Section 7.3 Lender Rights. The obligations of Borrower under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstances or occurrence except as specifically provided in this Agreement. The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower or any other Person pledging collateral pursuant to the other Loan Documents or existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s discretion. Lender shall have no duty to exercise any of the aforesaid rights, powers and remedies and shall not be responsible for any failure to do so or delay in so doing. Notwithstanding anything to the contrary contained in this Agreement, (a) Lender shall not be obligated to perform or discharge any obligation of Borrower or the Pledged Entity, either as a result of this Agreement or otherwise, and (b) the acceptance by Lender of this Agreement shall not at any time or in any event obligate Lender to (i) appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or (ii) take any action, expend any money, incur any expenses, or perform or discharge any obligation, duty or liability with respect to the Collateral.
Section 7.4 No Release, Etc. No delay or omission to exercise any remedy, right or power accruing upon a default or an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of any default or Event of Default shall not be construed to be a waiver of any subsequent default or Event of Default or to impair any remedy, right or power of Lender. Any and all of Lender’s rights with respect to any Collateral shall continue unimpaired, and Borrower shall be and remain obligated in accordance with the terms hereof, notwithstanding, among other things: (a) any renewal, extension, amendment or modification of, or addition or supplement to, or deletion from, this Agreement or any other Loan Document or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof; (b) any waiver, consent, delay, extension of time, indulgence or other action or inaction under or in respect of this Agreement or any other Loan Document; (c) any exercise or non-exercise of any right, remedy, power or privilege under or in respect of this Agreement or any other Loan Document; (d) any sale, exchange, release, surrender, or substitution of, or realization upon, any Collateral (except to the extent otherwise specifically agreed to by Lender) or any other security held by Lender to secure the Debt; (e) the furnishing to or acceptance by Lender of any additional security to secure the Debt; or (f) any invalidity, irregularity or unenforceability of all or any part of Borrower’s obligations under the Loan Documents or of any security therefor.
Section 7.5 Preferences. Lender shall have no obligation to marshal any assets in favor of Borrower or any other party or against, or in payment of, any or all of the obligations of Borrower pursuant to this Agreement, the Loan Agreement, the Note or any other Loan Document. To the extent Borrower makes a payment or payments to Lender for Borrower’s benefit, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations (or part thereof) of Borrower intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.
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Section 7.6 Right to Conduct Partial Sale of Collateral. In connection with any sale of the Collateral during the continuance of an Event of Default, Lender may grant options and may impose conditions such as requiring any purchaser to represent that any “securities” constituting any part of the Collateral are being purchased for investment only. If all or any of the Collateral is sold at any such sale by Lender to a third party upon credit, Lender shall not be liable for the failure of the purchaser to purchase or pay for the same and, in the event of any such failure, Lender may accept the next greatest bid placed at the sale or may resell such Collateral. Lender may exercise its rights with respect to less than all of the Collateral, leaving unexercised its rights with respect to the remainder of the Collateral, provided, however, that such partial exercise shall in no way restrict Lender’s right to exercise its rights with respect to the remaining Collateral at a later time or times. Borrower hereby waives and releases any and all rights of redemption with respect to the sale of any Collateral.
Section 7.7 Sale Procedures.
(a) No demand, advertisement or notice, all of which are hereby expressly waived by Borrower, shall be required in connection with any sale or other disposition of all or any part of the Collateral, except that Lender shall give Borrower at least fifteen (15) days’ prior written notice of the time and place of any public sale or of the time after which any private sale or other disposition is to be made, which notice Borrower hereby agrees is reasonable. The notice of such sale shall (a) in case of a public sale, state the time and place fixed for such sale, (b) in case of a sale at a broker’s board or on a securities exchange, state the board or exchange at which such sale is to be made and the day on which the Collateral, or the portion thereof so being sold, first will be offered for sale, and (c) in the case of a private sale, state the date after which such sale may be consummated.
(b) Borrower agrees that Lender shall not have any general duty or obligation to make any effort to obtain or pay any particular price for any Pledged Company Interests sold by Lender pursuant to this Agreement. Lender, may, in its sole discretion, among other things, accept the first offer received, or decide to approach or not to approach any potential purchasers. Without in any way limiting Lender’s right to conduct a foreclosure sale in any manner which is considered commercially reasonable, Borrower hereby agrees that any foreclosure sale conducted in accordance with the following provisions shall be considered a commercially reasonable sale and hereby irrevocably waives any right to contest any such sale:
(i) Lender conducts the foreclosure sale in the State of New York;
(ii) The foreclosure sale is conducted in accordance with the laws of the State of New York;
(iii) Lender notifies Borrower, in accordance with the requirements of this Agreement for the giving of notice, of the time and place of such foreclosure sale;
(iv) The foreclosure sale is conducted by an auctioneer licensed in the State of New York and is (i) conducted in front of the New York Supreme Court located in New York City or such other New York State Court having jurisdiction over the Collateral on any Business Day between the hours of 9 a.m. and 5 p.m. or (ii) conducted virtually;
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(v) The notice of the date, time and location of the foreclosure sale is published in the New York Times or Wall Street Journal (or such other newspaper widely circulated in New York, New York) for seven (7) consecutive days prior to the date of the foreclosure sale; and
(vi) Lender sends notification of the foreclosure sale to all secured parties identified as a result of a search of the UCC financings statements in the filing offices located in the State in which Pledged Entity is formed, conducted not later than twenty (20) days and not earlier than thirty (30) days before such notification date.
(c) Lender shall not incur any liability as a result of the sale of any Collateral, or any part thereof, at any private sale conducted in a commercially reasonable manner, it being agreed that some or all of the Collateral is or may be of one or more types that threaten to decline speedily in value and that are not customarily sold in a recognized market. Borrower hereby waives any claims against Lender arising by reason of the fact that the price at which any of the Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Debt, even if Lender accepts the first offer received and does not offer any Collateral to more than one offeree, provided that Lender has acted in a commercially reasonable manner in conducting such private sale.
Section 7.8 Adjournment; Credit Sale. Lender shall not be obligated to make any sale of the Collateral if it shall determine, in its discretion, not to do so, regardless of the fact that notice of sale may have been given, and Lender may without notice or publication adjourn any public or private sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. Upon each public or private sale of all or any portion of the Collateral, unless prohibited by any applicable statute which cannot be waived, Lender (or its nominee or designee) may purchase all or any portion of the Collateral being sold, free and clear of, and discharged from, any trusts, claims, equity or right of redemption of Borrower, all of which are hereby waived and released to the extent permitted by law, and may make payment therefor by credit against any of Borrower’s obligations under the Loan Documents in lieu of cash or any other obligations.
Section 7.9 Expenses of Sale; Application of Collateral and Distributions. In the case of any sale, public or private, of all or any portion of the Collateral, Borrower shall be responsible for the payment of all costs and expenses of every kind incurred in connection with the sale or the delivery of the Collateral, including brokers’ and reasonable attorneys’ fees and any taxes imposed in connection with the sale. All proceeds of the sale of all or any portion of the Collateral, and all Distributions now or at any time hereafter received or retained by Lender pursuant to the provisions of this Agreement (including, without limitation, the provisions of this Article 7), shall be applied by Lender to the satisfaction of the Debt (including, without limitation, any of the aforementioned costs and expenses) in such order and priority as determined by Lender in its sole discretion.
Section 7.10 No Public Registration of Sale. Pursuant to Section 9-603 of the UCC, Borrower specifically agrees that a foreclosure sale conducted in conformity with the principles set forth in the applicable No-Action Letters issued by the SEC describing procedures which permit a foreclosure sale of securities to occur in a manner that is public for purposes of Part 6 of Article 9 of the UCC, yet not public for purposes of Section 4(2) of the Securities Act, (a) shall be considered to be a “public disposition” for purposes of Section 9-610(c) of the UCC, (b) will be considered commercially reasonable notwithstanding that Lender has not registered or sought to register the interests under the Securities Act, even if Borrower, or the Pledged Entity agree to pay all costs of the registration process, and (c) shall be considered to be commercially reasonable, notwithstanding that Lender purchases such interests at such a sale.
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Section 7.11 Strict Foreclosure. Lender may, in its discretion, either negotiate an agreement (“Strict Foreclosure Agreement”) with Borrower, or make a written proposal (“Strict Foreclosure Proposal”) to Borrower, to retain the Collateral in full or partial satisfaction of the obligations in accordance with the procedures specified in Section 9-620 of the UCC. Borrower and each Pledged Entity shall fully cooperate, at their sole expense, in all matters deemed reasonably necessary by Lender to effect the transfer of ownership on the records of the applicable Pledged Entity in accordance with any applicable requirements of the Governing Documents of the Pledged Entity or the Loan Documents (as defined in the Mortgage Loan Agreement) in connection with any Strict Foreclosure Agreement or Strict Foreclosure Proposal. Such cooperation shall include using Borrower’s commercially reasonable efforts to assist Lender in obtaining any necessary review, approvals and other administrative action from the Pledged Entity or Mortgage Lender. Such assistance shall include at Lender’s request (i) attending all meetings with, and providing all related financial and operational documents and materials to such third parties, and (ii) providing such assurances and executing such documentation as is required by such third parties or Lender to effect such transfer.
Section 7.12 Receipt of Sales Proceeds. Upon any sale of the Collateral, or any portion thereof, by Lender hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the proceeds by Lender or the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any of the purchase money paid over to Lender or such officer or be answerable in any way for the misapplication or non-application thereo
Section 7.13 Standstill Period.
(a) Notwithstanding anything to the contrary contained in this Agreement, the Loan Agreement or any other Loan Document, Lender agrees that, for a period of forty-five (45) consecutive days following the day on which Lender shall have served notice upon Borrower that an Event of Default has occurred with respect to the Maturity Date (the “Standstill Period”), Lender shall not exercise, and shall refrain from exercising, any rights or remedies with respect to the Collateral in the Pledged Entity, provided, however, Lender may take actions reasonably necessary to preserve, protect or maintain the validity, perfection, priority or enforceability of its security interest in the Collateral (it being agreed by Borrower that it is reasonably necessary for Lender to (i) diligently prosecute the enforcement of its rights and (ii) pursue any and all remedies at its disposal, in each case, up to but excluding the conducting of a foreclosure sale in the State of New York).
(b) Following the expiration of the Standstill Period, Lender may exercise any and all of its rights and remedies granted hereunder or under the Loan Documents after the occurrence of an Event of Default.
Section 7.14
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ARTICLE
8
Securities Act
Section 8.1 Securities Registration. If an Event of Default shall have occurred and be continuing and Borrower shall have received from Lender a written request that Borrower effect any registration, qualification or compliance under any federal or state securities law or laws with respect to all or any part of the Collateral, and such registration, qualification and/or compliance is required under applicable federal or state securities law or laws, Borrower agrees, at its sole expense, to use commercially reasonable efforts to effect, as soon as practicable (and thereafter keep effective), such registration, qualification and compliance as required under: (a) applicable federal or state securities law or laws and as would permit or facilitate the sale and distribution of such Collateral, including, without limitation, registration under the Securities Act, as then in effect (or any similar statute then in effect), (b) applicable blue sky or other state securities laws, and (c) other government requirements. Lender shall furnish to Borrower such information regarding Lender as Borrower may request in writing and as shall reasonably be required in connection with any such registration, qualification or compliance. Borrower shall cause Lender to be kept reasonably advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, shall furnish to Lender such number of prospectuses, offering circulars or other documents incident thereto as Lender from time to time may reasonably request, and shall indemnify Lender and all others participating in the distribution of such Collateral against all losses, liabilities, claims or damages caused by any untrue statement (or alleged untrue statement) of a material fact contained therein (or in any related registration statement, notification or the like) or by any omission (or alleged omission) to state therein (or in any related registration statement, notification or the like) a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to Borrower by Lender expressly for use therein.
Section 8.2 Private Securities Sale. Lender may, in its discretion, sell the Collateral or any part thereof by private sale (for securities law purposes) in such manner and under such circumstances as Lender may deem necessary or advisable in order that such sale may legally be effected without such registration, provided that notice is given to Borrower in accordance with the private sale notice provisions of Article 7. Without limiting the generality of the foregoing, in any such event Lender, in its discretion (a) may proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Collateral or part thereof shall have been filed under such Securities Act, (b) may approach and negotiate with a single potential purchaser to effect such sale and (c) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of such Collateral or part thereof. In the event of any such sale, Lender shall incur no responsibility or liability for selling all or any part of the Collateral at a price which Lender may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration under the Securities Act.
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ARTICLE
9
Irrevocable Proxy
With respect to any Article 8 Matter, Borrower hereby irrevocably constitutes and appoints Lender, from the date of this Agreement until the Debt is indefeasibly paid in full, as Borrower’s true and lawful proxy, for and in each Borrower’s name, place and stead to vote the Pledged Company Interests and any and all other equity interests in Pledged Entity owned by Borrower whether directly or indirectly, beneficially or of record, now owned or hereafter acquired (the Pledged Company Interests together with all such other equity interests, the “Article 8 Interests”); provided, however, so long as no Event of Default has occurred and is continuing, Lender agrees not to exercise such proxy power. The foregoing proxy shall include the right to sign Borrower’s name (as an owner of the Pledged Entity) to any consent, certificate or other document relating to Pledged Entity that applicable law may permit or require, to cause the Article 8 Interests to be voted in accordance with the preceding sentence. Borrower hereby revokes all other proxies and powers of attorney with respect to the Article 8 Interests that Borrower may have previously appointed or granted, to the extent such proxies or powers extend to any Article 8 Matter. Borrower shall not give a subsequent proxy or power of attorney (and if given, it will not be effective) or enter into any other voting agreement with respect to the Article 8 Interests with respect to any Article 8 Matter. So long as no Event of Default has occurred and is continuing, Lender agrees to forebear from exercising any and all voting and other consensual rights pertaining to the Article 8 Interests or any part thereof in accordance with the terms and conditions of Section 3.1 hereof
THE PROXIES AND POWERS GRANTED BY BORROWER PURSUANT TO THIS AGREEMENT ARE COUPLED WITH AN INTEREST AND ARE GIVEN TO SECURE THE PERFORMANCE OF THE BORROWER’S OBLIGATIONS UNDER THIS AGREEMENT.
ARTICLE
10
Miscellaneous Provisions
Section 10.1 Further Assurances; Preservation and Perfection of Security Interest. At its own expense, Borrower agrees to do, and cause Pledged Entity to do, all such further acts and things and to execute and deliver to Lender with respect to the Collateral such additional conveyances, assignments, agreements, certificates, documents and instruments as Lender from time to time may reasonably require, or may deem reasonably advisable, necessary or expedient, to give full effect to this Agreement, and to further assure and confirm to Lender the rights, powers and remedies intended to be granted hereunder or under any other Loan Document, and for the purpose of effectively perfecting, maintaining and preserving Lender’s security interest and the benefits intended to be granted to Lender hereunder. Borrower hereby agrees to, and to cause Pledged Entity to, sign (as applicable) and deliver to Lender financing statements, continuation statements and other documents, in form reasonably acceptable to Lender, as Lender may from time to time reasonably request in writing or which are reasonably necessary or desirable in the opinion of Lender to establish and maintain a valid and perfected security interest in the Collateral, and to pay any filing fees relative thereto. Borrower also authorizes Lender, to the extent permitted by law, to file such financing statements and amendments thereto relating to all or any part of the Collateral without the consent of Borrower, and further authorizes Lender, to the extent permitted by law, to file a photographic or other reproduction of this Agreement or of a financing statement in lieu of a financing statement. In addition, Borrower agrees at any time and from time to time upon not less than ten (10) days’ prior notice by Lender to Borrower, to execute, acknowledge and deliver to Lender or any other party specified in such notice, a statement, in writing, certifying that this Agreement is unmodified and in full force and effect (or if there have been modifications, that the same, as modified, is in full force and effect and stating the modifications hereto) and stating whether or not any default or Event of Default has occurred, and, if so, specifying each such default or Event of Default.
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Section 10.2 Headings; Exhibits. The Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. All exhibits are incorporated herein by reference. Any reference to the “Collateral” shall be deemed to refer to all or a portion of the Collateral, as applicable, now held, or hereafter received, by Lender.
Section 10.3 Governing Law. The governing law and related provisions set forth in Section 13.14 of the Loan Agreement are hereby incorporated by reference as if fully set forth herein and shall be deemed fully applicable to Borrower and each additional pledgor hereunder, if any. Borrower and each additional pledgor hereunder, if any, hereby certify that they have received and reviewed the Loan Agreement (including, without limitation, Section 13.14 thereof). In the event of any conflict or inconsistency between any of the other terms and conditions of this Assignment and this Section 10.3, this Section 10.3 shall control.
Section 10.4 Notices. Notices by Lender to Borrower or Pledged Entity to be effective shall be in writing, addressed or transmitted to Borrower or Pledged Entity at the address of Borrower set forth in the introductory paragraph hereto, and shall be deemed to have been duly given if made in accordance with the terms and provisions of Section 13.2 of the Loan Agreement.
Section 10.5 Termination. Upon the indefeasible payment in full of the Debt and all other amounts due in connection therewith, if any, this Agreement shall terminate. Upon such payment, Lender shall promptly execute and deliver to Borrower any termination documents prepared by Borrower in order to, upon such execution and delivery, terminate Lender’s lien on the Collateral, which documents shall be in form and substance reasonably acceptable to Lender. This Section 10.5 and any termination effected hereunder shall be subject to the provisions of Sections 7.5 and 10.6(f) hereof.
Section 10.6 Waivers.
(a) In the event of any legal action between Borrower and Lender hereunder, Borrower expressly waives, to the extent permitted by law, any and all rights Borrower may have under the law as now constituted or hereafter amended that may constitute a limitation on prejudgment remedies, and Lender may invoke any prejudgment remedy available to it, including garnishment, attachment, foreign attachments and request, with respect to the Collateral, to enforce the provisions of this Agreement.
(b) The powers conferred on Lender hereunder are solely for Lender’s benefit and do not impose any duty on Lender to exercise any such powers. Borrower waives, to the fullest extent permitted by law, all rights whatsoever against Lender for any loss, expense, liability or damage suffered by Borrower as a result of actions taken pursuant to this Agreement, including those arising under any “mortgagee in possession” doctrine or the like, except to the extent such losses, expenses, liabilities or damages result from the fraud, gross negligence or willful misconduct of Lender, or to the extent otherwise expressly provided herein.
(c) Borrower hereby waives, to the fullest extent permitted by law, every statute of limitation, any right of redemption, any moratorium or redemption period, and any right which Borrower may have to direct the order in which any of the Collateral shall be disposed of in the event of any disposition thereof pursuant hereto, except as otherwise expressly provided herein or in the other Loan Documents.
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(d) Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Agreement does not specifically and expressly provide for the giving of notice by Lender to Borrower. No release of any security for the Loan or one or more extensions of time for payment of the Note or any installment thereof, and no alteration, amendment or waiver of any provision of this Agreement, the Note or the other Loan Documents made by agreement between Lender or any other person, shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower or any other person who may become liable for the payment of all or any part of the Loan under the Note, this Agreement or the other Loan Documents.
(e) Borrower hereby waives and releases all errors, defects and imperfections in any proceedings instituted by Lender under the Loan Documents, as well as any and all benefit that might accrue to Borrower by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of such property, from attachment, levy, or sale under execution, or providing for any stay of execution, exemption from civil process, or extensions of time for payment.
(f) Borrower hereby waives notice of acceptance hereof, and except as otherwise specifically provided herein or required by provision of law which may not be waived, hereby waives any and all notices or demands with respect to any exercise by Lender of any rights or powers which it may have or to which it may be entitled with respect to the Collateral.
Section 10.7 WAIVER OF JURY TRIAL. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
Section 10.8 Offsets, Counterclaims and Defenses. Borrower hereby knowingly waives the right to assert any counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against Borrower by Lender. Any assignee of the Loan Documents or any successor of Lender shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to the Loan Documents which Borrower may otherwise have against any assignor of the Loan Documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee under such Loan Document. Any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.
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Section 10.9 Security Agreement. This Agreement is intended to be a security agreement pursuant to the UCC for any and all of the Collateral purported to be covered by this Agreement, and, prior to the occurrence of and continuation of an Event of Default hereunder, any assignment of the Collateral by the Borrower pursuant to this Agreement is an assignment for security purposes only. All rights of Lender hereunder, the grant of a security interest in the Collateral and all obligations of Borrower hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Governing Documents; (b) any change in time, manner or place of payment of, or in any other term of, all or any of the Debt, or any release, amendment or waiver of or any consent to any departure from the Loan Agreement or any other of the Loan Documents; (c) any exchange, release or non-perfection of any other collateral, or any release, amendment or waiver of or consent to or departure from any guarantee, for all or any of the Debt; or (d) any other similar circumstance which might otherwise constitute a defense available to, or a discharge of, Pledged Entity or Borrower in respect of the Debt or in respect of this Agreement.
Section 10.10 Sole Discretion of Lender. Wherever pursuant to this Agreement Lender takes any of the following actions, each action shall be taken or decision made in Lender’s sole but reasonable discretion, unless expressly provided otherwise: (a) Lender exercises any right to approve or disapprove or to grant or withhold consent or (b) Lender exercises any right to determine whether an arrangement or term is satisfactory to Lender; provided, however, that actions and decisions regarding enforcement method and/or timing, releases of Collateral, Article 8 Matters or approval of Transfers shall be excluded from any requirement of reasonableness. Notwithstanding any provision hereunder which provides Lender the opportunity to approve or disapprove any action or decision by Borrower, Lender is not undertaking the performance of any obligation of Borrower.
Section 10.11 Remedies of Borrower. If a claim or adjudication is made that Lender or its agents or nominees, has acted unreasonably, or has unreasonably delayed acting, in any case where by law or under this Agreement or the other Loan Documents, Lender or such agent or nominee, as the case may be, has an obligation to act reasonably or promptly, Borrower agrees that neither Lender nor its agents or nominees, shall be liable for any monetary damages, and Borrower’s sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment. The parties hereto agree that any action or proceeding to determine whether Lender, its agents or nominees has acted reasonably shall be determined by an action seeking declaratory judgment.
Section 10.12 Limitation on Duties Regarding Collateral. All of the Collateral at any time delivered to Lender pursuant to this Agreement shall be held by Lender subject to the terms, covenants and conditions set forth in the Loan Documents. Lender’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, if any, under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as Lender deals with similar Equity Interests and other similar property for its own account. Lender shall not have any other duty concerning the collection or protection of the Collateral or any income thereon or payments with respect thereto, or concerning the preservation of any rights pertaining thereto. Neither Lender nor any of its directors, officers, partners, members, employees, agents or counsel shall be (a) liable for (i) failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or (ii) any action taken or omitted to be taken by such party or parties relative to any of the Collateral, except for such party’s or parties’ own gross negligence or willful misconduct or (b) under any obligation to sell or otherwise dispose of any Collateral upon the request of Borrower or otherwise. Lender shall be entitled to rely in good faith upon any writing or other document (including, without limitation, any telegram or e-mail) or any telephone conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person (but Lender shall be entitled to such additional evidence of authority or validity as it may in its discretion request in writing, but it shall have no obligation to make any such written request), and with respect to any legal matter, Lender may rely in acting or in refraining from acting upon the advice of counsel selected by it concerning all matters hereunder.
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Section 10.13 Right to Release Information. Following the occurrence and during the continuance of any Event of Default, Lender may forward to any broker, prospective purchaser of the Collateral, the Property or the Loan, or other Person or entity all documents and information which Lender now has or may hereafter acquire relating to the Debt, Borrower, any pledgor hereunder, Mortgage Borrower, any Guarantor, any indemnitor, the Collateral, the Property and any other matter in connection with the Loan, whether furnished by such parties or otherwise, as Lender determines necessary or desirable. The undersigned irrevocably waives any and all rights it may have to limit or prevent such disclosure, including any right of privacy or any claims arising therefrom.
Section 10.14 Secondary Market Cooperation. Lender shall have the right, but not the obligation, to effectuate one or more Secondary Market Transactions (and, at Lender’s election, each note and/or component comprising the Loan may be subject to one or more Secondary Market Transactions). The provisions contained in Section 13.35 of the Loan Agreement are hereby incorporated herein by reference, as if the same had been fully set forth herein, with each pledgor under this Agreement equally bound by the obligations of Borrower thereunder.
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IN WITNESS WHEREOF, the undersigned has caused this Pledge and Security Agreement to be executed and delivered by its duly authorized officer on the date first set forth above.
| BORROWER: |
|
BLOCK 40 HOLDCO LLC, a Delaware limited liability company
By:______________________ Name: Title: |
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EXHIBIT A
ACKNOWLEDGEMENT AND CONSENT
Block 40 Property, LLC, a Delaware limited liability company (individually and/or collectively, as the context may suggest or require, the “Mortgage Borrower”), hereby acknowledges receipt of a copy of that certain Pledge and Security Agreement, dated as of the date hereof, by Borrower in favor of Lender (the “Pledge Agreement”) and acknowledges that Borrower is bound thereby. Terms used herein but not otherwise defined herein shall have the respective meanings ascribed to them in the Pledge Agreement.
Mortgage Borrower shall give copies of any notices or other communications that it sends to Borrower or to any other owners of Mortgage Borrower related to any Article 8 Matter to Lender at the same time as such notices or other communications are sent to Borrower or any such other owners of Mortgage Borrower. Mortgage Borrower acknowledges the powers and proxies granted in the Pledge Agreement and agree that Lender shall have the sole right during the term of the Pledge Agreement to vote the Pledged Company Interests with respect to any Article 8 Matter.
Dated: _____________, 2026
BLOCK 40 PROPERTY, LLC,
a Delaware limited liability company
By:____________________________
Name:
Title:
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EXHIBIT B
INSTRUCTION TO REGISTER PLEDGE
[_], 2026
To: BLOCK 40 PROPERTY, LLC,
a Delaware limited liability company
In accordance with the requirements of that certain Pledge and Security Agreement, dated as of the date hereof (as amended, supplemented, replaced, amended and restated or otherwise modified from time to time, the “Pledge Agreement”), by Block 40 Holdco LLC, a Delaware limited liability company (“Borrower”), in favor of 1818 Mezz Lender LLC, a Delaware limited liability company (terms used but not defined herein are as defined in the Pledge Agreement), you are instructed, notwithstanding your and our understanding that your limited liability company interests are securities under Article 8 of the Uniform Commercial Code, to register the pledge of the following interests in the name of Lender as follows:
The 100% limited liability interest of Block 40 Property, LLC, a Delaware limited liability company (“Issuer”), including all of the related Collateral now owned or at any time hereafter arising or acquired by Borrower or in which Borrower now has or at any time in the future may acquire any right, title or interest or is deemed by law to have rights in or the power to convey rights in, wherever located.
You are further authorized and instructed to execute and deliver to Lender a Confirmation Statement and Control Agreement, substantially in the form of Exhibit C to the Pledge Agreement, and, to the extent provided more fully therein, to comply with the instructions of Lender in respect of the Collateral without further consent of, or notice to, the undersigned Borrower.
[Remainder of Page Intentionally Left Blank]
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Very truly yours,
1818 MEZZ LENDER LLC,
a Delaware limited liability company
By:
Name:
Title:
[Signatures continue on following page]
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BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
By:
Name:
Title:
[End of signatures]
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EXHIBIT C
CONFIRMATION STATEMENT AND CONTROL AGREEMENT
[_], 2026
To: 1818 MEZZ LENDER LLC
Pursuant to the requirements of that certain Pledge and Security Agreement, dated as of the date hereof (as amended, supplemented, replaced, amended and restated or otherwise modified from time to time, the “Pledge Agreement”), by Block 40 Holdco LLC, a Delaware limited liability company (“Borrower”), in favor of 1818 Mezz Lender LLC, a Delaware limited liability company (terms used but not defined herein are as defined in the Pledge Agreement), this Confirmation Statement and Control Agreement relates to those limited liability company interests, as further described on Schedule A (collectively, the “Pledged Company Interests”), issued by Block 40 Property, LLC, a Delaware limited liability company (“Issuer”).
The Pledged Company Interests are not (i) “investment company securities” (within the meaning of Section 8-103 of the Code) or (ii) dealt in or traded on securities exchanges or in securities markets. The Pledged Company Interests are “securities” (within the meaning of Sections 8-102(a)(15) and 8-103 of the Code), and, therefore, for purposes of perfecting the security interest of Lender therein, the Issuer agrees as follows:
On the date hereof, the registered owner of 100% of the limited liability company interests in Block 40 Property, LLC, a Delaware limited liability company;
is:
BLOCK 40 HOLDCO LLC, a Delaware limited liability company
Taxpayer I.D. Number: [_]
The registered pledgee of the Pledged Company Interests is:
1818 MEZZ LENDER LLC,
a Delaware limited liability company (“Lender”)
There are no liens of the Issuer on the Pledged Company Interests or any adverse claims thereto for which the Issuer has a duty under Section 8-403 of the Code. The Issuer has registered the Pledged Company Interests in the name of the registered pledgee on the date hereof. No other pledge or other interest adverse to that of the registered pledgee is currently registered on the books and records of the Issuer with respect to the Pledged Company Interests.
Until the Debt (as defined in that certain Mezzanine Loan Agreement, dated as of the date hereof, by and between Borrower and Lender) is indefeasibly paid in full, Borrower, Lender and Issuer agree that Issuer shall: (i) comply with the instructions of Lender, without any further consent from Borrower or any other Person, in respect of the Pledged Company Interests; and (ii) disregard any request made by Borrower or any other person which contravenes the instructions of Lender with respect to the Pledged Company Interests.
Very truly yours,
BLOCK 40 Property, LLC,
a Delaware limited liability company
By:____________________________
Name:
Title:
[Signatures continue on following page]
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BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
By:___________________________
Name:
Title:
[Signatures continue on following page]
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1818 MEZZ LENDER LLC,
a Delaware limited liability company
By:
Name:
Title:
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[End of signatures]
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SCHEDULE A
DESCRIPTION OF PLEDGED LIMITED LIABILITY COMPANY INTERESTS
| Issuer | Owner | Class of Interest | Initial Percentage of Limited Liability Company Interests |
| Block 40 Property, LLC, a Delaware limited liability company | Block 40 Holdco LLC, a Delaware limited liability company | Limited Liability Interest | 100% |
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EXHIBIT D
LIMITED LIABILITY COMPANY INTEREST CERTIFICATE
CERTIFICATE FOR
BLOCK 40 PROPERTY, LLC
Certificate Number 1 100% outstanding
limited liability company interests
Date: July [_], 2026
Block 40 Property, LLC, a Delaware limited liability company (the “Company”), hereby certifies that Block 40 Holdco LLC, a Delaware limited liability company, or, to the fullest extent permitted by applicable law and in all events subject to the Agreement (as defined below), any successors and assigns (the “Holder”) is the registered owner of 100% of the limited liability company interest in the Company (the “Interests”). THE RIGHTS, POWERS, PREFERENCES, RESTRICTIONS (INCLUDING TRANSFER RESTRICTIONS) AND LIMITATIONS OF THE INTERESTS ARE SET FORTH IN, AND THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY ARE ISSUED AND SHALL IN ALL RESPECTS BE SUBJECT TO THE TERMS AND PROVISIONS OF THE OPERATING AGREEMENT OF THE COMPANY, DATED AS OF [_], 2026, AS THE SAME MAY BE AMENDED OR AMENDED AND RESTATED FROM TIME TO TIME (THE “AGREEMENT”). THE TRANSFER OF THIS CERTIFICATE AND THE INTERESTS REPRESENTED HEREBY IS RESTRICTED AS DESCRIBED IN THE AGREEMENT. By acceptance of this Certificate, and as a condition to being entitled to any rights and/or benefits with respect to the Interests evidenced hereby, the Holder is deemed to have agreed to comply with and be bound by all of the terms and conditions of the Agreement. The Company will furnish a copy of the Agreement to the Holder without charge upon written request to the Company at its principal place of business. The Company maintains books for the purpose or registering the transfer of Interests. In all events subject to the Agreement, transfer of any or all Interests can be effected only after compliance with all the relevant restrictions in the Agreement and the delivery of an endorsed Certificate to the Company, accompanied by an assignment in the form appearing on the reverse side of this Certificate, duly completed and executed by and on behalf of the transferor in such transfer, and an applicable for transfer in the form appearing on the reverse side of this Certificate, duly completed and executed by and on behalf of the transferee in such transfer.
Each limited liability company interest in the Company shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.
This Certificate shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed as of the date set forth above.
BLOCK 40 PROPERTY, LLC,
a Delaware limited liability company
By:__________________________
Name:
Title:
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REVERSE SIDE OF CERTIFICATE REPRESENTED LIMITED LIABILITY COMPANY INTERESTS OF BLOCK 40 PROPERTY, LLC
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto __________________________ [print or typewrite the name of the transferee], _____________________ [insert Social Security Number or other taxpayer identification number of transferee], the following specified percentage of Interests: __________________________ [identify percentage of Interests being transferred], and irrevocably constitutes and appoints _____________________ as attorney-in-fact to transfer the same on the books and records of the Company, with full power of substitution in the premises.
Dated: ___________ BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
(TRANSFEROR)
By:
Name:
Title:
Address: ____________________________
APPLICATION FOR TRANSFER OF INTERESTS
The undersigned applicant (the “Applicant”) hereby (a) applies for a transfer of the percentage of limited liability company interests in the Company described above (the “Transfer”) and applies to be admitted to the Company as a substitute member of the Company in accordance with the Agreement (as defined on the front side hereof), (b) agrees to comply with and be bound by all of the terms and provisions of the Agreement, (c) represents that the Transfer complies with the terms and conditions of the Agreement, (d) represents that the Transfer does not violate any applicable laws and regulations, and (e) agrees to execute and acknowledge such instruments (including, without limitation, a counterpart of the Agreement), in form and substance satisfactory to the Company, as the Company reasonably deems necessary or desirable to effect the Applicant's admission to the Company as a substitute member of the Company in accordance with the Agreement and to confirm the agreement of the Applicant to be bound by all the terms and provisions of the Agreement with respect to the limited liability company interests in the Company described above. Initially capitalized terms used herein and not otherwise defined herein are used as defined in the Agreement.
Subject to the Agreement, the Delaware Limited Liability Company Act (the “Act”), and Article 8 of the Uniform Commercial Code as in effect in the State of Delaware on the date hereof (“Article 8”), the Applicant directs that the foregoing Transfer and the Applicant's admission to the Company as a substitute member of the Company shall be effective as of ______________________________.
Name of Transferee (Print)
________________________________________
Dated: __________________________ Signature:
(Transferee)
Address:
Subject to the Agreement, the Act and Article 8, the Company has determined (a) that the Transfer described above is permitted by the Agreement, (b) hereby agrees to effect such Transfer and the admission of the Applicant as a substitute member of the Company effective as of the date and time directed above, and (c) agrees to record, as promptly as possible, in the books and records of the Company the admission of the Applicant as a substitute member of the Company.
BLOCK 40 PROPERTY, LLC,
a Delaware limited liability company
By:___________________________
Name:
Title:
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MEZZANINE LIMITED GUARANTY
THIS MEZZANINE LIMITED GUARANTY (“Guaranty”) is given as of July 24, 2026, by STEWARDS, INC., a Nevada corporation, SHAUN A. QUIN, an individual, GLEN STEWARD, an individual, CHARLES R. ABELE, an individual, and PETER J. JAGO, an individual (individually and collectively (as the context requires), the “Guarantor”), in favor of 1818 MEZZ LENDER LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”).
RECITALS
A. Pursuant to the terms of that certain Mezzanine Loan Agreement of even date herewith by and between BLOCK 40 HOLDCO LLC, a Delaware limited liability company (“Borrower”), and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender has agreed to loan to Borrower the principal sum of up to $10,000,000.00 (“Loan”) for the purposes specified in the Loan Agreement. Unless otherwise defined herein, capitalized terms used in this Guaranty shall have the meanings attributed to such terms in the Loan Agreement.
B. The Loan Agreement provides that the Loan is evidenced by that certain Note (as defined in the Loan Agreement). The Loan is further evidenced and secured by the Loan Documents (as hereinafter defined).
C. The Note is secured by, among other things, that certain Pledge and Security Agreement (as defined in the Loan Agreement). The Pledge and Security Agreement encumbers Borrower’s equity interests in BLOCK 40 PROPERTY LLC, a Delaware limited liability company (“Mortgage Borrower”), which owns the real property and any and all Improvements thereon described on Exhibit A attached hereto and incorporated herein by this reference (the “Property”).
D. Guarantor retains a direct or indirect ownership interest in the Borrower and the Property and will benefit from the Loan to be made by Lender to Borrower.
E. The Loan Agreement, the Note, the Pledge and Security Agreement and those other documents described in the Loan Agreement as Loan Documents, together with all modifications, extensions, renewals and amendments thereto, are collectively referred to hereinafter as the “Loan Documents”.
F. Guarantor acknowledges that the liabilities under this Guaranty are in addition to and exclusive of the liabilities to Lender under that Hazardous Materials Indemnity.
AGREEMENT
NOW, THEREFORE, to induce Lender to enter into the Loan Documents and to make the Loan, and in consideration of the sum of Ten and No/100 Dollars ($10.00), the foregoing recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby absolutely, unconditionally and irrevocably, covenants and agrees with Lender, and guarantees to Lender as follows (collectively, the “Indebtedness Guaranteed”):
1. LIMITED GUARANTY. Guarantor hereby jointly and severally, unconditionally, absolutely and irrevocably guarantees, becomes surety for and promises to pay to Lender, or order, on demand, in lawful money of the United States of America, in immediately available funds, and to defend, indemnify and hold harmless Lender, its directors, officers, employees, successors and assigns from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities and any impairment of Lender’s security for the Loan), actions, proceedings, obligations, debts, damages, out-of-pocket costs and reasonable expenses, fines, penalties, charges, fees, judgments, awards and court costs (including, without limitation, reasonable attorneys’ fees and expenses and amounts paid in settlement of whatever kind or nature), all as actually incurred by Lender (collectively, the “Losses”) to the extent directly resulting from any of the following matters (collectively, the “Recourse Carve-Out Events”), which Losses shall not include repayment of the Loan, and for the avoidance of doubt, Losses shall not include any diminution in the value of the Collateral except to the extent directly caused by the applicable Recourse Carve-Out Event:
1.1 fraud, intentional misrepresentation or willful misconduct or intentional failure to disclose a material fact, by Borrower or Guarantor, or any Affiliate of Borrower or Guarantor, in connection with the Loan or the Collateral;
1.2 any financial information delivered to Lender by Borrower or Guarantor is fraudulent in any respect, contains any fraudulent information or intentional misrepresentation in any material respect concerning the financial condition of Borrower, Guarantor, the Collateral or the Property;
1.3 the commission of a criminal act by Borrower or Guarantor;
1.4 Borrower’s allowance of intentional material physical waste of the Property, or any portion thereof, by Mortgage Borrower or Guarantor, or any Affiliate of Borrower or Guarantor;
1.5 subject to any right of Borrower or Mortgage Borrower to contest such matters as expressly provided in the Loan Agreement or Mortgage Loan Agreement, respectively, Borrower’s failure to pay, or Borrower’s permitting of Mortgage Borrower’s failure to pay, property or other taxes, assessments or charges when due, except in the event (i) Mortgage Borrower timely deposited sufficient funds into the Tax Account (as defined in the Mortgage Loan Agreement), but Mortgage Lender failed to timely release such funds pursuant to the terms and conditions of the Mortgage Loan Agreement, or (ii) that revenues from the Property are insufficient to pay such amounts with respect to Mortgage Borrower;
1.6 Borrower’s failure to cause Mortgage Borrower to maintain insurance as required by the Mortgage Loan Agreement, except in the event (i) Borrower timely deposited sufficient funds into the Insurance Account (as defined in the Mortgage Loan Agreement), but Lender failed to release such funds pursuant to the terms and conditions of the Mortgage Loan Agreement, and/or (ii) Mortgage Borrower delivered evidence of insurance in compliance with the terms of the Mortgage Loan Agreement and Lender or Mortgage Lender nonetheless force-placed coverage;
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1.7 Borrower’s permitting of Mortgage Borrower’s misappropriation or intentional misapplication of any insurance or condemnation proceeds or awards received by Mortgage Borrower or the Property Manager (to the extent such Property Manager is an Affiliate of Borrower) and failure to cause Mortgage Borrower to turn over such proceeds or awards to Lender or to otherwise apply such sums if and as required under the terms of the Loan Documents, or any other instrument now or hereafter securing the Loan, provided that any such misapplication does not include amounts applied in good-faith reliance on a written direction from or on behalf of Lender or Servicer;
1.8 misappropriation, intentional misapplication, or conversion by Borrower, Guarantor and/or, to the extent such Property Manager is an Affiliate of Borrower, Property Manager, of any rents, royalties, accounts, revenues, income, issues, profits or other benefits from the Property which are collected or received by Mortgage Borrower or Property Manager (to the extent such Property Manager is an Affiliate of Borrower) during the period (i) of an existing Event of Default or (ii) after acceleration of the indebtedness and other sums owing under the Loan Documents, in each case other than to the payment of either (A) the Debt due Lender or Mortgage Lender or (B) the normal and necessary operating expenses of the Property (including reasonable reserves, professional fees and management fees paid in the ordinary course of Borrower’s business);
1.9 misappropriation or misapplication of any funds from any account pledged by Borrower to Lender under the Loan Agreement or the other Loan Documents, or Borrower’s permitting of misappropriation or misapplication of any funds from any account pledged by Mortgage Borrower to Mortgage Lender under the Mortgage Loan Agreement or the other Mortgage Loan Documents (including the failure to cause Mortgage Borrower to comply with the cash management provisions in the Mortgage Loan Agreement relating to the establishment and use of the Restricted Account and Cash Management Account);
1.10 Borrower’s failure to pay, or failure to cause Mortgage Borrower to pay, any charges (including charges for labor or materials) that create Liens on any portion of the Collateral or the Property, respectively, subject to Borrower’s and Mortgage Borrower’s right to contest any such Liens pursuant to the terms of the Loan Documents and Mortgage Loan Documents, respectively, and, with respect to Mortgage Borrower, subject to Lender disbursing amounts from the applicable Reserves that are to be used to pay for the costs of such Liens provided Borrower and/or Guarantor satisfies all conditions for such disbursement as detailed in the Mortgage Loan Agreement;
1.11 the failure of Borrower to cause Mortgage Borrower to deliver to Lender, upon a foreclosure of the Security Instrument, any security deposits, advance deposits or any other deposits held by Borrower and/or Property Manager (to the extent such Property Manager is an Affiliate of Borrower) with respect to the Property, except to the extent any such security deposits were applied in accordance with the terms and conditions of the applicable Leases and/or Mortgage Loan Documents or are required to be returned to Tenants under applicable law, in either case prior to such foreclosure or action in lieu thereof;
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1.12 any material failure by Borrower to comply with Article 7 of the Loan Agreement, or any material breach of any representation or warranty set forth in Article 7 of the Loan Agreement;
1.13 the failure of Borrower to obtain and maintain an Interest Rate Cap Agreement or replacement thereof in accordance with the terms and conditions of the Loan Agreement, including, without limitation, any reasonable, actual, out-of-pocket cost incurred by Lender to obtain such Interest Rate Cap Agreement or replacement thereof;
1.14 the failure of Borrower to pay any and all fees in connection with the making of the Loan and filing of the Financing Statement or in connection with a foreclosure or assignment-in-lieu of foreclosure, or the failure of Borrower to cause Mortgage Borrower to pay any and all mortgage or deed recording tax in connection with the making of the Mortgage Loan and recording of the Security Instrument, including any and all penalties and interest assessed by the State of Florida for failure to pay such taxes; and/or
1.15 any distributions made by Borrower in violation of the terms of the Loan Agreement.
Notwithstanding the foregoing or anything to the contrary elsewhere in this Guaranty, in no event shall Guarantor be liable under this Section 1 for (i) punitive, consequential, special or speculative damages, except to the extent arising out of third party claims, or (ii) any Losses arising out of or caused by Lender’s gross negligence or willful misconduct.
2. EXCEPTIONS; FULL RECOURSE. Notwithstanding the foregoing, or anything to the contrary contained in this Guaranty or the other Loan Documents, any limitation on liability set forth in Section 1 hereof shall be null and void and completely inapplicable, and Guarantor shall be fully and personally liable for the payment and performance of all obligations set forth in the Loan Agreement and the other Loan Documents, including the payment of all principal, interest and other amounts under the Note, in immediately available funds, in the event of any of the following (collectively, the “Full Recourse Events”):
2.1 Borrower, Mortgage Borrower, or any Guarantor files a voluntary petition under the Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law;
2.2 Borrower, Guarantor or any other Person which Controls Borrower or any Guarantor files an answer consenting to or otherwise acquiescing in, or joins in the filing of, an involuntary petition against Borrower, Mortgage Borrower or Guarantor under the Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law, or colludes with, solicits or causes to be solicited, petitioning creditors for any involuntary petition against Borrower or Guarantor from any Person (but excluding filings or actions legally required in any legal proceeding or filings which are expressly permitted or required by Lender in writing);
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2.3 Borrower or any Guarantor, or any Person which Controls Borrower or any Guarantor joins in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower, Mortgage Borrower, such Guarantor, or any portion of the Collateral or the Property (other than with respect to such an application by Lender, or such an application to which Lender consents or as otherwise instructed to do so by Lender);
2.4 Borrower, Mortgage Borrower, or any Guarantor makes an assignment for the benefit of creditors, or admits in any legal proceeding, its insolvency or inability to pay its debts as they become due, in each case only if such admission is not compelled by applicable law or court order;
2.5 there is a final, non-appealable order of substantive consolidation of Borrower or Mortgage Borrower with any other Person in connection with any federal or state bankruptcy proceeding directly resulting from failure to comply with Article 7 of the Loan Agreement or Mortgage Loan Agreement, as applicable;
2.6 Borrower, Guarantor or any other Person which Controls Borrower or any Guarantor contests or opposes any motion made by Lender to obtain relief from the automatic stay or seeks to reinstate the automatic stay in the event of any federal or state bankruptcy or insolvency proceeding involving the Borrower, Mortgage Borrower, or Guarantor, if there is a final, non-appealable determination that such action was brought in bad faith solely to delay or frustrate Lender’s exercise of its rights;
2.7 any litigation or other legal proceeding related to the Loan is filed by Borrower, Mortgage Borrower, or Guarantor that a court of competent jurisdiction determines, in a final non-appealable determination, was taken in bad faith for the sole purpose of delaying, impeding, obstructing, hindering, enjoining or otherwise interfering with or frustrating the efforts of Lender to exercise any rights and remedies available to Lender as provided herein and in the other Loan Documents;
2.8 Borrower fails to obtain Lender’s prior consent to any Transfer of the Property, the Collateral, or any interest therein or any Transfer of any direct or indirect interest in Borrower or Mortgage Borrower, except to the extent otherwise expressly permitted by the Loan Documents or the Mortgage Loan Documents (including any Permitted Transfers) or transfers resulting from foreclosure, deed- or assignment-in-lieu or UCC remedies by Lender or its affiliates. Failure to comply with notice or administrative requirements (where the Transfer would otherwise be permitted but for such failure) shall in no event trigger liability under this clause.
Notwithstanding anything else to the contrary contained in this Guaranty or in any of the other Loan Documents, Guarantor shall not have any liability for any of the obligations guaranteed under Sections 1 and 2 to the extent that such liability arises out of any actions, events, conditions or facts first arising or first occurring after the date on which (i) Mortgage Lender, or its nominees and/or assigns, acquires title to the Property through Mortgage Lender’s exercise of its remedies under the Mortgage Loan Documents, whether by foreclosure, exercise of power of sale, acceptance of a deed-in-lieu of foreclosure or otherwise, or (ii) Lender, or its nominees and/or assigns, acquires 100% of the Collateral as a result of the exercise of its rights under the terms and conditions of the Loan Documents, unless, in each case, such actions, events, conditions or facts were caused by Borrower or Mortgage Borrower (while any Guarantor maintains a Controlling Interest in Borrower or Mortgage Borrower) and/or Guarantor.
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3. NO WAIVER, RELEASE OR IMPAIRMENT. Nothing contained in this Guaranty shall be deemed to waive, release, affect or impair the indebtedness evidenced by the Loan Documents or the obligations of Borrower or Guarantor under the Loan Documents, or the liens and security interests created by the Loan Documents, or Lender’s rights to enforce its rights and remedies under the Loan Documents and under this Guaranty, in the Loan Documents or in connection with the Loan, or otherwise provided in equity or under applicable law, including, without limitation, the right to pursue any remedy for injunctive or other equitable relief, or any suit or action in connection with the preservation, enforcement or foreclosure of the liens, pledges, assignments and security interests which are now or at any time hereafter security for the payment and performance of all obligations under the Loan Agreement or in the other Loan Documents. The provisions of Sections 1 through 2 of this Guaranty shall prevail and control over any contrary provisions elsewhere in this Guaranty or the other Loan Documents.
4. REMEDIES. If Guarantor fails to promptly pay any of the Indebtedness Guaranteed following the expiration of ten (10) Business Days’ notice thereof from Lender, Lender may from time to time, and without first requiring performance by Borrower or any other guarantor, or without exhausting any or all security (if any) for the Loan, bring any action at law or in equity or both to compel Guarantor to pay the Indebtedness Guaranteed, together with interest thereon at the rate of interest applicable to the Principal Balance of the Note as specified therein.
5. RIGHTS OF LENDER. Guarantor authorizes Lender, without giving notice to Guarantor or obtaining Guarantor’s consent and without affecting the liability of Guarantor, from time to time,to: (a) renew, modify or extend all or any portion of Borrower’s obligations under the Note or any of the other Loan Documents; (b) declare all sums owing to Lender under the Note or any of the other Loan Documents due and payable upon the occurrence and during the continuance of an Event of Default under the Loan Documents; (c) otherwise modify the terms of any of the Loan Documents (except for any Loan Document executed by Guarantor which shall require the consent of Guarantor); (d) take and hold security for the performance of Borrower’s obligations under the Note or the other Loan Documents, and exchange, enforce, waive, subordinate and release any such security in whole or part; (e) apply such security and direct the order or manner of sale thereof as Lender in its discretion may determine; (f) release, substitute or add any one or more endorsers of the Note or guarantors of Borrower’s obligations under the Note or the other Loan Documents; (g) apply payments received by Lender from Borrower to any obligations of Borrower to Lender, in such order as Lender shall determine in its sole discretion, whether or not any such obligations are covered by this Guaranty; and (h) assign this Guaranty, in whole or in part, but only in compliance with the terms and conditions of the Loan Agreement.
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6. GUARANTOR’S WAIVERS.
6.1 Guarantor acknowledges that Guarantor has received copies of the Loan Documents, and to the extent permitted by applicable law, Guarantor waives any and all rights and defenses based upon or arising out of (a) any legal disability or other defense of Borrower, any other guarantor or other Person or by reason of the cessation or limitation of the liability of Borrower from any cause other than full payment of all sums payable under the Loan Documents; (b) any lack of authority of the officers, directors, partners, managers, members or agents acting or purporting to act on behalf of Borrower, Guarantor or any principal of Borrower or any Guarantor, or any defect in the formation of Borrower, Guarantor or any principal of Borrower or any Guarantor; (c) the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Guarantor; (d) any act or omission by Lender or Servicer which directly or indirectly results in, or contributes to, the release of Borrower or any other Person or any collateral for any obligation to Lender in connection with the Loan; (e) the unenforceability or invalidity of any collateral assignment or guaranty with respect to any obligation to Lender in connection with the Loan, or the lack of perfection or continuing perfection or lack of priority of any lien which secures any obligation to Lender in connection with the Loan; (f) any failure of Lender to marshal assets in favor of Guarantor or any other Person; (g) any modification of any obligation to Lender in connection with the Loan, in accordance with the Loan Documents, including, without limitation, any renewal, extension, acceleration or increase in interest rate; (h) an election of remedies by Lender, even though that election of remedies (such as a non-judicial foreclosure, if available and/or permitted, with respect to security for a guaranteed obligation) has or may have destroyed Guarantor’s rights of subrogation, reimbursement and contribution against the principal by the operation of applicable law or otherwise; (i) Lender’s failure to disclose to Guarantor any information concerning Borrower’s financial condition or any other circumstances bearing on Borrower’s ability to pay and perform its obligations under the Note or any of the other Loan Documents, or upon the failure of any other principals of Borrower to guaranty the Loan; (j) any statute or rule of law which provides that the obligation of a surety or guarantor must be neither larger in amount nor in any other respects more burdensome than that of a principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation; (k) any failure of Lender to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; (l) Lender’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (m) any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (n) any right of subrogation, reimbursement, indemnification and contribution, any right to enforce any remedy which Lender may have against Borrower and any right to participate in, or benefit from, any security for the Note or the other Loan Documents now or hereafter held by Lender; (o) presentment, demand, protest and notice of any kind (except as otherwise required to be given pursuant to the terms hereof or any of the other Loan Documents); (p) intentionally deleted; (q) use of cash collateral under Section 363 of the Bankruptcy Code; (r) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any Person; (s) any and all defenses based upon suretyship or impairment of collateral; and (t) any right to revoke this Guaranty as to any future advances made by Lender under and pursuant to the Loan Documents to protect Lender’s interest in the Collateral. Notwithstanding anything to the contrary set forth herein, in no event is Guarantor waiving any defense of payment and/or performance. Notwithstanding the foregoing or anything to the contrary in this Guaranty, Guarantor is not waiving and reserves all of its rights, remedies and defenses regarding a claim of Lender’s gross negligence or willful misconduct.
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6.2 This Guaranty is a “last dollar” guaranty, and accordingly, under no circumstances (except as otherwise set forth herein) shall the Guarantor’s liability hereunder be reduced by, from or as a result of any payment to or amount realized by Lender from Borrower, any guarantor other than Guarantors under this Agreement, any rents, deposits, insurance proceeds, condemnation awards, proceeds from bankruptcy sale, foreclosure or any conveyance in lieu of foreclosure or from any other profits, avails, revenues, or proceeds derived from the Collateral, and only payments made to Lender by the Guarantor out of their personal funds not derived from the Property before or after written demand thereof by Lender shall be applied against such liability. The foregoing sentence is an unconditional and irrevocable waiver of certain rights and defenses of Guarantor. This understanding and waiver is made in addition to and not in limitation of any of the other terms and conditions of this Guaranty. These rights and defenses being waived by Guarantor include, but are not limited to, any rights or defenses based upon deficiency limitation or anti-deficiency, redemption or other similar rights, if any. In no event shall Lender be entitled to recover more than 100% of its Losses (as defined in the Limited Guaranty) or amounts owed under the Loan Documents, without duplication, and Guarantor shall in no event be liable for any portion of the Debt that is satisfied from other proceeds. The foregoing last-dollar provisions shall not permit Lender to recover twice for the same Loss or Debt.
6.3 Lender may collect from Guarantor without first foreclosing on the Collateral; and if Lender forecloses on the Collateral, then (A) the amount of the debt may be reduced only by the price for which the Collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Lender may collect from Guarantor even if Lender, by foreclosing on the Collateral, has destroyed any right Guarantor may have to collect from Borrower. The foregoing sentence is an unconditional and irrevocable waiver of certain rights and defenses of Guarantor. This understanding and waiver is made in addition to and not in limitation of any of the other terms and conditions of this Guaranty. These rights and defenses being waived by Guarantor include, but are not limited to, any rights or defenses based upon deficiency limitation or anti-deficiency, redemption or other similar rights, if any, expressly excluding (i) any defense of payment and/or performance and (ii) any defense regarding a claim of Lender’s gross negligence or willful misconduct. Guarantor agrees that the payment or performance of any act which tolls any statute of limitations applicable to the Note or any of the other Loan Documents shall similarly operate to toll the statute of limitations applicable to Guarantor’s liability hereunder. Without limiting the generality of the foregoing or any other provision hereof, Guarantor further expressly waives to the extent permitted by law any and all rights and defenses to seek subrogation, reimbursement, indemnification or contribution which might otherwise be available to Guarantor under any applicable law, other than the defense of payment and/or performance, or any defense asserting Lender’s gross negligence or willful misconduct.
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6.4 The statutes and rules referred to above in this Section shall include any further statutes or rules amending, supplementing or supplanting same. The waivers and agreements contained herein are given by Guarantor knowingly, intelligently and voluntarily, upon advice of counsel, to induce Lender to accept a lower interest rate on the Note and other Loan Document terms more favorable to Borrower and Guarantor than would be acceptable to Lender in the absence thereof.
6.5 Notwithstanding the foregoing waivers, upon indefeasible payment in full of the Debt, and so long as no claim for a clawback, avoidance or recovery under applicable insolvency laws is pending or threatened in writing, such waivers shall be of no further force or effect, and Guarantor’s rights of subrogation, reimbursement, indemnification and contribution and any other waived rights shall automatically revive.
7. GUARANTOR’S WARRANTIES. Guarantor warrants, represents, covenants and acknowledges to Lender that: (a) Lender would not make the Loan but for this Guaranty; (b) Guarantor has reviewed all of the terms and provisions of the Loan Agreement and the other Loan Documents; (c) there are no conditions precedent to the effectiveness of this Guaranty; (d) Guarantor has established adequate means of obtaining from sources other than Lender, on a continuing basis, financial and other information pertaining to Borrower’s financial condition, the Property, the Collateral and Borrower’s activities relating thereto and the status of Borrower’s performance of obligations under the Loan Documents, and Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor’s risks hereunder, and Lender has made no representation to Guarantor as to any such matters; (e) the most recent financial statements of Guarantor heretofore delivered to Lender are true and correct in all material respects, have been prepared as required by Article 11 of the Loan Agreement (as such Section exists as of the date hereof) and fairly and accurately represent the financial condition of Guarantor as of the respective dates thereof, and to Guarantor’s actual knowledge, no material adverse change has occurred in the financial condition of Guarantor since the respective dates thereof except as disclosed to Lender in writing; (f) Guarantor has not and will not, without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed, sell, lease, assign, encumber, pledge, hypothecate, mortgage, transfer or otherwise dispose of all or substantially all of Guarantor’s assets, or all or substantially all of its interests therein such that as a direct result thereof Guarantor’s net worth and/or liquidity is reduced below the minimum threshold amounts required to be maintained by Guarantor in accordance with the terms of the Loan Documents; and (g) as of the date hereof Guarantor is not and will not be as of the date hereof, as a consequence of the execution and delivery of this Guaranty, impaired or rendered “insolvent”, as that term is defined in Section 101 of the Bankruptcy Code, or otherwise rendered unable to pay Guarantor’s debts as the same mature and will not have thereby undertaken liabilities in excess of the present fair value of Guarantor’s assets.
8. FINANCIAL STATEMENTS. Guarantor shall deliver to Lender all financial statements and additional information required to be delivered by such Guarantor pursuant to the terms and conditions of Article 11 of the Loan Agreement (as such Article exists as of the date hereof).
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9. SUBORDINATION. Guarantor subordinates all present and future indebtedness owing by Borrower to Guarantor to the obligations at any time owing by Borrower to Lender under the Note and the other Loan Documents. Guarantor assigns all such indebtedness to Lender as security for this Guaranty, the Note and the other Loan Documents. Guarantor agrees to make no claim for such indebtedness until all obligations of Borrower under the Note and the other Loan Documents have been repaid in full; provided, however, that the foregoing subordination, assignment and restriction shall suspend Guarantor’s rights only until such payment in full, and all such rights shall automatically revive thereafter without further action by any Person. Notwithstanding the foregoing, Guarantor may timely file proofs of claim or other protective claims, provided that, for so long as any obligations under the Loan Documents remain outstanding, any distributions or other amounts received by Guarantor on account of such claims shall be held in trust for and promptly turned over to Lender for application to the obligations in accordance with the Loan Documents. Guarantor further agrees not to assign all or any part of such indebtedness unless Lender is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. If a Guarantor receives payment for any such indebtedness while any obligations under the Loan Documents remain outstanding, then Guarantor shall deliver such payment to Lender. Guarantor will hold any such payment Guarantor receives in trust for Lender until such payment is delivered to Lender. If Lender so requests, (a) all instruments evidencing such indebtedness shall be duly endorsed and delivered to Lender, (b) all security for such indebtedness shall be duly assigned and delivered to Lender, (c) such indebtedness shall be enforced, collected and held by Guarantor as trustee for Lender and shall be paid over to Lender on account of the Loan, and (d) Guarantor shall execute, file and record such documents and instruments and take such other action as is reasonably necessary or appropriate to perfect, preserve and enforce Lender’s rights in and to such indebtedness and any security therefor provided such action does not increase the obligations or liabilities of Guarantor hereunder except, in each case, to a de minimis extent. If Guarantor fails to take any such action, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor limited solely to carrying out the specific actions expressly required of Guarantor under this Section, and not for any other purpose and provided such action does not increase the obligations or liabilities of Guarantor hereunder except, in each case, to a de minimis extent. The foregoing power of attorney is coupled with an interest and cannot be revoked.
10. BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may have against Borrower relating to any indebtedness of Borrower to Guarantor and shall assign to Lender all rights of Guarantor thereunder until the Debt and all other obligations under the Loan Documents have been paid and performed in full. If Guarantor does not file any such claim, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender’s discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of Lender’s nominee. The foregoing limited power of attorney is coupled with an interest and cannot be revoked while any portion of the Debt or any other obligation under the Loan Documents remains outstanding. Lender or Lender’s nominee shall have the right, in its reasonable discretion, to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, for so long as any portion of the Debt or any other obligation
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under the Loan Documents remains outstanding, the Person or Persons authorized to pay such claim shall pay to Lender the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor’s rights to any such payments or distributions; provided, however, that Guarantor may receive any such payment or distribution if Guarantor holds it in trust for Lender and promptly turns it over to Lender, and Guarantor’s obligations hereunder shall not be satisfied except to the extent that Lender receives cash by reason of any such payment or distribution. If Lender receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this Guaranty. The foregoing, assignment, suspension and restrictions on Guarantor’s rights shall continue only until the Debt and all other obligations under the Loan Documents have been paid and performed in full, at which time all such rights shall automatically revest and revive in favor of Guarantor without further action by any Person. If all or any portion of the obligations guaranteed hereunder are paid or performed, the obligations of Guarantor hereunder shall be reinstated with respect to all or any part of such payment or performance that is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws, irrespective of any notice of revocation given by Guarantor prior to such avoidance or recovery.
11. ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS. This Guaranty is a continuing guaranty of payment and not of collection and cannot be revoked by Guarantor and shall continue to be effective with respect to any indebtedness referenced herein arising or created after any attempted revocation hereof or after the death of Guarantor (if Guarantor is a natural person, in which event this Guaranty shall be binding upon Guarantor’s estate). The obligations of Guarantor hereunder shall be in addition to and shall not limit or in any way affect the obligations of Guarantor under any other existing or future guaranties unless said other guaranties are expressly modified or revoked in writing. Amounts paid by Guarantor under this Guaranty shall be credited against any overlapping obligation of Guarantor under any other guaranty or indemnity delivered in connection with the Loan, and vice versa, so that Lender shall not recover the same amount more than once. This Guaranty is independent of the obligations of Borrower under the Note, the other Loan Documents and the Pledge and Security Agreement. Lender may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Borrower or any other party or joining Borrower or any other party as a party to such action. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such security instrument expressly recites that it secures this Guaranty.
12. CREDIT REPORTS. Each legal entity and individual obligated on this Guaranty hereby authorizes Lender to order and obtain, from a credit reporting agency of Lender’s choice, a third party credit report on such legal entity and individual, not more than once annually and anytime during the occurrence of an uncured Default under the Loan Documents.
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13. ENFORCEABILITY. Guarantor hereby acknowledges that: (a) the obligations undertaken by Guarantor in this Guaranty are complex in nature, (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, (c) as part of Lender’s consideration for entering into this transaction, Lender has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek and receive legal advice from skilled legal counsel in the area of financial transactions of the type contemplated herein. Given all of the above, Guarantor does hereby represent and confirm to Lender that Guarantor is fully informed regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible defenses, (ii) the circumstances under which such defenses may arise, (iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses. Guarantor acknowledges that Guarantor makes this Guaranty with the intent that this Guaranty and all of the informed waivers herein shall each and all be fully enforceable by Lender, and that Lender is induced to enter into this transaction in material reliance upon the presumed full enforceability thereof.
14. INTENTIONALLY OMITTED.
15. MISCELLANEOUS.
15.1 Notices. All notices, demands, or other communications under this Guaranty shall be in writing and shall be delivered to the appropriate party at the addresses set forth below (subject to change from time to time by written notice to all other parties to this Guaranty as provided below). All notices, demands or other communications shall be considered as properly given if delivered (i) personally or sent by first class United States Postal Service mail, postage prepaid, (ii) by Overnight Mail Express (i.e., USPS Priority Mail Express), (iii) by overnight commercial courier service, charges prepaid or (iv) email with a copy of such notice to follow sent by any method as set forth in (i)–(iii) above. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be:
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| Guarantor: |
Stewards, Inc. 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Attn: Katy Murless, Vaughan Korte Email: [email protected]; [email protected]
Shaun Quin 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Email: [email protected]
Glen Steward 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Email: [email protected]
Charles R. Abele 1776 Polk Street, Suite 200 Hollywood, FL 33020
Peter J. Jago 1776 Polk Street, Suite 200 Hollywood, FL 33020
With a copy to:
Cozen O’Connor One Liberty Place 1650 Market Street, Suite 2800 Philadelphia, PA 19103 Attn: Howard Grossman Email: [email protected]
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| Lender: |
1818 Mezz Lender LLC c/o CCL Capital 420 Lexington Avenue Suite 2100 New York, NY 10170 Attn: Adam Budgor Email: [email protected]
With a copy to:
Windels Marx Lane & Mittendorf, LLP 156 West 56th Street New York, New York 10019 Attention: Wayne S. Cook, Jr., Esq. Email: [email protected] |
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Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of not less than thirty (30) days’ notice to the other party in the manner set forth hereinabove. Notices, demands, and communications provided by legal counsel on behalf of any party to this Guaranty pursuant to this Section 15.1 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
15.2 Attorneys’ Fees and Expenses; Enforcement. If any attorney is engaged by Lender to enforce or defend any provision of this Guaranty or as a consequence of any default under this Guaranty, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding or in connection with any appeal of a lower court decision (unless on the basis of Lender’s gross negligence, fraud or willful misconduct), then Guarantor shall immediately pay to Lender, within five (5) Business Days of written demand from Lender, together with reasonable supporting documentation therefor, the amount of all such reasonable attorneys’ fees and expenses and out-of-pocket costs actually incurred in connection therewith, including all trial and appellate proceedings in any legal action, suit, bankruptcy or other proceeding, together with interest thereon only from the expiration of such five (5) Business Day period until paid at the rate of interest applicable to the Principal Balance of the Note as specified therein. In the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and not by any jury and shall be included in any judgment obtained by Lender. This provision is separate and several and shall survive merger into judgment.
15.3 Cooperation. The terms and conditions of Section 13.35 and 13.36 of the Loan Agreement are incorporated herein by reference and Guarantor hereby agrees to reasonably cooperate with Lender in connection therewith.
15.4 No Waiver. No previous waiver and no failure or delay by Lender in acting with respect to the terms of the Note or this Guaranty shall constitute a waiver of any breach, default, or failure of condition under the Note or this Guaranty or the obligations secured thereby. A waiver of any term of the Note or this Guaranty or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.
15.5 Waiver of Right to Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, EACH PARTY TO THIS GUARANTY (AND LENDER BY ACCEPTING THIS GUARANTY) HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY (INCLUDING LENDER BY ACCEPTING THIS GUARANTY) HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY AND LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY. THIS PROVISION IS A MATERIAL INDUCEMENT OF LENDER TO MAKE THE LOAN TO BORROWER AND OF GUARANTOR TO PROVIDE THIS GUARANTY.
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15.6 Severability. If any provision or obligation under this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from this Guaranty and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of this Guaranty.
15.7 Successors and Assigns. Except as otherwise expressly provided under the terms and conditions herein and the Loan Agreement, the terms of this Guaranty shall bind and inure to the benefit of the executors, administrators, nominees, successors and assigns of the parties hereto. This Guaranty shall be binding against any revocable trust hereafter created or established by any Guarantor who is a natural person. Guarantor’s liability hereunder shall be unaffected by changes in the name of Borrower or in its constituent principals.
15.8 Time. Time is of the essence with respect to each and every term herein.
15.9 Governing Law And Consent To Jurisdiction. This Guaranty and any claim, controversy or dispute arising under or related to this Guaranty, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties will be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to any conflicts of law principles, except to the extent preempted by federal laws. Guarantor and all Persons in any manner obligated under the Loan Documents consent to the jurisdiction of any federal or state court within the State of New York having proper venue and also consent to service of process by any means authorized by the State of New York or federal law.
15.10 Survival. This Guaranty shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive the exercise of any remedy by Lender under the Pledge and Security Agreement or any of the other Loan Documents, including, without limitation, any foreclosure or assignment-in-lieu thereof.
15.11 Intentionally Omitted.
15.12 Headings. All article, section or other headings appearing in this Guaranty are for convenience of reference only and shall be disregarded in construing this Guaranty.
15.13 Powers Of Attorney. The powers of attorney granted by Guarantor to Lender in this Guaranty are coupled with an interest and cannot be revoked so long as any portion of the Loan remains unpaid or unperformed. Lender shall have no obligation to exercise any of the foregoing rights and powers in any event. Any power of attorney granted herein shall be limited solely to carrying out the specific actions expressly required of Guarantor under the applicable Section, and shall not expand Guarantor’s obligations or liabilities hereunder except, in each case, to a de minimis extent.
15.14 Defined Terms. Unless otherwise defined herein, capitalized terms used in this Guaranty shall have the meanings attributed to such terms in the Loan Agreement or the Pledge and Security Agreement, as applicable.
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15.15 Rules Of Construction. The word “Borrower” as used herein shall include both the named Borrower and any other Person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term “Mortgage Borrower” as used herein shall include the named Mortgage Borrower and any other Person at any time owning the Property or assuming or otherwise becoming primarily liable for all or any of the obligations of Mortgage Borrower under the Mortgage Loan Documents. The term “Person” as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one Person, the term “Guarantor” shall include all such Persons. The word “Lender” as used herein shall include Lender, its successors, assigns and affiliates.
15.16 Use Of Singular And Plural; Gender. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
15.17 Exhibits, Schedules And Riders. All exhibits, schedules, riders and other items attached hereto (if any) are incorporated into this Guaranty by such attachment for all purposes.
15.18 Community Property. If Guarantor is a natural person, this Guaranty shall be binding against Guarantor’s sole and separate property and the property now or hereafter owned by the marital community property of Guarantor.
15.19 Integration; Interpretation. This Guaranty contains the entire agreement of the parties with respect to the matters contemplated hereby and supersedes all prior negotiations or agreements, written or oral. This Guaranty shall not be modified except by written instrument executed by all parties.
15.20 Lender Agreement. Lender’s acceptance of this Guaranty (which shall be evidenced by it making the Loan) shall be deemed its agreement to all of the terms and provisions herein.
[Signature Page(s) to Follow]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing on the first pages of this Guaranty.
GUARANTOR:
STEWARDS, INC., a Nevada corporation
By: _________________________________
Name: Shaun A. Quin
Its: CEO
________________________________________
SHAUN A. QUIN
_______________________________________
GLEN STEWARD
_______________________________________
charles r. abele
_______________________________________
peter j. jago
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EXHIBIT A
Legal Description
ALL THAT CERTAIN LOT OR PARCEL OF LAND SITUATE IN THE COUNTY OF BROWARD, STATE OF FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1:
LOTS 1, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
PARCEL 2:
LOTS 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 AND 14, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
LESS AND EXCEPT THEREFROM THAT CERTAIN PROPERTY CONVEYED TO THE CITY OF HOLLYWOOD BY THAT CERTAIN DEED RECORDED IN OFFICIAL RECORDS BOOK 3476, PAGE 399, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF LOT 6, BLOCK 40, OF THE SUBDIVISION OF THE TOWN OF HOLLYWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 1, AT PAGE 21, IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA; RUN EAST ON AND ALONG THE SOUTH LINE OF LOTS 6, 7 AND 8 FOR A DISTANCE OF 65.36 FEET TO THE POINT OF BEGINNING. SAID POINT OF BEGINNING BEING THE POINT OF CURVATURE OF A CURVE CONCAVE TO THE NORTHWEST AND HAVING THE FOLLOWING PROPERTIES: R=30.0 FEET, DELTA=123 DEGREES 06 MINUTES 46 SECONDS, ARC LENGTH=64.46 FEET; THENCE RUN NORTHEASTERLY ON SAID CURVE FOR A DISTANCE OF 64.46 FEET TO THE POINT OF INTERSECTION WITH THE EAST PROPERTY LINE OF LOT 8 OF SAID BLOCK 40. THENCE RUN SOUTHEASTERLY ON THE EAST LINE OF LOT 8, SAID EAST LINE BEING A CURVE HAVING THE FOLLOWING PROPERTIES: R=492.0 FEET, DELTA=9 DEGREES 52 MINUTES 51 SECONDS, ARC LENGTH=84.85 FEET, EXTENDED TO A POINT OF INTERSECTION WITH THE SOUTH LINE OF LOTS 6, 7 AND 8 EXTENDED EASTERLY; THENCE RUN WESTERLY ON AND ALONG THE EXTENSION OF LOTS 6, 7 AND 8 TO THE POINT OF BEGINNING.
PARCEL 3:
THAT CERTAIN 13.00 FOOT ALLEY LYING IN BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS VACATED AND MORE PARTICULARLY DESCRIBED BY THAT CERTAIN ORDINANCE NO. 0-2005-16 RECORDED IN OFFICIAL RECORDS BOOK 47110, PAGE 253, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA
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MEZZANINE GUARANTY OF CARRY COSTS AND debt service
THIS MEZZANINE GUARANTY OF CARRY COSTS AND DEBT SERVICE (“Guaranty”) is made as of July 24, 2026, by STEWARDS, INC., a Nevada corporation, SHAUN A. QUIN, an individual, and GLEN STEWARD, an individual, CHARLES R. ABELE, an individual, and PETER J. JAGO, an individual (individually and collectively, as context may require, “Guarantor”), in favor of 1818 MEZZ LENDER LLC, a Delaware limited liability company (collectively with its successors or assigns “Lender”).
RECITALS
A. Pursuant to the terms of that certain Mezzanine Loan Agreement of even date herewith by and between BLOCK 40 HOLDCO LLC, a Delaware limited liability company (the “Borrower”), and Lender (as the same may be amended, modified, supplemented or replaced from time to time, the “Loan Agreement”), Lender has agreed to loan to Borrower the principal sum of up to Ten Million and 00/100 Dollars ($10,000,000.00) (“Loan”) for the purposes specified in the Loan Agreement.
B. The Loan Agreement provides that the Loan is evidenced by that certain Note. The Loan is further evidenced and secured by certain other Loan Documents (as defined below).
C. The Note is secured by, among other things, that certain Pledge and Security Agreement (as defined in the Loan Agreement). The Pledge and Security Agreement encumbers Borrower’s equity interests in BLOCK 40 PROPERTY LLC, a Delaware limited liability company (“Mortgage Borrower”), which owns the real property and any and all Improvements thereon described on Exhibit B attached hereto and incorporated herein by this reference (the “Property”).
D. The Loan Agreement, the Pledge and Security Agreement, the Note, and those other documents described and defined in the Loan Agreement as Loan Documents, together with all modifications, extensions, renewals and amendments thereto, are collectively referred to hereinafter as the “Loan Documents”.
E. Guarantor retains a direct or indirect interest in the Borrower and will benefit from the Loan to be made by Lender to Borrower.
NOW, THEREFORE, to induce Lender to enter into the Loan Documents and to make the Loan, and in consideration of the sum of Ten and No/100 Dollars ($10.00), the foregoing recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby, jointly and severally, absolutely, unconditionally and irrevocably, covenants and agrees with Lender, and guarantees to Lender, as follows:
1. NATURE AND SCOPE OF GUARANTY.
1.1 Guaranty and Agreement to be Primarily Obligated. Guarantor hereby assumes liability for, and hereby irrevocably and unconditionally, jointly and severally, guarantees to Lender and its successors and assigns the payment of the Indebtedness Guaranteed (as defined below) as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. Guarantor hereby irrevocably and unconditionally covenants and agrees that Guarantor is liable for the Indebtedness Guaranteed.
1.2 Definitions. For the purposes of this Guaranty, the following capitalized terms shall have the following meanings:
(a) “Indebtedness Guaranteed” shall mean, collectively, but without duplication, (i) the Debt Service as detailed in the Note (including, but not limited to, interest at the Contract Rate (as defined in the Note) and/or Default Rate (as defined in the Note), if applicable) when due on the Loan (to the extent not otherwise paid with revenues from the Property, payments made under any “in-the-money” Interest Rate Cap Agreement or from any Reserve pursuant to the terms and conditions of the Loan Agreement), but expressly excluding the obligation to pay the Principal Balance (as defined in the Note) due upon the Maturity Date or the earlier acceleration of the Loan, (ii) the Prepayment Fee, Exit Fee and any Late Charges (as defined in the Note), (iii) the funding and replenishment of any Reserve Account, as and when required under the Loan Agreement or the Mortgage Loan Agreement, (iv) the purchase of any Interest Rate Cap Agreement as and when required under the Loan Agreement, and (v) all Operating Expenses, as and when due, whether or not an Event of Default exists and is continuing.
Notwithstanding the foregoing, and for the sake of clarity, the Indebtedness Guaranteed shall stop accruing upon the earliest to occur of (A) the date the Debt is repaid in full, (B) the date that Mortgage Lender or its nominees and/or assigns, acquires title to the Property by foreclosure, deed-in-lieu of foreclosure , or exercise of power of sale through Lender’s exercise of its remedies under the Loan Documents or otherwise, (C) the date that Lender, or its nominees and/or assigns, acquires 100% of the Collateral as a result of the exercise of its rights under the terms and conditions of the Loan Documents or otherwise, or (D) sixty (60) days following the Tender Date (as defined below).
(b) “Tender Date” shall mean the date that all of the terms and conditions required to effectuate a Valid Tender (as set forth on Exhibit A attached hereto) have been satisfied by Borrower and/or Guarantor (as determined by Lender in its sole but reasonable, good faith discretion, with any deficiencies in the tendered Valid Tender identified by Lender in reasonable detail within ten (10) Business Days after Borrower tenders a purported Valid Tender).
2. NO WAIVER, RELEASE OR IMPAIRMENT. Nothing contained in this Guaranty shall be deemed to waive, release, affect or impair the indebtedness evidenced by the Loan Documents or the obligations of Borrower or Guarantor under the Loan Documents, or the liens and security interests created by the Loan Documents, or Lender’s rights to enforce its rights and remedies under the Loan Documents and under this Guaranty, in the Loan Documents or in connection with the Loan, or otherwise provided in equity or under applicable law, including, without limitation, the right to pursue any remedy for injunctive or other equitable relief, or any suit or action in connection with the preservation, enforcement or foreclosure of the liens, pledges, assignments and security interests which are now or at any time hereafter security, for the payment and performance of all obligations under the Loan Agreement or in the other Loan Documents.
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3. REMEDIES. If Guarantor fails to promptly pay the Indebtedness Guaranteed following the expiration of ten (10) Business Days’ notice thereof from Lender, Lender may from time to time, and without first requiring performance by Borrower or any other guarantor, or without exhausting any or all security (if any) for the Loan, bring any action at law or in equity or both to compel Guarantor to pay the Indebtedness Guaranteed, together with interest thereon at the rate of interest applicable to the Principal Balance of the Note as specified therein.
4. RIGHTS OF LENDER. Guarantor authorizes Lender, without giving notice to Guarantor or obtaining Guarantor’s consent and without affecting the liability of Guarantor, from time to time, to: (a) renew, modify or extend all or any portion of Borrower’s obligations under the Note or any of the other Loan Documents; (b) declare all sums owing to Lender under the Note or any of the other Loan Documents due and payable upon the occurrence and during the continuance of an Event of Default under the Loan Documents; (c) otherwise modify the terms of any of the Loan Documents (except for any Loan Document executed by Guarantor which shall require the consent of Guarantor); (d) take and hold security for the performance of Borrower’s obligations under the Note or the other Loan Documents, and exchange, enforce, waive, subordinate and release any such security in whole or part; (e) apply such security and direct the order or manner of sale thereof as Lender in its discretion may determine; (f) release, substitute or add any one or more endorsers of the Note or guarantors of Borrower’s obligations under the Note or the other Loan Documents; (g) apply payments received by Lender from Borrower to any obligations of Borrower to Lender, in such order as Lender shall determine in its sole discretion, whether or not any such obligations are covered by this Guaranty; and (h) assign this Guaranty, in whole or in part, but only in compliance with the terms and conditions of the Loan Agreement.
5. GUARANTOR’S WAIVERS.
5.1 Guarantor acknowledges that Guarantor has received copies of the Loan Documents, and to the extent permitted by applicable law, Guarantor waives any and all rights and defenses based upon or arising out of (a) any legal disability or other defense of Borrower, any other guarantor or other Person or by reason of the cessation or limitation of the liability of Borrower from any cause other than full payment of all sums payable under the Loan Documents; (b) any lack of authority of the officers, directors, partners, managers, members or agents acting or purporting to act on behalf of Borrower, Guarantor or any principal of Borrower or any Guarantor, or any defect in the formation of Borrower, Guarantor or any principal of Borrower or any Guarantor; (c) the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Guarantor; (d) any act or omission by Lender or Servicer which directly or indirectly results in, or contributes to, the release of Borrower or any other Person or any collateral for any obligation to Lender in connection with the Loan; (e) the unenforceability or invalidity of any collateral assignment or guaranty with respect to any obligation to Lender in connection with the Loan, or the lack of perfection or continuing perfection or lack of priority of any lien which secures any obligation to Lender in connection with the Loan; (f) any failure of Lender to
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marshal assets in favor of Guarantor or any other Person; (g) any modification of any obligation to Lender in connection with the Loan in accordance with the Loan Documents, including, without limitation, any renewal, extension, acceleration or increase in interest rate; (h) an election of remedies by Lender, even though that election of remedies (such as a non-judicial foreclosure, if available and/or permitted, with respect to security for a guaranteed obligation) has or may have destroyed Guarantor’s rights of subrogation, reimbursement and contribution against the principal by the operation of applicable law or otherwise; (i) Lender’s failure to disclose to Guarantor any information concerning Borrower’s financial condition or any other circumstances bearing on Borrower’s ability to pay and perform its obligations under the Note or any of the other Loan Documents, or upon the failure of any other principals of Borrower to guaranty the Loan; (j) any statute or rule of law which provides that the obligation of a surety or guarantor must be neither larger in amount nor in any other respects more burdensome than that of a principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation; (k) any failure of Lender to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; (l) Lender’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (m) any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (n) any right of subrogation, reimbursement, indemnification and contribution, any right to enforce any remedy which Lender may have against Borrower and any right to participate in, or benefit from, any security for the Note or the other Loan Documents now or hereafter held by Lender; (o) presentment, demand, protest and notice of any kind (except as otherwise required to be given pursuant to the terms hereof or any of the other Loan Documents); (p) intentionally deleted; (q) use of cash collateral under Section 363 of the Bankruptcy Code; (r) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any Person; (s) any and all defenses based upon suretyship or impairment of collateral; and (t) any right to revoke this Guaranty as to any future advances made by Lender under and pursuant to the Loan Documents to protect Lender’s interest in the Collateral. Notwithstanding anything to the contrary set forth herein, in no event is Guarantor waiving any defense of payment and/or performance. Notwithstanding the foregoing or anything to the contrary in this Guaranty, Guarantor is not waiving and reserves all of its rights, remedies and defenses regarding a claim of Lender’s gross negligence or willful misconduct.
5.2 This Guaranty is a “last dollar” guaranty, and accordingly, under no circumstances (except as otherwise set forth herein) shall the Guarantor’s liability hereunder be reduced by, from or as a result of any payment to or amount realized by Lender from Borrower, any guarantor other than Guarantors under this Agreement, any rents, deposits, insurance proceeds, condemnation awards, proceeds from bankruptcy sale, foreclosure or any conveyance in lieu of foreclosure or from any other profits, avails, revenues, or proceeds derived from the Collateral, and only payments made to Lender by the Guarantor out of their personal funds not derived from the Property before or after written demand thereof by Lender shall be applied against such liability. The foregoing sentence is an unconditional and irrevocable waiver of certain rights and defenses of Guarantor. This understanding and waiver is made in addition to and not in limitation of any of the other terms and conditions of this Guaranty. These rights and defenses being waived by Guarantor include, but are not limited to, any rights or defenses based upon deficiency limitation or anti-deficiency, redemption or other similar rights, if any. In no event shall Lender be entitled to recover more than 100% of its Losses (as defined in the Limited Guaranty) or amounts owed under the Loan Documents, without duplication, and Guarantor shall in no event be liable for any portion of the Debt that is satisfied from other proceeds.
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5.3 Lender may collect from Guarantor without first foreclosing on the Collateral; and if Lender forecloses on the Collateral, then (A) the amount of the debt may be reduced only by the price for which the Collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Lender may collect from Guarantor even if Lender, by foreclosing on the Collateral, has destroyed any right Guarantor may have to collect from Borrower. The foregoing sentence is an unconditional and irrevocable waiver of certain rights and defenses of Guarantor. This understanding and waiver is made in addition to and not in limitation of any of the other terms and conditions of this Guaranty. These rights and defenses being waived by Guarantor include, but are not limited to, any rights or defenses based upon deficiency limitation or anti-deficiency, redemption or other similar rights, if any, expressly excluding (i) any defense of payment and/or performance and (ii) any defense regarding a claim of Lender’s gross negligence or willful misconduct. Guarantor agrees that the payment or performance of any act which tolls any statute of limitations applicable to the Note or any of the other Loan Documents shall similarly operate to toll the statute of limitations applicable to Guarantor’s liability hereunder. Without limiting the generality of the foregoing or any other provision hereof, Guarantor further expressly waives to the extent permitted by law any and all rights and defenses to seek subrogation, reimbursement, indemnification or contribution which might otherwise be available to Guarantor under any applicable law, other than the defense of payment and/or performance, or any defense asserting Lender’s gross negligence or willful misconduct.
5.4 The statutes and rules referred to above in this Section shall include any further statutes or rules amending, supplementing or supplanting same. The waivers and agreements contained herein are given by Guarantor knowingly, intelligently and voluntarily, upon advice of counsel, to induce Lender to accept a lower interest rate on the Note and other Loan Document terms more favorable to Borrower and Guarantor than would be acceptable to Lender in the absence thereof.
5.5 Notwithstanding the foregoing waivers, upon payment in full of the Debt, and so long as no claim for a clawback, avoidance or recovery under applicable insolvency laws is pending or threatened in writing, such waivers shall be of no further force or effect, and Guarantor’s rights of subrogation, reimbursement, indemnification and contribution and any other waived rights shall automatically revive.
6. GUARANTOR’S WARRANTIES. Guarantor warrants, represents, covenants and acknowledges to Lender that: (a) Lender would not make the Loan but for this Guaranty; (b) Guarantor has reviewed all of the terms and provisions of the Loan Agreement and the other Loan Documents; (c) there are no conditions precedent to the effectiveness of this Guaranty; (d) Guarantor has established adequate means of obtaining from sources other than Lender, on a continuing basis, financial and other information pertaining to Borrower’s financial condition, the Property, the Collateral, Mortgage Borrower and Borrower’s activities relating thereto and the status of Borrower’s performance of obligations under the Loan Documents, and Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor’s risks hereunder,
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and Lender has made no representation to Guarantor as to any such matters; (e) the most recent financial statements of Guarantor heretofore delivered to Lender are true and correct in all material respects, have been prepared as required by Article 11 of the Loan Agreement (as such Section exists as of the date hereof) and fairly and accurately represent the financial condition of Guarantor as of the respective dates thereof, and to Guarantor’s actual knowledge, no material adverse change has occurred in the financial condition of Guarantor since the respective dates thereof except as disclosed to Lender in writing; (f) Guarantor has not and will not, without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed, sell, lease, assign, encumber, pledge, hypothecate, mortgage, transfer or otherwise dispose of all or substantially all of Guarantor’s assets, or all or substantially all of its interests therein such that as a direct result thereof Guarantor’s net worth and/or liquidity is reduced below the minimum threshold amounts required to be maintained by Guarantor in accordance with the terms of the Loan Documents; and (g) as of the date hereof Guarantor is not and will not be as of the date hereof, as a consequence of the execution and delivery of this Guaranty, impaired or rendered “insolvent”, as that term is defined in Section 101 of the Bankruptcy Code, or otherwise rendered unable to pay Guarantor’s debts as the same mature and will not have thereby undertaken liabilities in excess of the present fair value of Guarantor’s assets.
7. SUBORDINATION. Guarantor subordinates all present and future indebtedness owing by Borrower to Guarantor to the obligations at any time owing by Borrower to Lender under the Note and the other Loan Documents. Guarantor assigns all such indebtedness to Lender as security for this Guaranty, the Note and the other Loan Documents. Guarantor agrees to make no claim for such indebtedness until all obligations of Borrower under the Note and the other Loan Documents have been repaid in full; provided, however, that the foregoing subordination, assignment and restriction shall suspend Guarantor’s rights only until such payment in full, and all such rights shall automatically revive thereafter without further action by any Person. Notwithstanding the foregoing, Guarantor may timely file proofs of claim or other protective claims, provided that, for so long as any obligations under the Loan Documents remain outstanding, any distributions or other amounts received by Guarantor on account of such claims shall be held in trust for and promptly turned over to Lender for application to the obligations in accordance with the Loan Documents. Guarantor further agrees not to assign all or any part of such indebtedness unless Lender is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. If a Guarantor receives payment for any such indebtedness while any obligations under the Loan Documents remain outstanding, then Guarantor shall deliver such payment to Lender. Guarantor will hold any such payment Guarantor receives in trust for Lender until such payment is delivered to Lender. If Lender so requests, (a) all instruments evidencing such indebtedness shall be duly endorsed and delivered to Lender, (b) all security for such indebtedness shall be duly assigned and delivered to Lender, (c) such indebtedness shall be enforced, collected and held by Guarantor as trustee for Lender and shall be paid over to Lender on account of the Loan, and (d) Guarantor shall execute, file and record such documents and instruments and take such other action as is reasonably necessary or appropriate to perfect, preserve and enforce Lender’s rights in and to such indebtedness and any security therefor provided such action does not increase the obligations or liabilities of Guarantor hereunder except, in each case, to a de minimis extent. If Guarantor fails to take any such action, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor limited solely to carrying out the specific actions expressly required of Guarantor under this Section, and not for any other purpose and provided such action does not increase the obligations or liabilities of Guarantor hereunder except, in each case, to a de minimis extent. The foregoing power of attorney is coupled with an interest and cannot be revoked.
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8. BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may have against Borrower relating to any indebtedness of Borrower to Guarantor and shall assign to Lender all rights of Guarantor thereunder until the Debt and all other obligations under the Loan Documents have been paid and performed in full. If Guarantor does not file any such claim, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender’s discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of Lender’s nominee. The foregoing limited power of attorney is coupled with an interest and cannot be revoked while any portion of the Debt or any other obligation under the Loan Documents remains outstanding. Lender or Lender’s nominee shall have the right, in its reasonable discretion, to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, for so long as any portion of the Debt or any other obligation under the Loan Documents remains outstanding, the Person or Persons authorized to pay such claim shall pay to Lender the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor’s rights to any such payments or distributions; provided, however, that Guarantor may receive any such payment or distribution if Guarantor holds it in trust for Lender and promptly turns it over to Lender, and Guarantor’s obligations hereunder shall not be satisfied except to the extent that Lender receives cash by reason of any such payment or distribution. If Lender receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this Guaranty. The foregoing, assignment, suspension and restrictions on Guarantor’s rights shall continue only until the Debt and all other obligations under the Loan Documents have been paid and performed in full, at which time all such rights shall automatically revest and revive in favor of Guarantor without further action by any Person. If all or any portion of the obligations guaranteed hereunder are paid or performed, the obligations of Guarantor hereunder shall be reinstated with respect to all or any part of such payment or performance that is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws, irrespective of any notice of revocation given by Guarantor prior to such avoidance or recovery.
9. ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS. This Guaranty is a continuing guaranty of payment and not of collection and cannot be revoked by Guarantor and shall continue to be effective with respect to any indebtedness referenced herein arising or created after any attempted revocation hereof or after the death of Guarantor (if Guarantor is a natural person, in which event this Guaranty shall be binding upon Guarantor’s estate). The obligations of Guarantor hereunder shall be in addition to and shall not limit or in any way affect the obligations of Guarantor under any other existing or future guaranties unless said other guaranties are expressly modified or revoked in writing. Amounts paid by Guarantor under this Guaranty shall be credited against any overlapping obligation of Guarantor under any other guaranty or indemnity delivered in connection with the Loan, and vice versa, so that Lender shall not recover the same amount more than once. This Guaranty is independent of the obligations of Borrower under the Note, the other Loan Documents and the Pledge and Security Agreement. Lender may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Borrower or any other party or joining Borrower or any other party as a party to such action. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such instrument expressly recites that it secures this Guaranty.
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10. ENFORCEABILITY. Guarantor hereby acknowledges that: (a) the obligations undertaken by Guarantor in this Guaranty are complex in nature, (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, (c) as part of Lender’s consideration for entering into this transaction, Lender has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek and receive legal advice from skilled legal counsel in the area of financial transactions of the type contemplated herein. Given all of the above, Guarantor does hereby represent and confirm to Lender that Guarantor is fully informed regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible defenses, (ii) the circumstances under which such defenses may arise, (iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses. Guarantor acknowledges that Guarantor makes this Guaranty with the intent that this Guaranty and all of the informed waivers herein shall each and all be fully enforceable by Lender, and that Lender is induced to enter into this transaction in material reliance upon the presumed full enforceability thereof.
11. SURVIVAL. Subject to the second paragraph of Section 1.2(a), this Guaranty shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive the exercise of any remedy by Lender under the Pledge and Security Agreement or any of the other Loan Documents, including, without limitation, any foreclosure or assignment-in-lieu thereof, but shall terminate upon the payment in full of the Debt.
12. MISCELLANEOUS.
12.1 Notices. All notices, demands, or other communications under this Guaranty shall be in writing and shall be delivered to the appropriate party at the addresses set forth below (subject to change from time to time by written notice to all other parties to this Guaranty as provided below). All notices, demands or other communications shall be considered as properly given if delivered (i) personally or sent by first class United States Postal Service mail, postage prepaid, (ii) by Overnight Mail Express (i.e., USPS Priority Mail Express), (iii) by overnight commercial courier service, charges prepaid or (iv) email with a copy of such notice to follow sent by any method as set forth in (i)–(iii) above. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be:
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| Guarantor: |
Stewards, Inc. 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Attn: Katy Murless, Vaughan Korte Email: [email protected]; [email protected]
Shaun Quin 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Email: [email protected]
Glen Steward 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Email: [email protected]
Charles R. Abele 1776 Polk Street, Suite 200 Hollywood, FL 33020 Email:
Peter J. Jago 1776 Polk Street, Suite 200 Hollywood, FL 33020 Email:
With a copy to:
Cozen O’Connor One Liberty Place 1650 Market Street, Suite 2800 Philadelphia, PA 19103 Attn: Howard Grossman Email: [email protected]
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| Lender: |
1818 Mezz Lender LLC c/o CCL Capital 420 Lexington Avenue Suite 2100 New York, NY 10170 Attn: Adam Budgor Email: [email protected]
With a copy to:
Windels Marx Lane & Mittendorf, LLP 156 West 56th Street New York, New York 10019 Attention: Wayne S. Cook, Jr., Esq. Email: [email protected] |
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Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth hereinabove. Notices, demands, and communications provided by legal counsel on behalf of any party to this Guaranty pursuant to this Section 12.1 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
12.2 Attorneys’ Fees and Expenses; Enforcement. If any attorney is engaged by Lender to enforce or defend any provision of this Guaranty or as a consequence of any default under this Guaranty, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding or in connection with any appeal of a lower court decision (unless on the basis of Lender’s gross negligence, fraud or willful misconduct), then Guarantor shall immediately pay to Lender, within five (5) Business Days of written demand from Lender, together with reasonable supporting documentation therefor, the amount of all such reasonable attorneys’ fees and expenses and out-of-pocket costs actually incurred in connection therewith, including all trial and appellate proceedings in any legal action, suit, bankruptcy or other proceeding, together with interest thereon only from the expiration of such five (5) Business Day period until paid at the rate of interest applicable to the Principal Balance of the Note as specified therein. In the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and not by any jury and shall be included in any judgment obtained by Lender. This provision is separate and several and shall survive merger into judgment..
12.3 Cooperation. The terms and conditions of Section 13.35 and 13.36 of the Loan Agreement are incorporated herein by reference and Guarantor hereby agrees to reasonably cooperate with Lender in connection therewith.
12.4 No Waiver. No previous waiver and no failure or delay by Lender in acting with respect to the terms of the Note or this Guaranty shall constitute a waiver of any breach, default, or failure of condition under the Note or this Guaranty or the obligations secured thereby. A waiver of any term of the Note or this Guaranty or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.
12.5 Waiver of Right to Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, GUARANTOR AND, BY ITS ACCEPTANCE HEREOF, LENDER, EACH HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY. THIS PROVISION IS A MATERIAL INDUCEMENT OF LENDER TO MAKE THE LOAN TO BORROWER AND OF GUARANTOR TO PROVIDE THIS GUARANTY.
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12.6 Severability. If any provision or obligation under this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from this Guaranty and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of this Guaranty.
12.7 Successors and Assigns. Except as otherwise expressly provided under the terms and conditions herein, the terms of this Guaranty shall bind and inure to the benefit of the executors, administrators, nominees, successors and assigns of the parties hereto. This Guaranty shall be binding against any revocable trust hereafter created or established by any Guarantor who is a natural person. Guarantor’s liability hereunder shall be unaffected by changes in the name of Borrower or in its constituent principals.
12.8 Time. Time is of the essence of each and every term herein.
12.9 Governing Law And Consent To Jurisdiction. This Guaranty and any claim, controversy or dispute arising under or related to this Guaranty, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties will be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to any conflicts of law principles, except to the extent preempted by federal laws. Guarantor and all Persons in any manner obligated under the Loan Documents consent to the jurisdiction of any federal or state court within the State of New York having proper venue and also consent to service of process by any means authorized by the State of New York or federal law.
12.10 Joint and Several Liability. THE LIABILITY OF THE GUARANTOR HEREUNDER SHALL BE JOINT AND SEVERAL WITH EACH ADDITIONAL GUARANTOR.
12.11 Headings. All article, section or other headings appearing in this Guaranty are for convenience of reference only and shall be disregarded in construing this Guaranty.
12.12 Powers Of Attorney. The powers of attorney granted by Guarantor to Lender in this Guaranty (if any) shall be unaffected by the disability of the principal so long as any portion of the Loan remains unpaid or unperformed. Lender shall have no obligation to exercise any of the foregoing rights and powers in any event. Any power of attorney granted herein shall be limited solely to carrying out the specific actions expressly required of Guarantor under the applicable Section, and shall not expand Guarantor’s obligations or liabilities hereunder except, in each case, to a de minimis extent.
12.13 Defined Terms. Unless otherwise defined herein, capitalized terms used in this Guaranty shall have the meanings attributed to such terms in the Loan Agreement, or the Pledge and Security Agreement, as applicable.
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12.14 Rules Of Construction. The word “Borrower” as used herein shall include both the named Borrower and any other Person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term “Mortgage Borrower” as used herein shall include the named Mortgage Borrower and any other Person at any time owning the Property or assuming or otherwise becoming primarily liable for all or any of the obligations of Mortgage Borrower under the Mortgage Loan Documents. The term “Person” as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one Person, the term “Guarantor” shall include all such Persons. The word “Lender” as used herein shall include Lender, its successors, assigns and affiliates.
12.15 Use Of Singular And Plural; Gender. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
12.16 Exhibits, Schedules And Riders. All exhibits, schedules, riders and other items attached hereto are incorporated into this Guaranty by such attachment for all purposes.
12.17 Community Property. If Guarantor is a natural person, this Guaranty shall be binding against Guarantor’s sole and separate property and the property now or hereafter owned by the marital community property of Guarantor.
12.18 Integration; Interpretation. This Guaranty contains the entire agreement of the parties with respect to the matters contemplated hereby and supersedes all prior negotiations or agreements, written or oral. This Guaranty shall not be modified except by written instrument executed by all parties.
12.19 Lender Agreement. Lender’s acceptance of this Guaranty (which shall be evidenced by its making of the Loan) shall be deemed its agreement to all of the terms and provisions herein.
[Signature Page(s) to Follow]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing on the first page of this Guaranty.
GUARANTOR:
STEWARDS, INC., a Nevada corporation
By: _________________________________
Name: Shaun A. Quin
Its: CEO
________________________________________
SHAUN A. QUIN
_______________________________________
GLEN STEWARD
_______________________________________
charles r. abele
_______________________________________
peter j. jago
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EXHIBIT A
Tender Conditions
For purposes hereof, a “Valid Tender” shall occur only upon the satisfaction of all of the following terms and conditions. Within ten (10) Business Days after Lender’s receipt of the Tender Notice (as defined below) and all materials then required to be delivered in connection therewith, Lender shall deliver to Borrower and Guarantor a written notice specifying in reasonable detail each condition that Lender reasonably determines has not been satisfied and the factual basis therefor (a “Deficiency Notice”). Any condition not identified in a timely Deficiency Notice shall be deemed satisfied. Borrower and Guarantor shall have ten (10) Business Days after receipt of a timely Deficiency Notice, or such longer period as is reasonably necessary if cure is diligently commenced within such ten (10) Business Day period and thereafter diligently pursued, to cure the identified deficiencies. Lender shall act reasonably and in good faith in reviewing the Tender Notice and related materials and shall not unreasonably withhold, condition or delay any approval or determination contemplated by this Exhibit A. A Valid Tender shall be deemed to occur upon satisfaction, deemed satisfaction or timely cure of the following conditions, whether or not Lender accepts or records the AIL:
a. From and after any of the following: (A) an Event of Default then continuing (and provided such Event of Default shall not have been cured by Borrower or any additional permitted party, if applicable), (B) Lender’s acceleration of the Maturity Date or (C) the occurrence of the Maturity Date, Borrower shall be entitled to deliver (or cause to be delivered) written notice to Lender, specifying that it is the intention of Borrower to effectuate a Valid Tender and bearing a legend prominently displayed at the top of the first page thereof in capital letters in bold face type of a font size not less than fourteen (14) points as follows: “WARNING: THIS IS A NOTICE OF INTENT TO TENDER AN ASSIGNMENT IN LIEU AND EFFECTUATE A VALID TENDER” (the “Tender Notice”).
b. Borrower shall deliver to Lender a duly executed and acknowledged, fully authorized, assignment-in-lieu of foreclosure without covenants in a form acceptable to Lender in its reasonable discretion, which shall convey to Lender Borrower’s good and marketable title to the Collateral, free and clear of all Liens (other than those created by Lender under the Pledge and Security Agreement and Permitted Encumbrances (an “AIL”). A copy of the proposed AIL shall accompany the Tender Notice. It is specifically understood that upon Lender’s request, the AIL shall run to any assignee, subsidiary, affiliate or nominee of Lender and/or shall include “anti-merger” language reflecting the intention of the parties that the lien of the Pledge and Security Agreement not be extinguished; provided that compliance with such request shall not materially increase Borrower’s or Guarantor’s liability, cost or obligations.
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c. Guarantor and Borrower shall deliver to Lender a fully authorized, executed, binding and enforceable release of Lender, its Affiliates and their respective employees, agents, officers, directors, shareholders and members (collectively with their successors and assigns, the “Released Parties”),in form and substance reasonably acceptable to Lender, Borrower and Guarantor, pursuant to which Guarantor and Borrower (on its own behalf and on behalf of its respective Affiliates) shall, effective as of the date of effectiveness and delivery of the AIL, fully and irrevocably release each of the Released Parties from any and all claims pertaining to the Property or the Collateral which in any way arise out of, are connected with or relate to any acts or occurrences in connection with the ownership, maintenance and operation of the Property or the Collateral, which arise out of, are connected with or relate to any acts or occurrences on or prior to the Tender Date, unless caused by the fraud, gross negligence or willful misconduct of any Released Parties, provided that such release shall not release or impair Borrower’s or Guarantor’s rights to enforce the terms of this Guaranty, including the limitation of the Indebtedness Guaranteed following the date of the Valid Tender;
d. Borrower shall deliver to Lender each of (i) Borrower’s operating agreement and corporate resolutions of or on behalf of Borrower authorizing the transactions contemplated in connection with the AIL, and (ii) payment of all transfer taxes required to be paid under the applicable Legal Requirements in connection with the transfer and conveyance of the Collateral;
e. To the extent not delivered to Mortgage Lender in accordance with the Mortgage Loan Documents, Lender shall receive all cash and non-cash security deposits (and an assignment of such non-cash security deposits, if applicable), prepaid rents (if any) and any other deposits with respect to Leases at the Property to the extent actually received and currently being held or controlled by Borrower or Mortgage Borrower (and to the extent not otherwise held as collateral for the Loan by Lender (or any Servicer or other Person on Lender’s behalf));
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f. Lender shall receive copies (or originals, if reasonably available) of all of the following material documents to the extent then in the possession of Borrower or any of its Affiliates with respect to the Property and if and to the extent existing: Leases, service contracts, building permits, certificates of occupancy, entitlements, and other material governmental permits, subdivision maps, licenses and approvals for the Property, all plans and specifications for the Improvements, and all surveys, structural, mechanical, engineering, electrical, soil, environmental, and similar reports and studies, each to the extent not previously provided to Lender;
g. Intentionally omitted;
h. An updated search report issued by the First American Title Insurance Company, Stewart Title Insurance Company, Old Republic Title Insurance Company or any title company which is a part of the Fidelity National Title Group, showing fee title to the Property to be vested in Mortgage Borrower and no exceptions to the title of the Property, other than Permitted Encumbrances and other Liens created by Lender under the Pledge and Security Agreement, Mortgage Lender under the Mortgage Loan Documents, or otherwise approved in writing by Lender prior to the date of such assignment;
i. Lender shall be provided with a Phase I environmental report (which may be in the form of an update to the environmental report obtained by Lender in connection with the origination of the Loan) dated within forty-five (45) days of the Tender Notice addressed to Lender showing no recognized material environmental conditions at the Property (other than those conditions expressly identified in the environmental assessments delivered to Lender on or prior to the date hereof, if any, and any conditions caused by Lender or its Affiliates) which is required to be cured and/or remediated pursuant to Environmental Laws and has not been so cured or remediated; and
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j. Lender shall receive payment of an amount equal to the aggregate of the following: (i) any and all Indebtedness Guaranteed which is then outstanding and due and payable as of, and only for the period up to, the Tender Date; and (ii) all reasonable out-of-pocket costs and expenses (including reasonable out-of-pocket legal fees) actually incurred by Lender in connection with the Valid Tender.
Nothing here shall require Borrower or Guarantor to make a Valid Tender, which shall be within Borrower’s or Guarantor’s discretion. Regardless of whether Borrower satisfies the conditions for a Valid Tender, nothing contained herein shall be construed so as to obligate Lender to accept the AIL or any accompanying documents. However, if the conditions are satisfied such that a Valid Tender does occur, then the Indebtedness Guaranteed shall be limited as set forth in Section 1.2(a) regardless of whether the AIL and other documents are accepted by Lender. Notwithstanding anything to the contrary contained herein, in the event that Lender elects (in its sole discretion) to accept the AIL (and Lender elects to accept the other documentation referred to herein) and thereafter the conveyance of the Collateral is set aside or otherwise invalidated for any reason by final, non-appealable court order (whether pursuant to bankruptcy proceedings or otherwise), the limitation of the Indebtedness Guaranteed as referred to above shall be ineffective and void ab initio and Guarantor shall be liable under this Guaranty as if the AIL of the Collateral had never been conveyed. The provisions of Section 1.2 will be and remain effective notwithstanding any contrary action which may have been taken by Guarantor in reliance upon the limitation of this Guaranty, and any such contrary action so taken will be without prejudice to Lender’s rights hereunder and will be deemed to have been conditioned upon the conveyance of the Collateral and other assets to Lender (or its successor, assignee or nominee) having been final and irrevocable.
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EXHIBIT B
Legal Description
ALL THAT CERTAIN LOT OR PARCEL OF LAND SITUATE IN THE COUNTY OF BROWARD, STATE OF FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1:
LOTS 1, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
PARCEL 2:
LOTS 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 AND 14, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
LESS AND EXCEPT THEREFROM THAT CERTAIN PROPERTY CONVEYED TO THE CITY OF HOLLYWOOD BY THAT CERTAIN DEED RECORDED IN OFFICIAL RECORDS BOOK 3476, PAGE 399, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF LOT 6, BLOCK 40, OF THE SUBDIVISION OF THE TOWN OF HOLLYWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 1, AT PAGE 21, IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA; RUN EAST ON AND ALONG THE SOUTH LINE OF LOTS 6, 7 AND 8 FOR A DISTANCE OF 65.36 FEET TO THE POINT OF BEGINNING. SAID POINT OF BEGINNING BEING THE POINT OF CURVATURE OF A CURVE CONCAVE TO THE NORTHWEST AND HAVING THE FOLLOWING PROPERTIES: R=30.0 FEET, DELTA=123 DEGREES 06 MINUTES 46 SECONDS, ARC LENGTH=64.46 FEET; THENCE RUN NORTHEASTERLY ON SAID CURVE FOR A DISTANCE OF 64.46 FEET TO THE POINT OF INTERSECTION WITH THE EAST PROPERTY LINE OF LOT 8 OF SAID BLOCK 40. THENCE RUN SOUTHEASTERLY ON THE EAST LINE OF LOT 8, SAID EAST LINE BEING A CURVE HAVING THE FOLLOWING PROPERTIES: R=492.0 FEET, DELTA=9 DEGREES 52 MINUTES 51 SECONDS, ARC LENGTH=84.85 FEET, EXTENDED TO A POINT OF INTERSECTION WITH THE SOUTH LINE OF LOTS 6, 7 AND 8 EXTENDED EASTERLY; THENCE RUN WESTERLY ON AND ALONG THE EXTENSION OF LOTS 6, 7 AND 8 TO THE POINT OF BEGINNING.
PARCEL 3:
THAT CERTAIN 13.00 FOOT ALLEY LYING IN BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS VACATED AND MORE PARTICULARLY DESCRIBED BY THAT CERTAIN ORDINANCE NO. 0-2005-16 RECORDED IN OFFICIAL RECORDS BOOK 47110, PAGE 253, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA
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MEZZANINE LIMITED payment GUARANTY
THIS MEZZANINE LIMITED PAYMENT GUARANTY (“Guaranty”) is made as of July 24, 2026, by STEWARDS, INC., a Nevada corporation, SHAUN A. QUIN, an individual, GLEN STEWARD, an individual, CHARLES R. ABELE, an individual, and PETER J. JAGO, an individual (individually and collectively (as the context requires), the “Guarantor”), in favor of 1818 MEZZ LENDER LLC, a Delaware limited liability company (collectively with its successors or assigns “Lender”).
RECITALS
A. Pursuant to the terms of that certain Mezzanine Loan Agreement of even date herewith by and between BLOCK 40 HOLDCO LLC, a Delaware limited liability company (“Borrower”), and Lender (as the same may be amended, modified, supplemented or replaced from time to time, the “Loan Agreement”), Lender made a mezzanine loan to Borrower in the principal sum of Ten Million and 00/100 Dollars ($10,000,000.00) (the “Loan”) for the purposes specified in, and subject to the terms of, the Loan Agreement.
B. The Loan Agreement provides that the Loan is evidenced by that certain Note (as defined in the Loan Agreement). The Loan is further evidenced and secured by certain other Loan Documents (as defined below).
C. The Note is secured by, among other things, that certain Pledge and Security Agreement (as defined in the Loan Agreement). The Pledge and Security Agreement encumbers Borrower’s equity interests in BLOCK 40 PROPERTY LLC, a Delaware limited liability company, which owns the real property and any and all Improvements thereon described on Exhibit A attached hereto and incorporated herein by this reference (the “Property”).
D. The Loan Agreement, the Pledge and Security Agreement, the Note, and those other documents described and defined in the Loan Agreement as Loan Documents, together with all modifications, extensions, renewals and amendments thereto, are collectively referred to hereinafter as the “Loan Documents”.
E. Guarantor retains a direct or indirect ownership interest in Borrower and the Property and will benefit from the Loan that has been made by Lender to Borrower.
F. Pursuant to the terms of that certain Loan Agreement of even date herewith by and between BLOCK 40 PROPERTY, LLC, a Delaware limited liability company (“Mortgage Borrower”), and VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company (“Mortgage Lender”) (as the same may be amended, modified, supplemented or replaced from time to time, the “Mortgage Loan Agreement”), Mortgage Lender made a loan to Mortgage Borrower in the principal sum of Sixty-Nine Million and 00/100 Dollars ($69,000,000.00) (the “Mortgage Loan”) for the purposes specified in, and subject to the terms of, the Mortgage Loan Agreement. As security for the Mortgage Loan, Guarantor is executing that certain Limited Payment Guaranty of even date herewith in favor of Mortgage Lender (as the same may be amended, modified, supplemented or replaced from time to time, the “Mortgage Limited Payment Guaranty”).
NOW, THEREFORE, to induce Lender to enter into the Loan Documents and to make the Loan and in consideration of the sum of Ten and No/100 Dollars ($10.00), the foregoing recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably, covenants and agrees with Lender, and guarantees to Lender, as applicable, as follows:
1. GUARANTY OF OBLIGATIONS.
1.1 Guarantor hereby unconditionally, absolutely and irrevocably, guarantees, becomes surety for and promises to pay to Lender, as a primary obligor, the full and prompt payment of the Guaranteed Obligations (as defined below) as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. For the purposes of this Guaranty, the term “Guaranteed Obligations” shall mean the full and punctual payment when due of the outstanding principal balance of the Loan. Guarantor shall not be liable under this Guaranty for payment of interest, default interest, late charges, exit fees, prepayment premiums, yield maintenance, protective advances or any other non-principal amounts. Notwithstanding anything contained herein to the contrary, the maximum aggregate liability for payment of the total Guaranteed Obligations of Guarantor (jointly and severally among all Guarantors) hereunder, shall be limited to $19,750,000.00, plus all reasonable, actual, out-of-pocket collection costs and enforcement expenses related to the enforcement of this Guaranty, and minus any amounts actually paid or recovered from Guarantor by Mortgage Lender and applied to the outstanding principal balance of the Mortgage Loan pursuant to the terms and conditions of the Mortgage Limited Payment Guaranty (“Guaranty Cap”). All amounts paid by Guarantor under this Guaranty (exclusive of the foregoing collection costs and enforcement expenses) shall reduce the remaining amount available under the Guaranty Cap on a dollar-for-dollar basis. For avoidance of doubt, acceleration of the Loan, maturity of the Loan, foreclosure, assignment-in-lieu, exercise of remedies or the existence of any deficiency shall not increase Guarantor’s liability beyond the Guaranty Cap. For the avoidance of doubt, Guarantor's liability hereunder shall in no event exceed the lesser of (A) the then-remaining Guaranty Cap and (B) the then-outstanding Debt (as reduced by all payments and proceeds actually received by Lender and applied to the Debt, including without limitation payments by Borrower, payments by any other Guarantor, and proceeds from the Collateral)
1.2 Guarantor acknowledges and agrees that payments made by Guarantor pursuant to this Guaranty and/or the Mortgage Limited Payment Guaranty shall be applied to the Guaranteed Obligations and/or the Guaranteed Obligations (as defined in the Mortgage Limited Payment Guaranty) pursuant to the terms and conditions of Sections 5(d) and (e) of the Intercreditor Agreement.
2. NO WAIVER, RELEASE OR IMPAIRMENT. This Guaranty is a continuing guaranty of payment and guaranties payment of the Guaranteed Obligations to Lender, as limited herein. Nothing contained in this Guaranty shall be deemed to waive, release, affect or impair the indebtedness evidenced by the Loan Documents or the obligations of Borrower or Guarantor under any additional Loan Documents, or the liens and security interests created by the Loan Documents, or Lender’s rights to enforce its rights and remedies under the Loan Documents and under this Guaranty or the indemnity provided herein, in the Loan Documents or in connection with the Loan, or otherwise provided in equity or under applicable law, including, without limitation, the right to pursue any remedy for injunctive or other equitable relief, or any suit or action in connection with the preservation, enforcement or foreclosure of the liens, pledges, assignments and security interests which are now or at any time hereafter security for the payment and performance of all obligations under the Loan Agreement or in the other Loan Documents.
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3. NATURE OF GUARANTY. This Guaranty is an irrevocable, absolute, continuing guaranty of payment and not a guaranty of collection. This Guaranty may not be revoked by Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation hereof. The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of Guarantor to Lender with respect to the Guaranteed Obligations. The Guaranteed Obligations and the liabilities and obligations of Guarantor to Lender hereunder, shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower, or any other party, against Lender or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such security instrument expressly recites that it secures this Guaranty.
4. PAYMENT BY GUARANTOR. If all or any part of the Guaranteed Obligations shall not be punctually paid when due in accordance with the Loan Documents (following expiration of all applicable notice and cure periods thereunder), whether at demand, maturity, acceleration or otherwise, Guarantor shall, within ten (10) Business Days after receipt of written demand from Lender, and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity, or any other notice whatsoever, except for notices otherwise expressly provided for under the Loan Documents, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to Lender, at Lender’s address as set forth herein. Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with the notice provisions hereof. It shall not be necessary for Lender (and Guarantor hereby waives any rights which Guarantor may have to require Lender), in order to enforce the obligations of Guarantor hereunder, first to (a) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other person, (b) enforce Lender’s rights against any collateral which shall ever have been given to secure the Loan, (c) enforce Lender’s rights against any other guarantors of the Guaranteed Obligations, (d) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (e) exhaust any remedies available to Lender against any collateral which shall ever have been given to secure the Loan, (f) provide notice or proof of non-payment or default by Borrower or (g) resort to any other means of obtaining payment of the Guaranteed Obligations. If Guarantor fails to promptly pay the Guaranteed Obligations within the above ten (10) Business-Day Period, Lender may from time to time, and without first requiring performance by Borrower or any other guarantor, or without exhausting any or all security (if any) for the Loan, bring any action at law or in equity or both to compel Guarantor to pay the Guaranteed Obligations, together with interest thereon at the then applicable interest rate on the Note from the expiration of such ten (10) Business-Day period.
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5. GUARANTOR’S WAIVERS.
5.1 Guarantor acknowledges that Guarantor has received copies of the Loan Documents, and to the extent permitted by applicable law, Guarantor waives any and all rights and defenses based upon or arising out of (a) any legal disability or other defense of Borrower, any other guarantor or other Person or by reason of the cessation or limitation of the liability of Borrower from any cause other than full payment of all sums payable under the Loan Documents; (b) any lack of authority of the officers, directors, partners, managers, members or agents acting or purporting to act on behalf of Borrower, Guarantor or any principal of Borrower or any Guarantor, or any defect in the formation of Borrower, Guarantor or any principal of Borrower or any Guarantor; (c) the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Guarantor; (d) any act or omission by Lender or Servicer which directly or indirectly results in, or contributes to, the release of Borrower or any other Person or any collateral for any obligation to Lender in connection with the Loan; (e) the unenforceability or invalidity of any collateral assignment or guaranty with respect to any obligation to Lender in connection with the Loan, or the lack of perfection or continuing perfection or lack of priority of any lien which secures any obligation to Lender in connection with the Loan; (f) any failure of Lender to marshal assets in favor of Guarantor or any other Person; (g) any modification of any obligation to Lender in connection with the Loan, in accordance with the Loan Documents, including, without limitation, any renewal, extension, acceleration or increase in interest rate; (h) an election of remedies by Lender, even though that election of remedies (such as a non-judicial foreclosure, if available and/or permitted, with respect to security for a guaranteed obligation) has or may have destroyed Guarantor’s rights of subrogation, reimbursement and contribution against the principal by the operation of applicable law or otherwise; (i) Lender’s failure to disclose to Guarantor any information concerning Borrower’s financial condition or any other circumstances bearing on Borrower’s ability to pay and perform its obligations under the Note or any of the other Loan Documents, or upon the failure of any other principals of Borrower to guaranty the Loan; (j) any statute or rule of law which provides that the obligation of a surety or guarantor must be neither larger in amount nor in any other respects more burdensome than that of a principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation; (k) any failure of Lender to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; (l) Lender’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (m) any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code; (n) any right of subrogation, reimbursement, indemnification and contribution, any right to enforce any remedy which Lender may have against Borrower and any right to participate in, or benefit from, any security for the Note or the other Loan Documents now or hereafter held by Lender; (o) presentment, demand, protest and notice of any kind (except as otherwise required to be given pursuant to the terms hereof or any of the other Loan Documents); (p) intentionally deleted; (q) use of cash collateral under Section 363 of the Bankruptcy Code; (r) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any Person; (s) any and all defenses based upon suretyship or impairment of collateral; and (t) any right to revoke this Guaranty as to any future advances made by Lender under and pursuant to the Loan Documents to protect Lender’s interest in the Collateral. Notwithstanding anything to the contrary set forth herein, in no event is Guarantor waiving any defense of payment and/or performance. Notwithstanding the foregoing or anything to the contrary in this Guaranty, Guarantor is not waiving and reserves all of its rights, remedies and defenses regarding a claim of Lender’s gross negligence or willful misconduct.
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5.2 This Guaranty is a “last dollar” guaranty, and accordingly, under no circumstances (except as otherwise set forth herein) shall the Guarantor’s liability hereunder be reduced by, from or as a result of any payment to or amount realized by Lender from Borrower, any guarantor other than Guarantors under this Agreement, any rents, deposits, insurance proceeds, condemnation awards, proceeds from bankruptcy sale, foreclosure or any conveyance in lieu of foreclosure or from any other profits, avails, revenues, or proceeds derived from the Collateral, and only payments made to Lender by the Guarantor out of their personal funds not derived from the Property before or after written demand thereof by Lender shall be applied against such liability. The foregoing sentence is an unconditional and irrevocable waiver of certain rights and defenses of Guarantor. This understanding and waiver is made in addition to and not in limitation of any of the other terms and conditions of this Guaranty. These rights and defenses being waived by Guarantor include, but are not limited to, any rights or defenses based upon deficiency limitation or anti-deficiency, redemption or other similar rights, if any. In no event shall Lender be entitled to recover more than 100% of its Losses (as defined in the Limited Guaranty) or amounts owed under the Loan Documents, without duplication, and Guarantor shall in no event be liable for any portion of the Debt that is satisfied from other proceeds. The foregoing last-dollar provisions shall not permit Lender to recover twice for the same Loss or Debt.
5.3 Lender may collect from Guarantor without first foreclosing on the Collateral; and if Lender forecloses on the Collateral, then (A) the amount of the debt may be reduced only by the price for which the Collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Lender may collect from Guarantor even if Lender, by foreclosing on the Collateral, has destroyed any right Guarantor may have to collect from Borrower. The foregoing sentence is an unconditional and irrevocable waiver of certain rights and defenses of Guarantor. This understanding and waiver is made in addition to and not in limitation of any of the other terms and conditions of this Guaranty. These rights and defenses being waived by Guarantor include, but are not limited to, any rights or defenses based upon deficiency limitation or anti-deficiency, redemption or other similar rights, if any, expressly excluding (i) any defense of payment and/or performance and (ii) any defense regarding a claim of Lender’s gross negligence or willful misconduct. Guarantor agrees that the payment or performance of any act which tolls any statute of limitations applicable to the Note or any of the other Loan Documents shall similarly operate to toll the statute of limitations applicable to Guarantor’s liability hereunder. Without limiting the generality of the foregoing or any other provision hereof, Guarantor further expressly waives to the extent permitted by law any and all rights and defenses to seek subrogation, reimbursement, indemnification or contribution which might otherwise be available to Guarantor under any applicable law, other than the defense of payment and/or performance, or any defense asserting Lender’s gross negligence or willful misconduct.
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5.4 The statutes and rules referred to above in this Section shall include any further statutes or rules amending, supplementing or supplanting same. The waivers and agreements contained herein are given by Guarantor knowingly, intelligently and voluntarily, upon advice of counsel, to induce Lender to accept a lower interest rate on the Note and other Loan Document terms more favorable to Borrower and Guarantor than would be acceptable to Lender in the absence thereof.
5.5 Notwithstanding the foregoing waivers, upon indefeasible payment in full of the Debt, and so long as no claim for a clawback, avoidance or recovery under applicable insolvency laws is pending or threatened in writing, such waivers shall be of no further force or effect, and Guarantor’s rights of subrogation, reimbursement, indemnification and contribution and any other waived rights shall automatically revive.
6. GUARANTOR’S WARRANTIES. Guarantor warrants, represents, covenants and acknowledges to Lender that: (a) Lender would not make the Loan but for this Guaranty; (b) Guarantor has reviewed all of the terms and provisions of the Loan Agreement and the other Loan Documents; (c) there are no conditions precedent to the effectiveness of this Guaranty; (d) Guarantor has established adequate means of obtaining from sources other than Lender, on a continuing basis, financial and other information pertaining to Borrower’s financial condition, the Property, the Collateral and Borrower’s activities relating thereto and the status of Borrower’s performance of obligations under the Loan Documents, and Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor’s risks hereunder, and Lender has made no representation to Guarantor as to any such matters; (e) the most recent financial statements of Guarantor heretofore delivered to Lender are true and correct in all material respects, have been prepared as required by Article 11 of the Loan Agreement (as such Section exists as of the date hereof) and fairly and accurately represent the financial condition of Guarantor as of the respective dates thereof, and to Guarantor’s actual knowledge, no material adverse change has occurred in the financial condition of Guarantor since the respective dates thereof except as disclosed to Lender in writing; (f) Guarantor has not and will not, without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned, or delayed, sell, lease, assign, encumber, pledge, hypothecate, mortgage, transfer or otherwise dispose of all or substantially all of Guarantor’s assets, or all or substantially all of its interests therein such that as a direct result thereof Guarantor’s net worth and/or liquidity is reduced below the minimum threshold amounts required to be maintained by Guarantor in accordance with the terms of the Loan Documents; and (g) as of the date hereof Guarantor is not and will not be as of the date hereof, as a consequence of the execution and delivery of this Guaranty, impaired or rendered “insolvent”, as that term is defined in Section 101 of the Bankruptcy Code, or otherwise rendered unable to pay Guarantor’s debts as the same mature and will not have thereby undertaken liabilities in excess of the present fair value of Guarantor’s assets.
7. SUBORDINATION. Until payment in full of the Debt, Guarantor subordinates all present and future indebtedness owing by Borrower to Guarantor to the obligations at any time owing by Borrower to Lender under the Note and the other Loan Documents. Guarantor assigns all such indebtedness to Lender as security for this Guaranty, the Note and the other Loan Documents. Guarantor agrees to make no claim for such indebtedness until all obligations of Borrower under the Note and the other Loan Documents have been repaid in full; provided, however, that the foregoing subordination,
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assignment and restriction shall suspend Guarantor’s rights only until such payment in full, and all such rights shall automatically revive thereafter without further action by any Person. Notwithstanding the foregoing, Guarantor may timely file proofs of claim or other protective claims, provided that, for so long as any obligations under the Loan Documents remain outstanding, any distributions or other amounts received by Guarantor on account of such claims shall be held in trust for and promptly turned over to Lender for application to the obligations in accordance with the Loan Documents. Guarantor further agrees not to assign all or any part of such indebtedness unless Lender is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. If a Guarantor receives payment for any such indebtedness while any obligations under the Loan Documents remain outstanding, then Guarantor shall deliver such payment to Lender. Guarantor will hold any such payment Guarantor receives in trust for Lender until such payment is delivered to Lender. If Lender so requests, (a) all instruments evidencing such indebtedness shall be duly endorsed and delivered to Lender, (b) all security for such indebtedness shall be duly assigned and delivered to Lender, (c) such indebtedness shall be enforced, collected and held by Guarantor as trustee for Lender and shall be paid over to Lender on account of the Loan, and (d) Guarantor shall execute, file and record such documents and instruments and take such other action as is reasonably necessary or appropriate to perfect, preserve and enforce Lender’s rights in and to such indebtedness and any security therefor provided such action does not increase the obligations or liabilities of Guarantor hereunder except, in each case, to a de minimis extent. If Guarantor fails to take any such action, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor limited solely to carrying out the specific actions expressly required of Guarantor under this Section, and not for any other purpose and provided such action does not increase the obligations or liabilities of Guarantor hereunder except, in each case, to a de minimis extent. The foregoing power of attorney is coupled with an interest and cannot be revoked.
8. BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may have against Borrower relating to any indebtedness of Borrower to Guarantor and shall assign to Lender all rights of Guarantor thereunder until the Debt and all other obligations under the Loan Documents have been paid and performed in full. If Guarantor does not file any such claim, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender’s discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of Lender’s nominee. The foregoing limited power of attorney is coupled with an interest and cannot be revoked while any portion of the Debt or any other obligation under the Loan Documents remains outstanding. Lender or Lender’s nominee shall have the right, in its reasonable discretion, to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, for so long as any portion of the Debt or any other obligation under the Loan Documents remains outstanding, the Person or Persons authorized to pay such claim shall pay to Lender the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor’s rights to any such payments or distributions; provided, however, that Guarantor may receive any such payment or distribution if Guarantor holds it in trust for Lender and promptly turns it over to Lender, and Guarantor’s obligations hereunder shall not be satisfied except to the extent that Lender receives cash by reason of any such payment or distribution. If Lender receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this Guaranty. The foregoing, assignment, suspension and restrictions on Guarantor’s rights shall continue only until the Debt and all other obligations under the Loan Documents have been paid and performed in full, at which time such rights shall automatically revest and revive in favor of Guarantor without further action by any Person If all or any portion of the obligations guaranteed hereunder are paid or performed, the obligations of Guarantor hereunder shall be reinstated with respect to all or any part of such payment or performance that is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws, irrespective of any notice of revocation given by Guarantor prior to such avoidance or recovery.
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9. ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS. This Guaranty is a continuing guaranty of payment and not of collection and cannot be revoked by Guarantor and shall continue to be effective with respect to any indebtedness referenced herein arising or created after any attempted revocation hereof or after the death of Guarantor (if Guarantor is a natural person, in which event this Guaranty shall be binding upon Guarantor’s estate). The obligations of Guarantor hereunder shall be in addition to and shall not limit or in any way affect the obligations of Guarantor under any other existing or future guaranties unless said other guaranties are expressly modified or revoked in writing. Amounts paid by Guarantor under this Guaranty shall be credited against any overlapping obligation of Guarantor under any other guaranty or indemnity delivered in connection with the Loan, and vice versa, so that Lender shall not recover the same amount more than once. This Guaranty is independent of the obligations of Borrower under the Note, the other Loan Documents and the Pledge and Security Agreement. Lender may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Borrower or any other party or joining Borrower or any other party as a party to such action. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such security instrument expressly recites that it secures this Guaranty.
10. CREDIT REPORTS. Guarantor hereby authorizes Lender to order and obtain, from a credit reporting agency of Lender’s choice, a third party credit report on Guarantor, not more than once annually and any time during the occurrence of an uncured Default under the Loan Documents.
11. ENFORCEABILITY. Guarantor hereby acknowledges that: (a) the obligations undertaken by Guarantor in this Guaranty are complex in nature, (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, (c) as part of Lender’s consideration for entering into this transaction, Lender has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek and receive legal advice from skilled legal counsel in the area of financial transactions of the type contemplated herein. Given all of the above, Guarantor does hereby represent and confirm to Lender that Guarantor is fully informed regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible defenses, (ii) the circumstances under which such defenses may arise, (iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses. Guarantor acknowledges that Guarantor makes this Guaranty with the intent that this Guaranty and all of the informed waivers herein shall each and all be fully enforceable by Lender, and that Lender is induced to enter into this transaction in material reliance upon the presumed full enforceability thereof.
12. INTENTIONALLY OMITTED.
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13. MISCELLANEOUS.
13.1 Notices. All notices, demands, or other communications under this Guaranty shall be in writing and shall be delivered to the appropriate party at the addresses set forth below (subject to change from time to time by written notice to all other parties to this Guaranty as provided below). All notices, demands or other communications shall be considered as properly given if delivered (i) personally or sent by first class United States Postal Service mail, postage prepaid, (ii) by Overnight Mail Express (i.e., USPS Priority Mail Express), (iii) by overnight commercial courier service, charges prepaid or (iv) email with a copy of such notice to follow sent by any method as set forth in (i)–(iii) above. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be:
| Guarantor: |
Stewards, Inc. 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Attn: Katy Murless, Vaughan Korte Email: [email protected]; [email protected]
Shaun Quin 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Email: [email protected]
Glen Steward 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Email: [email protected]
Charles R. Abele 1776 Polk Street, Suite 200 Hollywood, FL 33020 Email:
Peter J. Jago 1776 Polk Street, Suite 200 Hollywood, FL 33020 Email:
With a copy to:
Cozen O’Connor One Liberty Place 1650 Market Street, Suite 2800 Philadelphia, PA 19103 Attn: Howard Grossman Email: [email protected]
|
| Lender: |
1818 Mezz Lender LLC c/o CCL Capital 420 Lexington Avenue Suite 2100 New York, NY 10170 Attn: Adam Budgor Email: [email protected]
With a copy to:
Windels Marx Lane & Mittendorf, LLP 156 West 56th Street New York, New York 10019 Attention: Wayne S. Cook, Jr., Esq. Email: [email protected] |
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Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth hereinabove. Notices, demands, and communications provided by legal counsel on behalf of any party to this Guaranty pursuant to this Section 13.1 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
13.2 Attorneys’ Fees and Expenses; Enforcement. If any attorney is engaged by Lender to enforce or defend any provision of this Guaranty or as a consequence of any default under this Guaranty, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding or in connection with any appeal of a lower court decision (unless on the basis of Lender’s gross negligence, fraud or willful misconduct), then Guarantor shall immediately pay to Lender, within five (5) Business Days of written demand from Lender, together with reasonable documentation therefor, the amount of all such reasonable attorneys’ fees and expenses and out-of-pocket costs actually incurred in connection therewith, including all trial and appellate proceedings in any legal action, suit, bankruptcy or other proceeding, together with interest thereon only from the expiration of such five (5) Business Day period at the rate of interest applicable to the Principal Balance of the Note as specified therein. In the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and not by any jury and shall be included in any judgment obtained by Lender. This provision is separate and several and shall survive merger into judgment.
13.3 Cooperation. The terms and conditions of Section 13.35 and 13.36 of the Loan Agreement are incorporated herein by reference and Guarantor hereby agrees to reasonably cooperate with Lender in connection therewith.
13.4 No Waiver. No previous waiver and no failure or delay by Lender in acting with respect to the terms of the Note or this Guaranty shall constitute a waiver of any breach, default, or failure of condition under the Note or this Guaranty or the obligations secured thereby. A waiver of any term of the Note or this Guaranty or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.
13.5 Waiver of Right to Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, GUARANTOR AND, BY ITS ACCEPTANCE HEREOF, LENDER, EACH HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY. THIS PROVISION IS A MATERIAL INDUCEMENT OF LENDER TO MAKE THE LOAN TO BORROWER AND OF GUARANTOR TO PROVIDE THIS GUARANTY.
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13.6 Severability. If any provision or obligation under this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from this Guaranty and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of this Guaranty.
13.7 Successors and Assigns. Except as otherwise expressly provided under the terms and conditions herein, the terms of this Guaranty shall bind and inure to the benefit of the executors, administrators, nominees, successors and assigns of the parties hereto.
13.8 Time. Time is of the essence of each and every term herein.
13.9 Governing Law And Consent To Jurisdiction. This Guaranty and any claim, controversy or dispute arising under or related to this Guaranty, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties will be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to any conflicts of law principles, except to the extent preempted by federal laws. Guarantor consents to the jurisdiction of any federal or state court within the State of New York having proper venue and also consent to service of process by any means authorized by New York or federal law.
13.10 Survival. This Guaranty shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive the exercise of any remedy by Lender under the Pledge and Security Agreement or any of the other Loan Documents, including, without limitation, any foreclosure or assignment in lieu thereof, provided that this Guaranty shall terminate on the earlier to occur of (i) full payment of the Debt and (ii) Guarantor making payments hereunder in an amount equal to the Guaranty Cap.
13.11 Joint and Several Liability. THE LIABILITY OF EACH GUARANTOR HEREUNDER SHALL BE JOINT AND SEVERAL WITH EACH ADDITIONAL GUARANTOR.
13.12 Headings. All article, section or other headings appearing in this Guaranty are for convenience of reference only and shall be disregarded in construing this Guaranty.
13.13 Powers Of Attorney. The powers of attorney granted by Guarantor to Lender in this Guaranty shall be unaffected by the disability of the principal so long as any portion of the Loan remains unpaid or unperformed. Lender shall have no obligation to exercise any of the foregoing rights and powers in any event. Any power of attorney granted herein shall be limited solely to carrying out the specific actions expressly required of Guarantor under the applicable Section, and shall not expand Guarantor’s obligations or liabilities hereunder except, in each case, to a de minimis extent. Lender shall not execute upon any power of attorney without first giving Guarantor no less than ten (10) Business Days’ notice thereof, and Guarantor and Borrower having not taken the requisite action during that time period.
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13.14 Defined Terms. Unless otherwise defined herein, capitalized terms used in this Guaranty shall have the meanings attributed to such terms in the Loan Agreement, or the Pledge and Security Agreement, as applicable.
13.15 Rules Of Construction. The word “Borrower” as used herein shall include both the named Borrower and any other Person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term “Person” as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one person, the term “Guarantor” shall include all such persons. The word “Lender” as used herein shall include Lender, its successors, assigns and affiliates.
13.16 Use Of Singular And Plural; Gender. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
13.17 Exhibits, Schedules And Riders. All exhibits, schedules, riders and other items attached hereto are incorporated into this Guaranty by such attachment for all purposes.
13.18 Community Property. If Guarantor is a natural person, this Guaranty shall be binding against Guarantor’s sole and separate property and the property now or hereafter owned by the marital community property of Guarantor.
13.19 Integration; Interpretation. This Guaranty contains the entire agreement of the parties with respect to the matters contemplated hereby and supersedes all prior negotiations or agreements, written or oral. This Guaranty shall not be modified except by written instrument executed by all parties.
13.20 Lender Agreement. Lender’s acceptance of this Guaranty (which shall be evidenced by its making of the Loan) shall be deemed its agreement to all of the terms and provisions herein.
[signatures follow]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing on the first page of this Guaranty.
GUARANTOR:
STEWARDS, INC., a Nevada corporation
By: _________________________________
Name: Shaun A. Quin
Its: CEO
________________________________________
SHAUN A. QUIN
_______________________________________
GLEN STEWARD
_______________________________________
charles r. abele
_______________________________________
peter j. jago
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EXHIBIT A
Legal Description
ALL THAT CERTAIN LOT OR PARCEL OF LAND SITUATE IN THE COUNTY OF BROWARD, STATE OF FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1:
LOTS 1, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
PARCEL 2:
LOTS 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 AND 14, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
LESS AND EXCEPT THEREFROM THAT CERTAIN PROPERTY CONVEYED TO THE CITY OF HOLLYWOOD BY THAT CERTAIN DEED RECORDED IN OFFICIAL RECORDS BOOK 3476, PAGE 399, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF LOT 6, BLOCK 40, OF THE SUBDIVISION OF THE TOWN OF HOLLYWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 1, AT PAGE 21, IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA; RUN EAST ON AND ALONG THE SOUTH LINE OF LOTS 6, 7 AND 8 FOR A DISTANCE OF 65.36 FEET TO THE POINT OF BEGINNING. SAID POINT OF BEGINNING BEING THE POINT OF CURVATURE OF A CURVE CONCAVE TO THE NORTHWEST AND HAVING THE FOLLOWING PROPERTIES: R=30.0 FEET, DELTA=123 DEGREES 06 MINUTES 46 SECONDS, ARC LENGTH=64.46 FEET; THENCE RUN NORTHEASTERLY ON SAID CURVE FOR A DISTANCE OF 64.46 FEET TO THE POINT OF INTERSECTION WITH THE EAST PROPERTY LINE OF LOT 8 OF SAID BLOCK 40. THENCE RUN SOUTHEASTERLY ON THE EAST LINE OF LOT 8, SAID EAST LINE BEING A CURVE HAVING THE FOLLOWING PROPERTIES: R=492.0 FEET, DELTA=9 DEGREES 52 MINUTES 51 SECONDS, ARC LENGTH=84.85 FEET, EXTENDED TO A POINT OF INTERSECTION WITH THE SOUTH LINE OF LOTS 6, 7 AND 8 EXTENDED EASTERLY; THENCE RUN WESTERLY ON AND ALONG THE EXTENSION OF LOTS 6, 7 AND 8 TO THE POINT OF BEGINNING.
PARCEL 3:
THAT CERTAIN 13.00 FOOT ALLEY LYING IN BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS VACATED AND MORE PARTICULARLY DESCRIBED BY THAT CERTAIN ORDINANCE NO. 0-2005-16 RECORDED IN OFFICIAL RECORDS BOOK 47110, PAGE 253, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA
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MEZZANINE HAZARDOUS MATERIALS INDEMNITY AGREEMENT
THIS MEZZANINE HAZARDOUS MATERIALS INDEMNITY AGREEMENT (“Indemnity”) is given as of July 24, 2026, by BLOCK 40 HOLDCO LLC, a Delaware limited liability company (“Borrower”), and STEWARDS, INC., a Nevada corporation, SHAUN A. QUIN, an individual, GLEN STEWARD, an individual, CHARLES R. ABELE, an individual, and PETER J. JAGO, an individual (individually and collectively, as context may require, “Guarantor”, and together with Borrower, individually and collectively, “Indemnitor”), to 1818 MEZZ LENDER LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”).
RECITALS
A. Pursuant to the terms of that certain Mezzanine Loan Agreement of even date herewith by and between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender has agreed to loan to Borrower the principal sum of up to $10,000,000 (“Loan”) for the purposes specified in the Loan Agreement.
B. The Loan Agreement provides that the Loan is evidenced by that certain Mezzanine Promissory Note of even date herewith executed by Borrower payable to the order of Lender in the principal amount of up to $10,000,000.00 (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”). The Loan is further evidenced and secured by certain other documents described in the Loan Agreement as Loan Documents.
C. The Note is secured by, among other things, the Pledge and Security Agreement. The Pledge and Security Agreement encumbers Borrower’s equity interests in BLOCK 40 PROPERTY LLC, a Delaware limited liability company (“Mortgage Borrower”), which owns the real property and any and all Improvements thereon described on Exhibit A attached hereto and incorporated herein by this reference (the “Property”). Any Property encumbered by the Security Instrument on and after the date hereof shall automatically be included in the term “Property” without the necessity of any further agreement or amendments.
D. Guarantor retains a direct or indirect ownership interest in the Borrower and the Property and will benefit from the Loan to be made by Lender to Borrower and is on even date herewith executing the Guaranty (as defined in the Loan Agreement).
E. The Loan Agreement, the Pledge and Security Agreement, the Note, the Guaranty, and those other documents described in the Loan Agreement as Loan Documents, together with all modifications, extensions, renewals and amendments thereto, are collectively referred to hereinafter as the “Loan Documents”.
F. Indemnitor is entering into this Indemnity to induce Lender to make the Loan.
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AGREEMENT
NOW, THEREFORE, in consideration of Lender contemporaneously herewith making the Loan as requested by Borrower, and for other good and valuable consideration, the receipt of which is hereby acknowledged, subject to the terms hereof, Indemnitor agrees, to the extent permitted by law, as follows:
1. HAZARDOUS MATERIALS.
1.1 Representations And Warranties. Indemnitor hereby represents and warrants, except as expressly disclosed in the Environmental Report, to the best of each such Indemnitor’s knowledge, as follows:
(a) Hazardous Materials. The Property is not and, to Indemnitor’s actual knowledge, has not been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation or presence of any oil, flammable explosives, asbestos, urea formaldehyde insulation, mold, toxic mold, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials,” “toxic substances,” “wastes,” “regulated substances,” “industrial solid wastes,” or “pollutants or contaminants” under the Hazardous Materials Laws, as described below, and/or other applicable environmental laws, ordinances and regulations (collectively, “Hazardous Materials”). “Hazardous Materials” shall not include materials customarily present or used in the ordinary course of ownership or operation of the Property which are used and stored in accordance with all applicable Hazardous Materials Laws (as defined below).
(b) Hazardous Materials Laws. Indemnitor has no actual knowledge that the Property and the Improvements are not in compliance with all laws, ordinances and regulations relating to Hazardous Materials (collectively, the “Hazardous Materials Laws”), including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Hazardous Materials Transportation Act, as amended 49 U.S.C. Section 1801 et seq.; the Atomic Energy Act, as amended, 42 U.S.C. Section 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. Section 136 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; each as now and hereafter amended, and the regulations thereunder, and any other applicable local, state and/or federal laws or regulations that govern (i) the existence, cleanup and/or remedy of contamination of Hazardous Materials on the Property; (ii) the protection of the environment from released, spilled, deposited or otherwise emplaced contamination of Hazardous Materials; (iii) the control of Hazardous Materials; or (iv) the use, generation, transport, treatment, removal or recovery of Hazardous Materials, including any and all building materials.
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(c) Hazardous Materials Claims. There are no claims, actions, proceedings or investigations (“Hazardous Materials Claims”) for which Indemnitor has received written notice or, to Indemnitor’s actual knowledge, pending against Indemnitor or the Property by any Governmental Authority or by any other Person relating to Hazardous Materials or pursuant to the Hazardous Materials Laws.
1.2 Hazardous Materials Covenants. Indemnitor agrees as follows:
(a) No Hazardous Activities. Indemnitor (i) shall not cause or permit the Property to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge, disposal or transportation of any Hazardous Materials and (ii) shall not permit the presence of any Hazardous Materials on the Property in violation of Hazardous Materials Laws.
(b) Compliance. Borrower shall cause Mortgage Borrower to comply in all material respects, and use commercially reasonable efforts to cause the Property to comply in all material respects, with all Hazardous Materials Laws.
(c) Notices. Indemnitor shall promptly notify Lender in writing of: (1) Indemnitor’s discovery of any Hazardous Materials on, under or about the Property in violation of Hazardous Materials Laws; (2) actual knowledge by Indemnitor that the Property does not comply with any Hazardous Materials Laws; (3) any Indemnitor’s actual knowledge of any Hazardous Materials Claims; and (4) Indemnitor’s actual knowledge of any occurrence or condition on any real property adjoining or in the vicinity of the Property that would reasonably be expected to cause the Property or any part thereof to violate Hazardous Materials Laws.
(d) Remedial Action. In response to the presence of any Hazardous Materials on, under or about the Property, Indemnitor shall promptly take, or cause to be taken, at Indemnitor’s sole expense, all remedial action reasonably required by any Hazardous Materials Laws or any Governmental Authority.
1.3 Inspection By Lender. Upon no less than three (3) days’ prior notice to Borrower and subject to the rights of tenants, Lender and its employees and agents may from time to time (whether before or after the commencement of a foreclosure proceeding) enter and inspect the Property, during normal business hours, in a manner that does not unreasonably interfere with operation of the Property and subject to the rights of tenants, for the purpose of determining the existence, location, nature and magnitude of any past or present release or threatened release of any Hazardous Materials into, onto, beneath or from the Property.
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1.4 Hazardous Materials Indemnity. INDEMNITOR HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS INDEMNITEES (AS DEFINED IN THE LOAN AGREEMENT) FOR, FROM AND AGAINST ANY AND ALL ACTUAL LOSSES, DAMAGES (BUT IN NO EVENT SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, UNLESS IMPOSED UPON AN INDEMNITEE BY A THIRD PARTY), LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, REASONABLE COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND EXPENSES) (COLLECTIVELY, “CLAIMS”) WHICH INDEMNITEES INCUR AS A CONSEQUENCE OF (A) THE USE, GENERATION, MANUFACTURE, STORAGE, TREATMENT, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, TRANSPORTATION OR PRESENCE OF ANY HAZARDOUS MATERIALS WHICH ARE FOUND IN, ON, UNDER, ABOUT OR MIGRATING FROM THE PROPERTY; (B) ANY VIOLATION OR CLAIM OF VIOLATION OF ANY HAZARDOUS MATERIALS LAWS WITH RESPECT TO THE PROPERTY; (C) ANY CLAIM BY A THIRD PARTY AGAINST ONE OR MORE INDEMNITEES IN CONNECTION WITH ANY OF THE FOREGOING; OR (D) THE BREACH OF ANY COVENANTS (OR REPRESENTATIONS AND WARRANTIES) OF INDEMNITOR UNDER THIS INDEMNITY. SUCH INDEMNITY SHALL INCLUDE, WITHOUT LIMITATION: (i) THE COSTS OF ANY INVESTIGATION, REPAIR, CLEANUP OR DETOXIFICATION OF THE PROPERTY, OR THE REMOVAL OR REMEDIATION OF ANY HAZARDOUS MATERIALS (REGARDLESS OF THE MEDIUM) FROM THE PROPERTY, OR THE TAKING OF ANY EMERGENCY ACTION, EACH OF WHICH IS REQUIRED BY ANY GOVERNMENTAL AUTHORITY OR REQUIRED BY ANY HAZARDOUS MATERIALS LAWS; AND (ii) ALL COURT COSTS AND REASONABLE ATTORNEYS’ FEES AND EXPENSES PAID OR INCURRED BY ANY AND ALL INDEMNITEES. EACH INDEMNITEE SHALL HAVE THE RIGHT AT ANY TIME TO APPEAR IN, AND TO PARTICIPATE IN AS A PARTY IF IT SO ELECTS, AND BE REPRESENTED BY COUNSEL OF ITS OWN CHOICE IN, ANY ACTION OR PROCEEDING INITIATED IN CONNECTION WITH ANY HAZARDOUS MATERIALS LAWS THAT AFFECT THE PROPERTY; PROVIDED, HOWEVER, THAT INDEMNITOR SHALL REMAIN ENTITLED TO CONTROL THE DEFENSE UNLESS AND UNTIL LENDER IS ENTITLED TO ASSUME SUCH DEFENSE PURSUANT TO SECTION 2. NOTWITHSTANDING THE FOREGOING, THE REASONABLE FEES AND EXPENSES OF SUCH SEPARATE COUNSEL SHALL BE INCLUDED IN THE CLAIMS TO THE EXTENT ARISING AFTER LENDER BECOMES ENTITLED TO ASSUME THE DEFENSE PURSUANT TO SECTION 2 OR IF A CONFLICT OF INTEREST EXISTS THAT REASONABLY REQUIRES SEPARATE COUNSEL. INDEMNITOR SHALL PROMPTLY PAY TO THE APPLICABLE INDEMNITEES UPON FIVE (5) BUSINESS DAYS OF WRITTEN DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE EXPIRATION OF SUCH FIVE (5) BUSINESS DAY PERIOD UNTIL PAID AT THE THEN APPLICABLE RATE OF INTEREST UNDER THE NOTE. NOTWITHSTANDING THE FOREGOING OR ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, INDEMNITOR SHALL NOT BE OBLIGATED TO INDEMNIFY, DEFEND OR HOLD HARMLESS ANY INDEMNITEE FOR, FROM OR AGAINST ANY CLAIM TO THE EXTENT ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNITEE, OR (II) ARISING OUT OF ANY ENVIRONMENTAL CONDITION EXISTING AT THE PROPERTY PRIOR TO THE CLOSING OF THE LOAN AND SPECIFICALLY DISCLOSED TO LENDER IN THE ENVIRONMENTAL RPORT DELIVERED TO LENDER IN CONNECTION WITH THE CLOSING OF THE LOAN.
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1.5 Legal Effect. The term of the indemnity provided for in this Indemnity will commence on the Effective Date. Without in any way limiting the above, it is expressly understood that Indemnitor’s duty to defend and indemnify the Indemnitees hereunder shall survive: (1) any foreclosure under the Pledge and Security Agreement, or transfer of the Collateral in lieu thereof; (2) the cancellation of the Note and the release or partial release of the Pledge and Security Agreement; and (3) the satisfaction of all of Indemnitor’s obligations under the Loan Documents. Notwithstanding any provision contained herein to the contrary, the indemnification obligations of Indemnitor hereunder shall terminate three (3) years after payment in full of the Loan (except in connection with a foreclosure under the Pledge and Security Agreement), provided that each of the following clauses (i) and (ii) are satisfied at such time (or, if clauses (i) and (ii) are not both satisfied, three (3) years following such later date as clauses (i) and (ii) are both satisfied): (i) Indemnitor furnishes to Lender an updated environmental inspection report for the Property dated no more than ninety (90) days prior to the date the same is delivered to Lender and no earlier than ninety (90) days prior to the date that the Loan is paid in full, which report does not disclose any violation of applicable Hazardous Materials Laws in connection with the Property or presence of Hazardous Materials in, on, above or under the Property that have not been remediated in accordance with applicable Hazardous Materials Laws; and (ii) three (3) years after such repayment in full of the Loan there is no outstanding claim (in writing) for indemnification or outstanding request for defense by any Indemnitee.
1.6 Transfer Date. Notwithstanding anything in this Indemnity to the contrary, the indemnifications herein shall not apply to the initial introduction or release of Hazardous Materials on, at, about, or to the Property by anyone other than the Indemnitor from and after the earlier of (i) the date that Mortgage Lender, or its nominees and/or assigns, acquires title to the Property through Mortgage Lender’s exercise of its remedies under the Mortgage Loan Documents, whether by foreclosure, exercise of power of sale, acceptance of a deed-in-lieu of foreclosure or otherwise, or (ii) the date that Lender, or its nominees and/or assigns, acquires 100% of the Collateral as a result of the exercise of its rights under the terms and conditions of the Loan Documents (the “Transfer Date”).
2. SETTLEMENTS; CLAIMS; JUDGMENTS. If (i) Indemnitor is not performing its obligation to defend Indemnitees pursuant to and in accordance with Section 1.4 within ten (10) days after receipt of written demand from Lender to perform such obligations, or (ii) an Event of Default shall have occurred and be continuing, without the prior written consent of Indemnitor, Lender may settle or compromise any claim with respect to Hazardous Materials made against any Indemnitee and Lender may employ an attorney of Lender’s own selection to defend such Indemnitee. Indemnitor shall pay upon three (3) Business Days’ written demand all of Lender’s actual, out-of-pocket costs and reasonable expenses of such defense. In addition, and notwithstanding any other provision of this Indemnity, Indemnitor shall not, without the prior written consent of Lender: (a) settle or compromise any action, suit, proceeding, or claim in which any Indemnitee is named as a party or consent to the entry of any judgment in such a matter that does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the Indemnitee of a written release of the Indemnitee (in form, scope and substance reasonably satisfactory to Lender and the Indemnitee) from all liability in respect of such action, suit, or proceeding; or (b) settle or compromise any action, suit, proceeding, or claim in which an Indemnitee is named as a party in any manner that may materially and adversely affect Lender as determined by Lender in its sole discretion.
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3. INTEREST. Indemnitor shall pay Lender, within five (5) Business Days of written demand, interest, at the then applicable interest rate of the Note, on any costs or expenses incurred by Lender in the enforcement of this Indemnity or on any sums Lender is obligated to pay in respect to the matters with respect to which this Indemnity is given, from the date of Lender’s demand.
4. RIGHTS NOT EXCLUSIVE. The rights of Indemnitees under this Indemnity shall be in addition to any other rights and remedies of Lender against any Indemnitor under any other document or instrument now or hereafter executed by any Indemnitor, or at law or in equity (including, without limitation, any right of reimbursement or contribution pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as heretofore or hereafter amended from time to time).
5. RIGHTS OF LENDER. Indemnitor authorizes Lender, without giving notice to Indemnitor or obtaining Indemnitor’s consent and without affecting the liability of Indemnitor, from time to time to assign this Indemnity in whole or in part.
6. INDEMNITOR’S WAIVERS. To the extent permitted by applicable law, Indemnitor waives any and all rights and defenses based upon or arising out of (a) any legal disability or other defense of Indemnitor, any other guarantor or other Person or by reason of the cessation or limitation of the liability of Indemnitor from any cause other than full payment of all sums payable under the Loan Documents; (b) any lack of authority of the officers, directors, partners, managers, members or agents acting or purporting to act on behalf of Indemnitor or any principal of Indemnitor, or any defect in the formation of Indemnitor or any principal of Indemnitor; (c) the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Indemnitor; (d) any act or omission by Lender which directly or indirectly results in, or contributes to, the release of Borrower or any other person or any collateral for any obligation to Lender in connection with the Loan; (e) the unenforceability or invalidity of any collateral assignment or guaranty with respect to any obligation to Lender in connection with the Loan, or the lack of perfection or continuing perfection or lack of priority of any lien which secures any obligation to Lender in connection with the Loan; (f) any failure of Lender to marshal assets in favor of Indemnitor or any other Person; (g) any modification of any obligation to Lender in connection with the Loan in accordance with the Loan Documents, including, without limitation, any renewal, extension, acceleration or increase in interest rate; (h) an election of remedies by Lender, even though that election of remedies (such as a non-judicial foreclosure, if available and/or permitted, with respect to security for a guaranteed obligation) has or may have destroyed Indemnitor’s rights of subrogation, reimbursement and contribution against the principal by the operation of applicable law or otherwise; (i) Lender’s failure to disclose to Indemnitor any information concerning Borrower’s financial condition or any other circumstances bearing on Borrower’s ability to pay and perform its obligations under the Note or any of the other Loan Documents, or upon the failure of any other principals of Borrower to guaranty the Loan; (j) any statute or rule of law which provides that the obligation of a surety or guarantor must be neither larger in amount nor in any other respects more burdensome than that of a principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation; (k) any failure of Lender to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; (l) Lender’s election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (m) any borrowing or any grant of a security interest under Section 364 of the Federal Bankruptcy Code; (n) any right of subrogation, reimbursement, indemnification and contribution, any right to enforce any remedy which Lender may have against Borrower and any right to participate in, or benefit from, any security for the Note or the other Loan Documents; (o) presentment, demand, protest and notice of any kind; (p) any statute of limitations affecting the liability of Indemnitor hereunder or the enforcement hereof; (q) use of cash collateral under Section 363 of the United States Bankruptcy Code; and (r) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any person. Lender may collect from Indemnitor without first foreclosing on the Collateral; and if Lender forecloses on the Collateral, then (A) the amount of the debt may be reduced only by the price for which the Collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Lender may collect from Indemnitor even if Lender, by foreclosing on the Collateral, has destroyed any right Indemnitor may have to collect from Borrower. The foregoing sentence is an unconditional and irrevocable waiver of certain rights and defenses of Indemnitor. This understanding and waiver is made in addition to and not in limitation of any of the other terms and conditions of this Indemnity. These rights and defenses being waived by Indemnitor include, but are not limited to, any rights or defenses based upon deficiency limitation or anti-deficiency, redemption or other similar rights, if any. Indemnitor agrees that the payment or performance of any act which tolls any statute of limitations applicable to the Note or any of the other Loan Documents shall similarly operate to toll the statute of limitations applicable to Indemnitor’s liability hereunder. Without limiting the generality of the foregoing or any other provision hereof, Indemnitor understands that Indemnitor’s duties, obligations and liabilities under this Indemnity are not limited in any way by any information (whether obtained from Borrower, from Indemnitor, or from Lender’s own investigations) which Lender may have concerning the Property and the presence of any Hazardous Materials on the Property. Notwithstanding the foregoing, Indemnitor does not waive (i) the defense of full payment and performance of the obligations under this Indemnity, or (ii) any defense based on Lender's fraud, gross negligence or willful misconduct.
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7. ENFORCEABILITY. Indemnitor hereby acknowledges that: (a) the obligations undertaken by Indemnitor in this Indemnity are complex in nature, (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, (c) as part of Lender’s consideration for entering into this transaction, Lender has specifically bargained for the waiver and relinquishment by Indemnitor of all such defenses, and (d) Indemnitor has had the opportunity to seek and receive legal advice from skilled legal counsel in the area of financial transactions of the type contemplated herein. Given all of the above, Indemnitor does hereby represent and confirm to Lender that Indemnitor is fully informed regarding, and that Indemnitor does thoroughly understand: (i) the nature of all such possible defenses, (ii) the circumstances under which such defenses may arise, (iii) the benefits which such defenses might confer upon Indemnitor, and (iv) the legal consequences to Indemnitor of waiving such defenses. Indemnitor acknowledges that Indemnitor makes this Indemnity with the intent that this Indemnity and all of the informed waivers herein shall each and all be fully enforceable by Lender, and that Lender is induced to enter into this transaction in material reliance upon the presumed full enforceability thereof.
8. MISCELLANEOUS.
8.1 Notices. All notices, demands, or other communications under this Indemnity shall e in writing and shall be delivered to the appropriate party at the addresses set forth below (subject to change from time to time by written notice to all other parties to this Indemnity as provided below). All notices, demands or other communications shall be considered as properly given if delivered (i) personally or sent by first class United States Postal Service mail, postage prepaid, (ii) by Overnight Express Mail, (iii) by overnight commercial courier service, charges prepaid or (iv) email with a copy of such notice to follow sent by any method as set forth in (i)–(iii) above. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be:
| Indemnitor: |
Stewards, Inc. 4300 N. University Drive, Suite D105 auderhill, FL 33351 Attn: Katy Murless, Vaughan Korte Email: [email protected]; [email protected]
Shaun Quin 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Email: [email protected]
Glen Steward 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Email: [email protected]
Charles R. Abele 1776 Polk Street, Suite 200 Hollywood, FL 33020
Peter J. Jago 1776 Polk Street, Suite 200 Hollywood, FL 33020
With a copy to:
Cozen O’Connor One Liberty Place 1650 Market Street, Suite 2800 Philadelphia, PA 19103 Attn: Howard Grossman Email: [email protected]
|
| Lender: |
1818 Mezz Lender LLC c/o CCL Capital 420 Lexington Avenue Suite 2100 New York, NY 10170 Attn: Adam Budgor Email: [email protected]
With a copy to:
Windels Marx Lane & Mittendorf, LLP 156 West 56th Street New York, New York 10019 Attention: Wayne S. Cook, Jr., Esq. Email: [email protected] |
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Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of not less than thirty (30) days’ notice to the other party in the manner set forth hereinabove. Notices, demands, and communications provided by legal counsel on behalf of any party to this Indemnity pursuant to this Section 8.1 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
8.2 Attorneys’ Fees And Expenses; Enforcement. If any attorney is engaged by Lender, or one or more other Indemnitees, to enforce or defend any provision of this Indemnity or as a consequence of any default under this Indemnity, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding or in connection with any appeal of a lower court decision (unless on the basis of Lender’s gross negligence, fraud or willful misconduct), then Indemnitor shall immediately pay to Lender, within five (5) Business Days of written demand from Lender, together with reasonable supporting documentation therefor, the amount of all such reasonable attorneys’ fees and expenses and costs actually incurred in connection therewith, including all trial and appellate proceedings in any legal action, suit, bankruptcy or other proceeding, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the Principal Balance of the Note as specified therein. In the event of any legal proceedings, court costs and attorneys’ fees shall be set by the court and not by any jury and shall be included in any judgment obtained by Lender. This provision is separate and several and shall survive merger into judgment.
8.3 Sale of Loan/Securitization. Indemnitor agrees that Lender shall have the right, (i) to sell, assign, pledge or otherwise transfer the Loan or any portion thereof or interest therein to any Person, (ii) to sell participation interests in the Loan to any Person, or (iii) to securitize the Loan or any portion thereof or interest therein in one or more private or public single asset or pooled loan securitizations, as detailed in the Loan Agreement.
8.4 Waiver of Right to Trial By Jury. TO THE EXTENT PERMITTED BY APPLICABLE STATE LAW, EACH PARTY TO THIS INDEMNITY (INCLUDING LENDER BY ACCEPTING THIS INDEMNITY) HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS INDEMNITY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
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8.5 Severability. If any provision or obligation under this Indemnity shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from this Indemnity and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of this Indemnity.
8.6 Heirs, Successors and Assigns. Except as otherwise expressly provided under the terms and conditions herein, the terms of this Indemnity shall bind and inure to the benefit of the heirs, executors, administrators, nominees, successors and assigns of the parties hereto.
8.7 Time. Time is of the essence with respect to each and every term herein.
8.8 Governing Law and Consent to Jurisdiction. This Indemnity and any claim, controversy or dispute arising under or related to this Indemnity, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties will be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to any conflicts of law principles, except to the extent preempted by federal laws. Indemnitor consents to the jurisdiction of any federal or state court within the State of New York having proper venue and also consents to service of process by any means authorized by New York or federal law.
8.9 Joint and Several Liability. The liability of all Persons obligated in any manner hereunder as an Indemnitor shall be joint and several.
8.10 Headings. All article, section or other headings appearing in this Indemnity are for convenience of reference only and shall be disregarded in construing this Indemnity.
8.11 Defined Terms. Unless otherwise defined herein, capitalized terms used in this Indemnity shall have the meanings attributed to such terms in the Loan Agreement or the Pledge and Security Agreement, as applicable.
8.12 Rules of Construction. The word “Borrower” as used herein shall include both the named Borrower and any other Person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term “Mortgage Borrower” as used herein shall include the named Mortgage Borrower and any other Person at any time owning the Property or assuming or otherwise becoming primarily liable for all or any of the obligations of Mortgage Borrower under the Mortgage Loan Documents. The term “Person” as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Indemnity is executed by more than one Person, the term “Indemnitor” shall include all such Persons. The word “Lender” as used herein shall include Lender, its successors, assigns and affiliates.
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8.13 Use of Singular and Plural; Gender. When the identity of the parties or other circumstances make it appropriate, the singular number includes the plural, and the masculine gender includes the feminine and/or neuter.
8.14 Exhibits, Schedules and Riders. All exhibits, schedules, riders and other items attached hereto are incorporated into this Indemnity by such attachment for all purposes.
8.15 Integration; Interpretation. This Indemnity contains the entire agreement of the parties with respect to the matters contemplated hereby and supersedes all prior negotiations or agreements, written or oral. This Indemnity shall not be modified except by written instrument executed by all parties.
8.16 Lender Agreement. Lender’s acceptance of this Indemnity (which shall be evidenced by its making of the Loan) shall be deemed its agreement to all of the terms and provisions herein.
[Signature Page(s) to Follow]
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IN WITNESS WHEREOF, the undersigned have executed this Indemnity as of the date first written above.
INDEMNITOR:
BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
By:
Name: Shaun A. Quin
Its: Authorized Signatory
STEWARDS, INC., a Nevada corporation
By: _________________________________
Name: Shaun A. Quin
Its: CEO
_______________________________________
SHAUN A. QUIN
_______________________________________
GLEN STEWARD
_______________________________________
charles r. abele
_______________________________________
peter j. jago
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EXHIBIT A
Legal Description
ALL THAT CERTAIN LOT OR PARCEL OF LAND SITUATE IN THE COUNTY OF BROWARD, STATE OF FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1:
LOTS 1, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
PARCEL 2:
LOTS 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 AND 14, OF BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA.
LESS AND EXCEPT THEREFROM THAT CERTAIN PROPERTY CONVEYED TO THE CITY OF HOLLYWOOD BY THAT CERTAIN DEED RECORDED IN OFFICIAL RECORDS BOOK 3476, PAGE 399, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF LOT 6, BLOCK 40, OF THE SUBDIVISION OF THE TOWN OF HOLLYWOOD, ACCORDING TO THE PLAT RECORDED IN PLAT BOOK 1, AT PAGE 21, IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA; RUN EAST ON AND ALONG THE SOUTH LINE OF LOTS 6, 7 AND 8 FOR A DISTANCE OF 65.36 FEET TO THE POINT OF BEGINNING. SAID POINT OF BEGINNING BEING THE POINT OF CURVATURE OF A CURVE CONCAVE TO THE NORTHWEST AND HAVING THE FOLLOWING PROPERTIES: R=30.0 FEET, DELTA=123 DEGREES 06 MINUTES 46 SECONDS, ARC LENGTH=64.46 FEET; THENCE RUN NORTHEASTERLY ON SAID CURVE FOR A DISTANCE OF 64.46 FEET TO THE POINT OF INTERSECTION WITH THE EAST PROPERTY LINE OF LOT 8 OF SAID BLOCK 40. THENCE RUN SOUTHEASTERLY ON THE EAST LINE OF LOT 8, SAID EAST LINE BEING A CURVE HAVING THE FOLLOWING PROPERTIES: R=492.0 FEET, DELTA=9 DEGREES 52 MINUTES 51 SECONDS, ARC LENGTH=84.85 FEET, EXTENDED TO A POINT OF INTERSECTION WITH THE SOUTH LINE OF LOTS 6, 7 AND 8 EXTENDED EASTERLY; THENCE RUN WESTERLY ON AND ALONG THE EXTENSION OF LOTS 6, 7 AND 8 TO THE POINT OF BEGINNING.
PARCEL 3:
THAT CERTAIN 13.00 FOOT ALLEY LYING IN BLOCK 40, HOLLYWOOD, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 1, PAGE 21, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, AS VACATED AND MORE PARTICULARLY DESCRIBED BY THAT CERTAIN ORDINANCE NO. 0-2005-16 RECORDED IN OFFICIAL RECORDS BOOK 47110, PAGE 253, OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA
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COLLATERAL ASSIGNMENT OF INTEREST RATE CAP AGREEMENT
THIS COLLATERAL ASSIGNMENT OF INTEREST RATE CAP AGREEMENT, dated as of July 24, 2026 (this “Assignment”), is made by BLOCK 40 PROPERTY, LLC, a Delaware limited liability company (“Assignor”), in favor of VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company (together with its successors and/or assigns, “Assignee”).
RECITALS
A. Pursuant to the terms of that certain Loan Agreement, dated as of the date hereof, between Assignor, as borrower, and Assignee, as lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Assignee has agreed to loan to Assignor the principal sum of up to $69,000,000.00 (“Loan”) for the purposes specified in the Loan Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Loan Agreement.
B. Assignor has entered into that certain interest rate cap transaction as evidenced by that certain Confirmation (Reference Number [____________]), dated [date], between ________________________, as cap provider (“Counterparty”), and Assignor, as counterparty, a copy of which is attached as Exhibit A hereto, together with the documents referenced therein and incorporated therein by reference, and as supplemented and amended from time to time (collectively, the “Interest Rate Cap Agreement”).
C. As additional security for the payment and performance by Assignor of its obligations under the Loan Agreement and the other Loan Documents, Assignee has required that Assignor pledge and assign to Assignee any and all of its right, title and interest in, to and under the Interest Rate Cap Agreement, including, without limitation, the right to any Payments (as hereinafter defined) owed by the Counterparty to Assignor thereunder.
AGREEMENT
NOW, THEREFORE, in consideration of ten ($10.00) dollars and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Assignor and Assignee hereby covenant and agree as follows:
1. To secure payment and performance of the obligations of Assignor in connection with the Loan and under the Loan Agreement and the other Loan Documents, Assignor does hereby absolutely, unconditionally and irrevocably grant a security interest in, and assign, transfer, convey and set over unto Assignee, its successors and assigns, all of Assignor’s right, title and interest, whether now owned or hereafter acquired, now existing or hereafter arising, wherever located, in, to and under the Interest Rate Cap Agreement, including, but not limited to, any and all rights that Assignor may now or hereafter have to any and all payments, disbursements, distributions or proceeds (collectively, the “Payments”) owing, payable or required to be delivered to Assignor on account of the Interest Rate Cap Agreement with respect to the period commencing on the date hereof and ending on the date on which Assignor shall have repaid the Loan in its entirety, and all proceeds of any or all of the foregoing (collectively, the “Cap Collateral”); TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns. Moreover, Assignor does hereby absolutely, unconditionally and irrevocably assign to Assignee, its successors and assigns, any and all rights that Assignor may now or hereafter have to terminate the Interest Rate Cap Agreement, as provided for therein. This Assignment shall constitute a security agreement under the Uniform Commercial Code as adopted in the State of Delaware and New York (the “UCC”).
2. Concurrently herewith, Assignor shall cause Counterparty to execute and deliver to Assignee an “Acknowledgment of Pledge of Interest Rate Cap Agreement” in the form attached hereto, whereby Counterparty shall consent to the assignment contained in Paragraph 1 hereof and shall agree that it will make any Payments that become payable under or pursuant to the Interest Rate Cap Agreement directly into an account designated in writing by Assignee until such time as this Assignment is terminated or otherwise canceled, at which time Counterparty will be instructed in writing by Assignee to make payments to or on behalf of Assignor. The Counterparty shall be entitled to conclusively rely (without any independent investigation) on any written notice or instructions from Assignee in respect of the Interest Rate Cap Agreement and this Assignment. In consideration of the foregoing agreement by the Counterparty, Assignee and Assignor agree that Counterparty shall be held harmless and shall be fully indemnified by Assignor from and against any and all claims, other than those arising out of the gross negligence or willful misconduct of Counterparty, and from and against any damages, penalties, judgments, liabilities, losses or expenses (including reasonable attorneys’ fees and disbursements) reasonably incurred by Counterparty as a result of the assertion of any claim, by any Person, arising out of, or otherwise related to, any actions taken or omitted to be taken by Counterparty in reliance upon any such instructions or notices provided by Assignee.
3. Assignor shall cause all Payments to be made directly into the Restricted Account (or other account designated by Assignee) pursuant to the direction contained in the “Acknowledgement of Pledge of Interest Rate Cap Agreement” delivered in accordance with Paragraph 2 above and Assignee shall apply such Payments in the manner provided in the Loan Agreement and/or the Cash Management Agreement. Upon the occurrence and during the continuance of an Event of Default (which has not been waived in writing by Assignee), (a) payments received by Assignee may be applied by Assignee pursuant to the Loan Documents, and (b) Assignee shall be entitled to exercise all remedies provided in the UCC with respect to the security interest granted herein. In the event that any Payments consisting of cash, checks or instruments are actually received by Assignor, Assignor shall hold such cash, checks or instruments in trust for the benefit of Assignee, segregated from all other funds of Assignor, and forthwith upon receipt by Assignor, shall deposit the same into the Restricted Account (or other account designated by Assignee).
4. Except in connection with permitted transfers or encumbrances that do not require Assignee’s written consent or approval pursuant to the Loan Agreement, Assignor hereby covenants and agrees that Assignor shall not, without first obtaining Assignee’s or its successor’s or assign’s written consent, which consent may not be unreasonably withheld, conditioned or delayed, convey, assign, sell, mortgage, encumber, pledge, hypothecate, grant a security interest in, grant an option or options with respect to, or otherwise dispose of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration), cancel or terminate the Interest Rate Cap Agreement except as required under the Loan Agreement. Assignor hereby further covenants and agrees that Assignor shall not, without first obtaining Assignee’s or its successor’s or assign’s written consent, which consent shall not be unreasonably withheld, conditioned or delayed, amend or modify the Interest Rate Cap Agreement except as required under the Loan Agreement. Assignee agrees to be bound by all of the terms, covenants and conditions of the Interest Rate Cap Agreement.
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5. Assignor represents and warrants that: (a) it has the full power, right and authority to assign its interest in the Cap Collateral; (b) Assignor owns the Cap Collateral free and clear of all liens and claims of others and Assignor has not transferred, assigned, granted a security interest in or otherwise encumbered its interest in and to the Cap Collateral other than in favor of Assignee and the Permitted Encumbrances; (c) no security agreement, financing statement or other document is on file or of record in any public office with respect to the Cap Collateral, other than in favor of Assignee and the Permitted Encumbrances; and (d) to Assignor’s knowledge, the obligation of Counterparty under the Interest Rate Cap Agreement to make Payments is not subject to any defense or counterclaim.
6. Assignor covenants and agrees with Assignee that until such time as this Assignment is terminated: (a) it will comply with all material terms of the Interest Rate Cap Agreement; (b) it will not waive or amend any material provision of the Interest Rate Cap Agreement, fail to deliver to Assignee a copy of any material notice it receives from Counterparty or, without the prior written consent of Assignee, fail to exercise any material right thereunder; and (c) it will not change the location of its state of organization.
7. Assignor further covenants and agrees with Assignee that it will at any time and from time to time, upon the written request of Assignee, and at the sole expense of Assignor, promptly and duly execute and deliver such further instruments and documents and take such further action as Assignee may reasonably request for the purpose of obtaining or preserving the full benefits of this Assignment and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the UCC. Assignor also hereby authorizes Assignee to file any such financing or continuation statement without the signature of Assignor to the extent permitted by applicable law and consistent with this Assignment. To the extent permitted by applicable law, a carbon, photographic or other reproduction of this Assignment shall be sufficient as a financing statement for filing in any jurisdiction.
8. This Assignment does not include the delegation to Assignee of any duties, responsibilities or obligations of Assignor under the Interest Rate Cap Agreement, Assignor remaining liable to perform all duties, responsibilities and obligations to be performed by Assignor thereunder, and Assignee shall not have any obligation or liability under the Interest Rate Cap Agreement or by reason of or arising out of this Assignment or the receipt by Assignee of any Payment, and Assignor specifically agrees to indemnify and forever hold Assignee harmless from any actual claim or liability on account thereof, including, without limitation, reasonable out-of-pocket attorneys’ fees actually incurred (but excluding any consequential, special or punitive damages), except to the extent arising from the bad faith, fraud, gross negligence, illegal acts or willful misconduct of Assignee, its agents, employees or contractors.
9. Assignee shall only be accountable for Payments actually received by it or its agent hereunder. Assignee’s sole duty with respect to the custody, safekeeping and physical preservation of the Cap Collateral in its possession, under the UCC or otherwise, shall be to deal with it in the same manner as Assignee deals with similar property for its own account. Neither Assignee nor any of its members, partners, shareholders, directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Cap Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Cap Collateral upon the request of Assignor or any other Person or to take any other action whatsoever with regard to the Cap Collateral or any part thereof. The powers conferred on Assignee hereunder are solely to protect Assignee’s interests in the Cap Collateral and shall not impose any duty upon Assignee to exercise any such powers. Assignee shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its members, partners, shareholders, officers, directors, employees or agents shall be responsible to Assignor for any act or failure to act hereunder, except for their own gross negligence, willful misconduct, fraud, bad faith or illegal acts.
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10. Any notices required to be given under this Assignment shall be given in the manner provided in the Loan Agreement.
11. This Assignment may not be modified, amended or terminated except by a written agreement executed by all of the parties hereto.
12. Any provision of this Assignment that is prohibited or unenforceable in any jurisdiction shall, as to jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
13. Assignee shall not by any act (except by a written instrument), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default, Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Assignee any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Assignee of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Assignee otherwise has on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singularly or concurrently and are not exclusive of any rights or remedies provided by law.
14. The parties hereto hereby notify Counterparty of this Assignment and the security interests granted to Assignee hereunder and instruct Counterparty to make all Payments to be made under or pursuant to the terms of the Interest Rate Cap Agreement, without set-off, defense or counterclaim, to an account designated in writing by Assignee pursuant to the direction contained in the “Acknowledgment of Pledge of Interest Rate Cap Agreement” delivered in accordance with Paragraph 2 above.
15. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES) AND ANY APPLICABLE FEDERAL LAW.
16. This Assignment shall automatically terminate upon the earlier to occur of (a) the termination or expiration of the Interest Rate Cap Agreement and (b) the payment in full of the Loan.
17. This Assignment shall be binding upon and shall inure to the benefit of Assignor and Assignee and their respective successors and permitted assigns.
18. This Assignment may be executed in any number of counterparts each of which shall be an original, but all of which shall constitute one instrument.
19. Assignee shall have the right to assign its interest in this Assignment and the obligations hereunder in connection with any assignment of the Loan. The parties hereto acknowledge that following the execution and delivery of this Assignment, Assignee may sell, transfer and assign this Assignment, the Loan and the other Loan Documents. All references to “Assignee” hereunder shall be deemed to include the successors and assigns of Assignee and the parties hereto acknowledge that actions taken by Assignee hereunder may be taken by Assignee’s agents and by the agents of the successors and assigns of Assignee.
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IN WITNESS WHEREOF, Assignor and Assignee have duly executed this Collateral Assignment of Interest Rate Cap Agreement as of the date first written above.
ASSIGNOR:
BLOCK 40 PROPERTY, LLC,
a Delaware limited liability company
By:
Name:
Its:
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ASSIGNEE:
VMC CRE MASTER LENDING UPPER REIT LLC, a Delaware limited liability company
By: Värde Partners, Inc.
Its: Manager
By:____________________________
Name:
Its:
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ACKNOWLEDGMENT OF PLEDGE OF
INTEREST RATE CAP AGREEMENT
The undersigned, as of July 24, 2026, hereby acknowledges and consents to the execution and delivery to VMC CRE Master Lending Upper REIT LLC, a Delaware limited liability company (“Assignee”), by BLOCK 40 PROPERTY, LLC, a Delaware limited liability company (“Assignor”), of that certain Collateral Assignment of Interest Rate Cap Agreement to which this Acknowledgement is attached (the “Assignment”), as collateral security for the payment and performance by Assignor of each and all of its obligations under that certain Loan Agreement dated as of the date of the Assignment, between Assignor, as borrower, and Assignee, as lender, and the assignment and pledge thereby to Assignee of all of Assignor’s right, title and interest in, to and under the Cap Collateral (as defined in the Assignment). All capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Assignment.
The undersigned shall document the pledge of the Cap Collateral to Assignee in accordance with its normal business practices and agrees not to consent to or permit any material modification, amendment, transfer or assignment of the Cap Collateral without the prior written consent of Assignee. The undersigned represents and warrants that the undersigned does not have any claim, right of offset, or counterclaim against Assignor under or with respect to the Cap Collateral, and Assignor is not in default to the undersigned under the Interest Rate Cap Agreement.
Notwithstanding the security interests of Assignee in the Cap Collateral, Assignee shall have no obligation or liability whatsoever to the undersigned, or any member or manager thereof, or any creditor or other Person having any relationship, contractual or otherwise, with the undersigned, nor shall Assignee be obligated to perform any of the obligations or duties of Assignor under the Interest Rate Cap Agreement or to take any action to collect or enforce any claim for payment due Assignor arising thereunder. The undersigned acknowledges that the security interest of Assignee in the Cap Collateral and all of Assignee’s rights and remedies under the Assignment may be freely transferred or assigned by Assignee. In the event of any such transfer or assignment, all of the provisions of this Acknowledgment of Pledge shall inure to the benefit of the transferees, successors and/or assigns of Assignee. The undersigned shall be entitled to treat the Assignee named above as the Assignee for all purposes until actual receipt of written notice of such transferee, successor or assign. The provisions of this Acknowledgment of Pledge shall likewise be binding upon any and all permitted transferees, successors and assigns of the undersigned.
The undersigned hereby agrees that the undersigned shall, upon written notice from Assignee, cause all Payments required to be made by the undersigned pursuant to the terms of the Interest Rate Cap Agreement to be made via wire transfer directly to an account designated by Assignee.
The undersigned further acknowledges and agrees that Assignee, or any successor lender identified by Assignee, may by written notice rescind or modify the account information or payment instructions contained herein. The undersigned further agrees that all such Payments shall be made to Assignee, its successors or assigns, without set-off, defense or counterclaim (other than as permitted under the Interest Rate Cap Agreement).
The undersigned hereby agrees that Assignee shall have the sole and exclusive right to exercise all of Assignor’s powers of ownership pertaining to the Interest Rate Cap Agreement. The undersigned agrees that it shall not materially amend or modify the Interest Rate Cap Agreement without the prior written consent of Assignee, its successors or assigns.
The undersigned shall, from time to time, promptly execute and deliver such further instruments, documents and agreements, and perform such further acts, as may be reasonably necessary or proper to carry out and effect the terms of the Assignment and this Acknowledgment of Pledge.
This Acknowledgment of Pledge is being given to induce Assignee to accept the Assignment and with the understanding that Assignee will rely hereon
[Signature page(s) to follow]
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IN WITNESS WHEREOF, the undersigned has duly executed this Acknowledgment of Pledge as of the date first written above.
COUNTERPARTY:
__________________________________,
a _________________________________
By: ____________________________
Name:
Title:
______________________
______________________
______________________
Attention:
| 8 |
EXHIBIT A
confirmation of Interest Rate Cap Agreement
[see attached]
| 9 |
MEZZANINE SUBORDINATION OF MANAGEMENT AGREEMENT
This MEZZANINE SUBORDINATION OF MANAGEMENT AGREEMENT (this “Subordination”) is made as of July 24, 2026, by BLOCK 40 HOLDCO LLC, a Delaware limited liability company (“Borrower”) and 1818 MEZZ LENDER LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”), and is consented and agreed to by CROWN RESIDENTIAL LLC, a Florida limited liability company (“Agent”).
RECITALS
A. Pursuant to the terms of that certain Mezzanine Loan Agreement of even date herewith by and between Borrower and Lender (as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Loan Agreement”), Lender has agreed to loan to Borrower the principal sum of up to $10,000,000.00 (“Loan”) for the purposes specified in the Loan Agreement.
B. Borrower is the owner of 100% of the equity interests in Mortgage Borrower, which it has pledged to Lender as security for the Loan pursuant to the Pledge and Security Agreement.
C. Pursuant to that certain Property Management Agreement dated August 1, 2021, between Mortgage Borrower (as successor-in-interest to Block 40, LLC, a Florida limited liability company) and Agent as successor in interest by assignment from Castle Residential Management, Inc. (the “Management Agreement”) (a true and correct copy of such Management Agreement is attached hereto as Exhibit A), Mortgage Borrower engaged Agent to manage the Property and Agent is entitled to certain management and other costs and fees (collectively, the “Management Fees”) thereunder.
D. Lender requires as a condition to the making of the Loan that Agent subordinate its rights under the Management Agreement to the lien of the Pledge and Security Agreement.
E. Capitalized terms used herein without being defined shall have the respective meanings set forth in the Loan Agreement.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Intentionally Omitted.
2. Subordination of Management Agreement. The Management Agreement and any and all liens, rights and interests (whether choate or inchoate and including, without limitation, all mechanic’s and materialmen’s liens under applicable law) owed, claimed or held, by Agent in and to the Property, are and shall be in all respects subordinate to the liens and security interests created, or to be created, for the benefit of Lender, under the Note and the performance of the obligations under the Loan Agreement and the other Loan Documents, and all renewals, extensions, increases, supplements, amendments, modifications or replacements thereof. Notwithstanding the foregoing, nothing contained in this Subordination or in any of the Loan Documents shall in any way be deemed to be a waiver by Agent of (i) its rights to receive current payments of the Management Fees due to Agent under the Management Agreement, (ii) its right to terminate the Management Agreement in accordance with its terms except as expressly set forth herein, or (iii) its rights and remedies under the Management Agreement against Mortgage Borrower.
3. Termination. At such time as the Loan is paid in full, this Subordination shall automatically terminate without any further action on part of Borrower, Lender or any other party.
4. Estoppel. Borrower and Agent represent, warrant and covenant that (a) a true, correct and complete copy of the Management Agreement is attached hereto as Exhibit A, (b) the Management Agreement is in full force and effect and has not been modified, amended or assigned other than pursuant to this Subordination and as indicated in Recital B above and constitutes the entire agreement between Agent and Mortgage Borrower with respect to the management of the Property, (c) neither Agent nor Mortgage Borrower shall modify, amend, repeal, replace, restate, assign or supplement the Management Agreement without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed, (d) neither Mortgage Borrower nor Agent has received or sent any notice of default under any of the terms, covenants or provisions of the Management Agreement, (e) neither Agent nor Mortgage Borrower has commenced any action or given or received any notice for the purpose of terminating the Management Agreement, and (f) the Management Fees and all other sums due and payable to the Agent under the Management Agreement as of the date hereof have been paid in full.
5. Intentionally Omitted.
6. Receipt of Management Fees. Borrower and Agent hereby agree that, subject to Section 5 above, Agent shall not be entitled to receive any Management Fees or other fee, commission or other amount payable to Agent under the Management Agreement for and during any period of time after the Management Agreement is terminated in accordance with Section 5 of that certain Assignment and Subordination of Management Agreement, dated of even date herewith, by Mortgage Borrower in favor of Mortgage Lender; provided, that Agent may receive and retain any payments by Mortgage Borrower of any fees that accrued, became due and payable and were actually paid prior to the occurrence of such termination pursuant to the terms of the Management Agreement. Notwithstanding anything to the contrary contained herein, unless and until a Management Agreement Transfer occurs, Agent shall have no claims against Lender for the payment of any fees pursuant to the Management Agreement, including, without limitation, any accrued but unpaid Management Fees, termination fees or other similar fees or expenses. Until such date as a Management Agreement Transfer occurs, Agent shall look exclusively to Mortgage Borrower for payment or discharge of any obligations under the Management Agreement, and any claims against Mortgage Borrower for such fees shall be subject and subordinate to the liens of the Security Instrument and the other Loan Documents.
7. Consent and Agreement by Agent. Agent hereby acknowledges and consents to this Subordination. Agent agrees that it will act in conformity with the provisions of this Subordination and Lender’s rights hereunder or otherwise related to the Management Agreement. In the event that the responsibility for the management of the Property is transferred from Agent in accordance with the provisions hereof, Agent shall, and hereby agrees to, reasonably cooperate in transferring its responsibility to a new management company and use commercially reasonable efforts to effectuate such transfer no later than thirty (30) days from the date the Management Agreement is terminated. Further, Agent hereby agrees (a) not to contest or intentionally impede the exercise by Lender of any right it has under or in connection with this Subordination; and (b) that it shall, in the manner provided for in this Subordination, give at least thirty (30) days prior written notice to Lender of its intention to terminate the Management Agreement or otherwise discontinue its management of the Property. Agent further agrees that Lender shall have the right (subject to the rights of Mortgage Lender under the Mortgage Loan Agreement), but not the obligation, to cure any default of Mortgage Borrower within such thirty (30) day notice period prior to the termination of the Management Agreement by Agent.
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8. Further Assurances. Agent further agrees to (a) execute such affidavits and certificates as Lender shall reasonably require to further evidence the agreements herein contained; (b) on reasonable request from Lender, furnish Lender with copies of such information as Mortgage Borrower is entitled to receive under the Management Agreement; and (c) reasonably cooperate with Lender’s representative in any inspection of all or any portion of the Property to the extent such inspection is permitted under the Loan Agreement or the other Loan Documents.
9. Intentionally Omitted.
10. Agent Not Entitled to Revenues. Without limiting Agent’s rights to receive any Management Fees pursuant to the terms of the Management Agreement, as modified hereunder, Agent acknowledges and agrees that it is collecting and processing the revenues from the Property solely as the agent for the Mortgage Borrower and Agent has no right to, or title in, the revenues. Notwithstanding anything to the contrary in the Management Agreement, the Agent acknowledges and agrees that the revenues are the sole property of the Mortgage Borrower, the equity interests in which are pledged to Lender. In any bankruptcy, insolvency or similar proceeding the Agent, or any trustee acting on behalf of the Agent, waives any claim to the revenues from the Property other than as such revenues may be used to pay the fees and compensation of the Agent pursuant to the terms and conditions of the Management Agreement.
11. Governing Law. THIS SUBORDINATION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE APPLICABILITY OF ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, BORROWER, OR AGENT ARISING OUT OF OR RELATING TO THIS SUBORDINATION MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK AND EACH PARTY WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.
12. Notices. All notices, demands, or other communications under this Subordination shall be in writing and shall be delivered to the appropriate party at the addresses set forth below (subject to change from time to time by written notice to all other parties to this Subordination as provided below). All notices, demands or other communications shall be considered as properly given if delivered (i) personally or sent by first class United States Postal Service mail, postage prepaid, (ii) by Overnight Express Mail, (iii) by overnight commercial courier service, charges prepaid or (iv) email with a copy of such notice to follow sent by any method as set forth in (i)-(iii) above. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be:
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|
If to Lender:
With a copy to: |
1818 Mezz Lender LLC c/o CCL Capital 420 Lexington Avenue, Suite 2100 New York, NY 10170 Attn: Adam Budgor Email: [email protected]
Windels Marx Lane & Mittendorf, LLP New York, NY 10019 Attn: Wayne S. Cook, Jr., Esq. Email: [email protected] |
|
If to Borrower:
|
Block 40 Holdco LLC c/o Stewards, Inc. 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Attn: Katy Murless, Chief Financial Officer Email: [email protected]
With a copy to: Scott Doney, Esq. 3651 Lindell Rd Ste D121 Las Vegas, NV 89103 Email: [email protected]
|
|
If to Agent:
|
Crown Residential LLC 12331 SW 3rd Street, Suite 100 Plantation, FL 33325 Attn: Craig Vaughan Email: [email protected]
With a copy to:
Crown Residential LLC 12331 SW 3rd Street, Suite 100 Plantation, FL 33325 Attn: Lindsay Norma Email: [email protected] And to:
Carpenter & Berger, PL 101 NE 3rd Avenue, Suite 1500 Fort Lauderdale, FL 33301 Attn: Michael Berger Email: [email protected]
|
| 4 |
Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of not less than thirty (30) days’ notice to the other party in the manner set forth hereinabove. Notices, demands, and communications provided by legal counsel on behalf of any party to this Subordination pursuant to this Section 12 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
13. No Oral Change. This Subordination may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower, Lender or Agent, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
14. Secondary Market. Agent acknowledges that Lender and its successors and assigns may, to the extent permitted by the Loan Agreement, (i) sell, assign, pledge or otherwise transfer the Loan or any portion thereof or interest therein to any Person, (ii) sell participation interests in the Loan to any Person, or (iii) securitize the Loan or any portion thereof or interest therein in one or more private or public single asset or pooled loan securitizations, as detailed in the Loan Agreement (collectively and individually, each a “Secondary Market Transaction”). Agent shall cooperate in all reasonable respects with Lender in effectuating any such Secondary Market Transaction. Lender shall be permitted to share all such information (including, without limitation, the terms of this Subordination) with potential purchasers, participants or assignees of an interest in the Loan and the investment banking firms, accounting firms, law firms and other third-party advisory firms involved with the applicable Secondary Market Transaction. Other than for its own legal expenses in connection with any assignment, Agent shall not be required to incur costs, fees, or other expenses in connection with any sale, assignment, pledge or other transfer referenced in Section.
15. Successors and Assigns. This Subordination shall be binding upon and inure to the benefit of Borrower, Agent, Lender and their respective successors and assigns forever. Subject to the terms of the Loan Agreement and other Loan Documents, Lender shall have the right to assign or transfer its rights under this Subordination in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Subordination. Except as otherwise permitted by the terms of the Loan Agreement or other Loan Documents, neither Borrower nor Agent shall have the right to assign or transfer its rights or obligations under this Subordination without the prior written consent of Lender, and any attempted assignment without such consent shall be null and void.
16. Inapplicable Provisions. If any term, covenant or condition of this Subordination is held to be invalid, illegal or unenforceable in any respect, this Subordination shall be construed without such provision.
17. Headings, etc. The headings and captions of various paragraphs of this Subordination are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
18. Duplicate Originals, Counterparts. This Subordination may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Subordination may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment. The failure of any party hereto to execute this Subordination, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.
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19. Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.
20. Waiver Of Trial By Jury. BORROWER, AGENT AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS SUBORDINATION OR ANY OTHER LOAN DOCUMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AGENT AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
21. Inconsistencies. So long as the Loan is outstanding, in the event of any inconsistency between the terms and conditions of this Subordination and the terms and conditions of the Management Agreement, the terms and conditions set forth in this Subordination shall govern.
22. Further Assurances. Agent further agrees to (a) execute such affidavits and certificates as Lender shall require to further evidence the agreements herein contained, (b) on request from Lender, furnish Lender with copies of such information as Mortgage Borrower is entitled to receive under the Management Agreement and (c) cooperate with Lender’s representative in any inspection of all or any portion of the Property.
23. Miscellaneous. Wherever pursuant to this Subordination it is provided that Borrower pay any out-of-pocket costs and expenses, such costs and expenses shall include, but not be limited to, reasonable, out-of-pocket legal fees and disbursements of Lender to outside retained firms (but shall not include costs for internal legal personnel).
[Signature page(s) to follow]
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IN WITNESS WHEREOF, the undersigned have executed this Subordination as of the date first written above.
BORROWER:
BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
By:
Name:
Its:
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LENDER:
1818 MEZZ LENDER LLC,
a Delaware limited liability company
By:____________________________
Name:
Its:
| 8 |
AGENT:
CROWN RESIDENTIAL LLC.,
a Florida limited liability company
By:
Name:
Its:
| 9 |
EXHIBIT A
Management
Agreement
(see attached)
| 10 |
MEZZANINE SUBORDINATION OF ASSET MANAGEMENT AGREEMENT
This MEZZANINE SUBORDINATION OF MANAGEMENT AGREEMENT (this “Subordination”) is made as of July 24, 2026, by BLOCK 40 HOLDCO LLC, a Delaware limited liability company (“Borrower”) and 1818 MEZZ LENDER LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”), and is consented and agreed to by GCF DEVELOPMENT, LLC, a Florida limited liability company (“Agent”).
RECITALS
A. Pursuant to the terms of that certain Mezzanine Loan Agreement of even date herewith by and between Borrower and Lender (as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Loan Agreement”), Lender has agreed to loan to Borrower the principal sum of up to $10,000,000.00 (“Loan”) for the purposes specified in the Loan Agreement.
B. Borrower is the owner of 100% of the equity interests in Mortgage Borrower, which it has pledged to Lender as security for the Loan pursuant to the Pledge and Security Agreement.
C. Pursuant to that certain Asset Management Agreement dated November 14, 2025, between Mortgage Borrower (as successor-in-interest to Block 40, LLC, a Florida limited liability company) and Agent as successor in interest by assignment from Castle Residential Management, Inc. (the “Management Agreement”) (a true and correct copy of such Management Agreement is attached hereto as Exhibit A), Mortgage Borrower engaged Agent and Agent is entitled to certain management and other costs and fees (collectively, the “Management Fees”) thereunder.
D. Lender requires as a condition to the making of the Loan that Agent subordinate its rights under the Management Agreement to the lien of the Pledge and Security Agreement.
E. Capitalized terms used herein without being defined shall have the respective meanings set forth in the Loan Agreement.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Intentionally Omitted.
2. Subordination of Management Agreement. The Management Agreement and any and all liens, rights and interests (whether choate or inchoate and including, without limitation, all mechanic’s and materialmen’s liens under applicable law) owed, claimed or held, by Agent in and to the Property, are and shall be in all respects subordinate to the liens and security interests created, or to be created, for the benefit of Lender, under the Note and the performance of the obligations under the Loan Agreement and the other Loan Documents, and all renewals, extensions, increases, supplements, amendments, modifications or replacements thereof.
3. Termination. At such time as the Loan is paid in full, this Subordination shall automatically terminate without any further action on part of Borrower, Lender or any other party.
4. Estoppel. Borrower and Agent represent, warrant and covenant that (a) a true, correct and complete copy of the Management Agreement is attached hereto as Exhibit A, (b) the Management Agreement is in full force and effect and has not been modified, amended or assigned other than pursuant to this Subordination and as indicated in Recital B above and constitutes the entire agreement between Agent and Mortgage Borrower with respect to the asset management of the Property, (c) neither Agent nor Mortgage Borrower shall modify, amend, repeal, replace, restate, assign or supplement the Management Agreement without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed, (d) neither Mortgage Borrower nor Agent has received or sent any notice of default under any of the terms, covenants or provisions of the Management Agreement, (e) neither Agent nor Mortgage Borrower has commenced any action or given or received any notice for the purpose of terminating the Management Agreement, and (f) the Management Fees and all other sums due and payable to the Agent under the Management Agreement as of the date hereof have been paid in full.
5. Intentionally Omitted.
6. Receipt of Management Fees. Borrower and Agent hereby agree that, subject to Section 5 above, Agent shall not be entitled to receive any Management Fees or other fee, commission or other amount payable to Agent under the Management Agreement for and during any period of time after the Management Agreement is terminated in accordance with Section 5 of that certain Assignment and Subordination of Management Agreement, dated of even date herewith, by Mortgage Borrower in favor of Mortgage Lender; provided, that Agent may receive and retain any payments by Mortgage Borrower of any fees that accrued, became due and payable and were actually paid prior to the occurrence of such termination pursuant to the terms of the Management Agreement. Notwithstanding anything to the contrary contained herein, unless and until a Management Agreement Transfer occurs, Agent shall have no claims against Lender for the payment of any fees pursuant to the Management Agreement, including, without limitation, any accrued but unpaid Management Fees, termination fees or other similar fees or expenses. Until such date as a Management Agreement Transfer occurs, Agent shall look exclusively to Mortgage Borrower for payment or discharge of any obligations under the Management Agreement, and any claims against Mortgage Borrower for such fees shall be subject and subordinate to the liens of the Security Instrument and the other Loan Documents.
7. Consent and Agreement by Agent. Agent hereby acknowledges and consents to this Subordination. Agent agrees that it will act in conformity with the provisions of this Subordination and Lender’s rights hereunder or otherwise related to the Management Agreement. In the event that the responsibility for the management of the Property is transferred from Agent in accordance with the provisions hereof, Agent shall, and hereby agrees to, reasonably cooperate in transferring its responsibility to a new management company and use commercially reasonable efforts to effectuate such transfer no later than thirty (30) days from the date the Management Agreement is terminated. Further, Agent hereby agrees (a) not to contest or intentionally impede the exercise by Lender of any right it has under or in connection with this Subordination; and (b) that it shall, in the manner provided for in this Subordination, give at least thirty (30) days prior written notice to Lender of its intention to terminate the Management Agreement or otherwise discontinue its management of the Property. Agent further agrees that Lender shall have the right (subject to the rights of Mortgage Lender under the Mortgage Loan Agreement), but not the obligation, to cure any default of Mortgage Borrower within such thirty (30) day notice period prior to the termination of the Management Agreement by Agent.
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8. Further Assurances. Agent further agrees to (a) execute such affidavits and certificates as Lender shall reasonably require to further evidence the agreements herein contained; (b) on reasonable request from Lender, furnish Lender with copies of such information as Mortgage Borrower is entitled to receive under the Management Agreement; and (c) reasonably cooperate with Lender’s representative in any inspection of all or any portion of the Property to the extent such inspection is permitted under the Loan Agreement or the other Loan Documents.
9. Intentionally Omitted.
10. Agent Not Entitled to Revenues. Without limiting Agent’s rights to receive any Management Fees pursuant to the terms of the Management Agreement, as modified hereunder, Agent acknowledges and agrees that it is collecting and processing the revenues from the Property solely as the agent for the Mortgage Borrower and Agent has no right to, or title in, the revenues. Notwithstanding anything to the contrary in the Management Agreement, the Agent acknowledges and agrees that the revenues are the sole property of the Mortgage Borrower, the equity interests in which are pledged to Lender. In any bankruptcy, insolvency or similar proceeding the Agent, or any trustee acting on behalf of the Agent, waives any claim to the revenues from the Property other than as such revenues may be used to pay the fees and compensation of the Agent pursuant to the terms and conditions of the Management Agreement.
11. Governing Law. THIS SUBORDINATION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE APPLICABILITY OF ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, BORROWER, OR AGENT ARISING OUT OF OR RELATING TO THIS SUBORDINATION MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK AND EACH PARTY WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.
12. Notices. All notices, demands, or other communications under this Subordination shall be in writing and shall be delivered to the appropriate party at the addresses set forth below (subject to change from time to time by written notice to all other parties to this Subordination as provided below). All notices, demands or other communications shall be considered as properly given if delivered (i) personally or sent by first class United States Postal Service mail, postage prepaid, (ii) by Overnight Express Mail, (iii) by overnight commercial courier service, charges prepaid or (iv) email with a copy of such notice to follow sent by any method as set forth in (i)-(iii) above. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided, however, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be:
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|
If to Lender:
With a copy to: |
1818 Mezz Lender LLC c/o CCL Capital 420 Lexington Avenue, Suite 2100 New York, NY 10170 Attn: Adam Budgor Email: [email protected]
Windels Marx Lane & Mittendorf, LLP New York, NY 10019 Attn: Wayne S. Cook, Jr., Esq. Email: [email protected] |
|
If to Borrower:
|
Block 40 Holdco LLC c/o Stewards, Inc. 4300 N. University Drive, Suite D105 Lauderhill, FL 33351 Attn: Katy Murless, Chief Financial Officer Email: [email protected]
With a copy to: Scott Doney, Esq. 3651 Lindell Rd Ste D121 Las Vegas, NV 89103 Email: [email protected]
|
|
If to Agent:
|
GCF Development, LLC 1776 Polk Street Suite 200 Hollywood, FL 33020 Attn: Charles (Chip) R. Abele, Jr.
|
Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of not less than thirty (30) days’ notice to the other party in the manner set forth hereinabove. Notices, demands, and communications provided by legal counsel on behalf of any party to this Subordination pursuant to this Section 12 will be effective as notice by such party provided such notice clearly states that such legal counsel is acting on behalf of such party in connection with such notice, demand and/or communication.
13. No Oral Change. This Subordination may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower, Lender or Agent, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
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14. Secondary Market. Agent acknowledges that Lender and its successors and assigns may, to the extent permitted by the Loan Agreement, (i) sell, assign, pledge or otherwise transfer the Loan or any portion thereof or interest therein to any Person, (ii) sell participation interests in the Loan to any Person, or (iii) securitize the Loan or any portion thereof or interest therein in one or more private or public single asset or pooled loan securitizations, as detailed in the Loan Agreement (collectively and individually, each a “Secondary Market Transaction”). Agent shall cooperate in all reasonable respects with Lender in effectuating any such Secondary Market Transaction. Lender shall be permitted to share all such information (including, without limitation, the terms of this Subordination) with potential purchasers, participants or assignees of an interest in the Loan and the investment banking firms, accounting firms, law firms and other third-party advisory firms involved with the applicable Secondary Market Transaction. Other than for its own legal expenses in connection with any assignment, Agent shall not be required to incur costs, fees, or other expenses in connection with any sale, assignment, pledge or other transfer referenced in Section.
15. Successors and Assigns. This Subordination shall be binding upon and inure to the benefit of Borrower, Agent, Lender and their respective successors and assigns forever. Subject to the terms of the Loan Agreement and other Loan Documents, Lender shall have the right to assign or transfer its rights under this Subordination in connection with any assignment of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Subordination. Except as otherwise permitted by the terms of the Loan Agreement or other Loan Documents, neither Borrower nor Agent shall have the right to assign or transfer its rights or obligations under this Subordination without the prior written consent of Lender, and any attempted assignment without such consent shall be null and void.
16. Inapplicable Provisions. If any term, covenant or condition of this Subordination is held to be invalid, illegal or unenforceable in any respect, this Subordination shall be construed without such provision.
17. Headings, etc. The headings and captions of various paragraphs of this Subordination are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
18. Duplicate Originals, Counterparts. This Subordination may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Subordination may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment. The failure of any party hereto to execute this Subordination, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.
19. Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.
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20. Waiver Of Trial By Jury. BORROWER, AGENT AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS SUBORDINATION OR ANY OTHER LOAN DOCUMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AGENT AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
21. Inconsistencies. In the event of any inconsistency between the terms and conditions of this Subordination and the terms and conditions of the Management Agreement, the terms and conditions set forth in this Subordination shall govern.
22. Further Assurances. Agent further agrees to (a) execute such affidavits and certificates as Lender shall require to further evidence the agreements herein contained, (b) on request from Lender, furnish Lender with copies of such information as Mortgage Borrower is entitled to receive under the Management Agreement and (c) cooperate with Lender’s representative in any inspection of all or any portion of the Property.
23. Miscellaneous. Wherever pursuant to this Subordination it is provided that Borrower pay any out-of-pocket costs and expenses, such costs and expenses shall include, but not be limited to, reasonable, out-of-pocket legal fees and disbursements of Lender to outside retained firms (but shall not include costs for internal legal personnel).
[Signature page(s) to follow]
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IN WITNESS WHEREOF, the undersigned have executed this Subordination as of the date first written above.
BORROWER:
BLOCK 40 HOLDCO LLC,
a Delaware limited liability company
By:
Name:
Its:
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LENDER:
1818 MEZZ LENDER LLC,
a Delaware limited liability company
By:____________________________
Name:
Its:
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AGENT:
GCF DEVELOPMENT, LLC,
a Florida limited liability company
By:
Name:
Its:
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EXHIBIT A
ASSET
Management Agreement
(see attached)
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ACKNOWLEDGEMENT AND CONSENT
Block 40 Property, LLC, a Delaware limited liability company (individually and/or collectively, as the context may suggest or require, the “Mortgage Borrower”), hereby acknowledges receipt of a copy of that certain Pledge and Security Agreement, dated as of the date hereof, by Borrower in favor of Lender (the “Pledge Agreement”) and acknowledges that Borrower is bound thereby. Terms used herein but not otherwise defined herein shall have the respective meanings ascribed to them in the Pledge Agreement.
Mortgage Borrower shall give copies of any notices or other communications that it sends to Borrower or to any other owners of Mortgage Borrower related to any Article 8 Matter to Lender at the same time as such notices or other communications are sent to Borrower or any such other owners of Mortgage Borrower. Mortgage Borrower acknowledges the powers and proxies granted in the Pledge Agreement and agree that Lender shall have the sole right during the term of the Pledge Agreement to vote the Pledged Company Interests with respect to any Article 8 Matter.
Dated: July 24, 2026
BLOCK 40 PROPERTY, LLC,
a Delaware limited liability company
By:____________________________
Name:
Title:
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NOTE PURCHASE AGREEMENT
(Aggregate Principal Amount: $5,000,000)
THIS NOTE PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of July [*], 2026, by and among Stewards, Inc., a Nevada corporation (the “Company”), and the persons and entities listed on the schedule of investors attached hereto as Schedule I (each an “Investor” and, collectively, the “Investors”).
RECITALS
A. On the terms and subject to the conditions set forth herein, each Investor is willing to purchase from the Company, and the Company is willing to sell to such Investor, a Secured Convertible Promissory Note in the principal amount set forth opposite such Investor’s name on Schedule I hereto, together with a Common Stock Purchase Warrant.
B. The Company intends to issue Notes in an aggregate principal amount of up to Five Million Dollars ($5,000,000) to up to three (3) unrelated accredited investors. The Notes will have a term of one hundred eighty (180) days, will bear interest at the rate of fifteen percent (15%) per annum and, on the Maturity Date, will automatically convert the outstanding principal amount together with all accrued and unpaid interest into shares of the Company’s common stock at a conversion price of $3.00 per share. Any conversion of a Note prior to the Maturity Date shall require the prior written consent of the Company.
C. Capitalized terms not otherwise defined herein shall have the meanings set forth in the form of Note attached hereto as Exhibit A.
DEFINITIONS
“Charter Documents” means the Articles of Incorporation and Bylaws of the Company, as amended from time to time.
“Majority in Interest” means Investors holding more than fifty percent (50%) of the aggregate outstanding principal amount of the Notes.
“Material Adverse Effect” means a material adverse effect on the business, assets, financial condition, results of operations, or prospects of the Company and its subsidiaries, taken as a whole.
“Transaction Documents” means this Agreement, the Notes, the Warrants, the Security Agreement, and any other agreements, documents, or instruments executed in connection with the transactions contemplated hereby.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:
1. The Notes and Warrants
(a) Issuance of Notes and Warrants. At the Closing (as defined below), the Company agrees to issue and sell to each of the Investors, and, subject to all of the terms and conditions hereof, each of the Investors severally agrees to purchase:
§ a Secured Convertible Promissory Note in the form of Exhibit A hereto (each, a “Note” and, collectively, the “Notes”) in the principal amount set forth opposite the respective Investor’s name on Schedule I hereto; and
§ a Common Stock Purchase Warrant in the form of Exhibit B hereto (each, a “Warrant”).
The obligations of the Investors to purchase Notes and Warrants are several and not joint.
(b) Security. The Notes will be secured by a first-priority security interest in certain personal property of the Company, as more particularly described in the Security Agreement to be executed and delivered at Closing.
(c) Delivery; Multiple Closings. The sale and purchase of the Notes and Warrants may take place via one or more electronic exchanges of signature pages (each a “Closing”). The Company may sell and issue Notes and Warrants at one or more Closings on the same terms and conditions as those contained herein. At any Closing, the Company will deliver to each Investor the Note and Warrant to be purchased by such Investor against receipt of the corresponding Purchase Price set forth on Schedule I.
(d) Use of Proceeds. The proceeds from the sale of the Notes shall be used to fund payments under the promissory note issued to the Company in connection with the acquisition of HOPCo pursuant to the Letter of Intent dated June 2, 2026, and for general corporate purposes.
(e) Payments. The Company will make all cash payments due under the Notes in immediately available funds by wire transfer to the account designated by each Investor on Schedule I (or as otherwise directed in writing).
(f) Conversion. The Notes shall automatically convert the outstanding principal amount together with all accrued and unpaid interest into Common Stock on the Maturity Date at a conversion price of $3.00 per share in accordance with the terms of the Notes. Any conversion of a Note prior to the Maturity Date shall require the prior written consent of the Company. Cash repayment of a Note on the Maturity Date in lieu of conversion shall require the prior written agreement of the Company.
2. Representations and Warranties of the Company
The Company represents and warrants to each Investor that:
(a) Due Incorporation; Qualification. The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of Nevada; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified to do business in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.
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(b) Authority. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action.
(c) Enforceability. This Agreement and each Note and Warrant constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and general principles of equity.
(d) Non-Contravention. The execution and delivery of this Agreement and the performance of the transactions contemplated hereby do not and will not (i) violate the Company’s Charter Documents, (ii) violate any judgment, order, statute or regulation applicable to the Company, or (iii) result in a breach of or default under any material agreement to which the Company is a party.
(e) Approvals. No consent, approval or filing with any governmental authority is required in connection with the execution and delivery of this Agreement or the issuance of the Notes and Warrants, except for any notices required to be filed with securities regulators after Closing and any UCC financing statements required to perfect the security interest.
(f) No Violation or Default. The Company is not in violation of or in default under its Charter Documents or any material agreement to which it is a party.
(g) Litigation. Except as set forth on Schedule II, there are no actions, suits or proceedings pending or, to the Company’s knowledge, threatened against the Company that would reasonably be expected to have a Material Adverse Effect.
(h) Title. The Company has good and marketable title to its assets, free and clear of all liens except as permitted under the Transaction Documents.
3. Representations and Warranties of Investors
Each Investor, for itself alone, represents and warrants to the Company as follows:
(a) Binding Obligation. Such Investor has full legal capacity and authority to execute and deliver this Agreement and to perform its obligations hereunder.
(b) Securities Law Compliance. The Notes and Warrants have not been registered under the Securities Act or any state securities laws. Such Investor is acquiring the Notes and Warrants for its own account for investment purposes only and not with a view to distribution. Such Investor is an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act.
(c) General Solicitation. The Investor is not purchasing the Notes and Warrants as a result of any general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act.
(d) Access to Information. The Investor has had an opportunity to ask questions of and receive answers from the Company concerning the terms and conditions of the offering and the business and affairs of the Company.
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(e) No Finder’s Fee. No brokerage or finder’s fee is payable by the Investor in connection with this transaction.
(f) No Public Market. The Investor understands that no public market currently exists for the Notes or Warrants and that the Company has no obligation to create one.
4. Conditions to Closing of the Investors
Each Investor’s obligations at the Closing are subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by all of the Investors (or by the Investor with respect to its own Closing, if multiple Closings occur):
(a) Representations and Warranties. The representations and warranties made by the Company in Section 2 hereof shall have been true and correct when made, and shall be true and correct in all material respects on and as of the Closing Date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such date).
(b) Governmental Approvals and Filings. Except for any notices required or permitted to be filed after the Closing Date with the U.S. Securities and Exchange Commission or any state securities commissions, the Company shall have obtained all governmental approvals, consents, and authorizations required in connection with the lawful sale and issuance of the Notes and Warrants.
(c) Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Notes and Warrants shall be legally permitted by all laws and regulations to which the Investors or the Company are subject, including all applicable federal and state securities laws.
(d) Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing, and all documents and instruments incident to such transactions, shall be reasonably satisfactory in substance and form to the Investors.
(e) Transaction Documents. The Company shall have duly executed and delivered to the Investors this Agreement, each Note to be issued hereunder, and each Warrant to be issued hereunder, and the Security Agreement.
(f) Corporate Documents. The Company shall have delivered to the Investors each of the following:
§ A copy of the Articles of Incorporation of the Company, certified as of a recent date prior to the Closing Date by the Secretary of State of the State of Nevada;
§ A copy of the Bylaws of the Company, certified as of the Closing Date by the Secretary of the Company;
§ A certificate of good standing of the Company issued by the Secretary of State of the State of Nevada, dated as of a recent date prior to the Closing Date; and
§ Such other documents relating to the existence and good standing of the Company as the Investors may reasonably request.
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(g) Officer’s Certificate. The Company shall have delivered to the Investors a certificate, dated as of the Closing Date and signed by an authorized officer of the Company, certifying that (i) the representations and warranties of the Company set forth in Section 2 are true and correct in all material respects as of the Closing Date, and (ii) the Company has performed and complied with all covenants and agreements required to be performed or complied with by it under this Agreement on or prior to the Closing Date.
(h) No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Material Adverse Effect with respect to the Company.
(i) Delivery of Notes and Warrants. The Company shall have delivered to each Investor the Note and Warrant being purchased by such Investor, duly executed by the Company and registered in the name of such Investor.
(j) Perfection of Security Interest. All actions necessary to perfect the security interest granted under the Security Agreement (including the filing of any required UCC financing statements) shall have been taken or shall be taken contemporaneously with Closing.
5. Conditions to Obligations of the Company
The Company’s obligation to issue and sell the Notes and Warrants at the Closing is subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the Company:
(a) Representations and Warranties. The representations and warranties made by each Investor in Section 3 hereof shall have been true and correct when made, and shall be true and correct in all material respects on and as of the Closing Date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such date).
(b) Governmental Approvals and Filings. Except for any notices required or permitted to be filed after the Closing Date with the U.S. Securities and Exchange Commission or any state securities commissions, all governmental approvals, consents, and authorizations required to be obtained by the Investors in connection with the purchase of the Notes and Warrants shall have been obtained.
(c) Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Notes and Warrants shall be legally permitted by all laws and regulations to which the Investors or the Company are subject, including all applicable federal and state securities laws.
(d) Purchase Price. Each Investor shall have delivered to the Company the full Purchase Price for the Note and Warrant being purchased by such Investor, by wire transfer of immediately available funds to an account designated by the Company.
(e) Transaction Documents. Each Investor shall have duly executed and delivered to the Company this Agreement, the Note and Warrant being purchased by such Investor, and any other documents reasonably requested by the Company in connection with the Closing.
(f) Accredited Investor Questionnaire and Supporting Documentation. Each Investor shall have checked the box on the signature page to confirm such Investor’s accredited investor status.
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(g) No Legal Impediment. There shall not be in effect any law, regulation, or order that would prohibit or materially restrict the consummation of the transactions contemplated by this Agreement or the issuance of the Notes and Warrants to the Investors.
(h) Proceedings and Documents. All actions and proceedings required to be taken by the Investors in connection with the transactions contemplated at the Closing, and all documents and instruments required to be delivered by the Investors in connection therewith, shall be reasonably satisfactory in substance and form to the Company.
6. Miscellaneous
(a) Waivers and Amendments. Any provision of this Agreement may be amended, waived, or modified only upon the written consent of the Company and Investors holding a Majority in Interest of the outstanding principal amount of the Notes; provided, however, that no amendment, waiver, or modification shall adversely affect the rights of any Investor disproportionately to the other Investors without the prior written consent of such Investor.
(b) Governing Law. This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflicts of law provisions of the State of Nevada or of any other state.
(c) Survival. The representations, warranties, covenants, and agreements made herein shall survive the execution and delivery of this Agreement and the Closing.
(d) Successors and Assigns. Subject to the restrictions on transfer described in this Agreement, the rights and obligations of the Company and the Investors under this Agreement shall be binding upon and inure to the benefit of the successors, assigns, heirs, administrators, and transferees of the parties.
(e) Registration, Transfer and Replacement of the Notes and Warrants. The Notes and Warrants issuable under this Agreement shall be registered. The Company will keep, at its principal executive office, books for the registration and registration of transfer of the Notes and Warrants. Prior to presentation of any Note or Warrant for registration of transfer, the Company shall treat the Person in whose name such Note or Warrant is registered as the owner and holder thereof for all purposes whatsoever, whether or not such Note or Warrant shall be overdue, and the Company shall not be affected by notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in any Note or Warrant, the holder of any Note or Warrant, at its option, may in person or by duly authorized attorney surrender the same for exchange at the Company’s chief executive office, and promptly thereafter and at the Company’s expense (except as provided below), receive in exchange therefor one or more new Note(s) or Warrant(s), each in the principal amount or number of shares requested by such holder, dated the date to which interest shall have been paid on the Note so surrendered (or the date of the Warrant so surrendered) and registered in the name of such Person or Persons as shall have been designated in writing by such holder or its attorney. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note or Warrant and (i) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (ii) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new Note or Warrant executed in the same manner as the Note or Warrant being replaced.
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(f) Assignment by the Company. The rights, interests or obligations of the Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of Investors holding a Majority in Interest.
(g) Entire Agreement. This Agreement, together with the Exhibits and Schedules attached hereto (including the Notes and Warrants), constitutes and contains the entire agreement among the Company and the Investors and supersedes any and all prior agreements, negotiations, correspondence, understandings, and communications among the parties, whether written or oral, respecting the subject matter hereof.
(h) Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when (i) delivered personally, (ii) sent by confirmed email, (iii) one (1) business day after being sent by overnight courier, or (iv) three (3) business days after being deposited in the U.S. mail, first class with postage prepaid, addressed as follows:
§ If to the Company:
Stewards, Inc.
[Address]
Attention: Shaun Quin
Email: [email protected]
§ If to an Investor:
At the address or email set forth on Schedule I hereto, or at such other address or email as such Investor shall have furnished to the Company in writing.
(i) Separability of Agreements; Severability. The Company’s agreement with each of the Investors is a separate agreement, and the sale of the Notes and Warrants to each of the Investors is a separate transaction. Unless otherwise expressly provided herein, the rights of each Investor hereunder are several rights, not rights jointly held with any of the other Investors. Any invalidity, illegality, or limitation on the enforceability of this Agreement or any part thereof by any Investor, whether arising by reason of the law of the respective Investor’s domicile or otherwise, shall in no way affect or impair the validity, legality, or enforceability of this Agreement with respect to the other Investors. If any provision of this Agreement shall be judicially determined to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(j) Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement. Electronic signatures (including DocuSign, Adobe Sign, or similar) and PDF or facsimile copies of signed signature pages shall be deemed original signatures for all purposes.
(k) Further Assurances. Each party agrees to execute and deliver such further documents and instruments and take such further actions as may be reasonably necessary or desirable to carry out the terms and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
COMPANY:
Stewards, Inc.
By: /s/ Shaun Quin___________________
Name: Shaun Quin
Title: Chief Executive Officer
INVESTOR:
By: /s/ Cameron Diviak
Name: Cameron Diviak
Title: Individual
☒ By checking this box, Investor represents that it is an “Accredited Investor” as defined in Rule 501 of Regulation D (see Schedule III).
INVESTOR:
By: /s/ Pieter & Desiree van Staden as Tentants by the Entirety
Name: Pieter & Desiree van Staden as Tentants by the Entirety
Title: Member
☒ By checking this box, Investor represents that it is an “Accredited Investor” as defined in Rule 501 of Regulation D (see Schedule III).
INVESTOR:
By: /s/ Philippus van Staden
Name: Philippus and Celeste van Staden, as Tenants by the Entirety
Title: Mr
☒ By checking this box, Investor represents that it is an “Accredited Investor” as defined in Rule 501 of Regulation D (see Schedule III).
INVESTOR:
By: /s/ Philippus van Staden
Name: Philippus van Staden Roth IRA
Title: Mr
☒ By checking this box, Investor represents that it is an “Accredited Investor” as defined in Rule 501 of Regulation D (see Schedule III).
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SCHEDULE I – SCHEDULE OF INVESTORS(Aggregate: $5,000,000)
| Investor Name | Principal Amount of Note | Warrant Shares | Purchase Price |
| Cameron Diviak | $500,000 | 166,666 | $500,000 |
| Pieter van Staden | $1,500,000 | 500,000 | $1,500,000 |
| Philippus and Celeste van Staden, as Tenants by the Entirety | $2,000,000 | 666,666 | $2,000,000 |
| Philippus van Staden Roth IRA | $1,000,000 | 333,333 | $1,000,000 |
| TOTAL | $5,000,000 | 1,666,665 | $5,000,000 |
Payment Instructions: [Wire details for each Investor]
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SCHEDULE II – DISCLOSURE SCHEDULE
Due to the nature of the Company's business, the Company may at times be subject to claims and legal actions. The Company is currently not involved in any material legal proceedings.
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SCHEDULE III – ACCREDITED INVESTOR DEFINITION
The Investor will be an "Accredited Investor" as such term is defined in Rule 501 of Regulation D promulgated under the United States Securities Act of 1933, as amended (the "Act") if the Investor is any of the following:
1. Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
2. Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
3. Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
4. Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
5. Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000, exclusive of the value of such person’s primary residence;
6. Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
7. Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) and
8. Any entity in which all of the equity owners are accredited investors.
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Exhibit A
Form of Secured Convertible Promissory Note
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Exhibit B
Form of Common Stock Purchase Warrant
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SECURITY AGREEMENT
This Security Agreement (this “Agreement”) is made and entered into as of July [*], 2026, by and between: STEWARDS, INC., a corporation organized and existing under the laws of the State of Nevada (the “Company”), and the persons and entities listed on Schedule I attached hereto and made a part hereof (each a “Secured Party” and, collectively, the “Secured Parties”).
RECITALS
A. Pursuant to that certain Note Purchase Agreement dated as of July [*], 2026 (the “Note Purchase Agreement”), by and among the Company and the Secured Parties, the Company has agreed to issue and sell to the Secured Parties, and the Secured Parties have agreed to purchase from the Company, certain Secured Convertible Promissory Notes in the aggregate principal amount of up to Five Million Dollars ($5,000,000) (each a “Note” and, collectively, the “Notes”).
B. It is a condition precedent to the obligations of the Secured Parties under the Note Purchase Agreement that the Company grant to the Secured Parties a first-priority security interest in certain of its personal property to secure the Obligations.
C. The Company has agreed to execute and deliver this Agreement to induce the Secured Parties to purchase the Notes.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Note Purchase Agreement or the Notes, as applicable. As used in this Agreement, the following terms shall have the following meanings:
“Collateral” means the property described on Exhibit A attached hereto and made a part hereof.
“Event of Default” has the meaning set forth in Article VII of this Agreement.
“Majority in Interest” means Secured Parties holding Notes representing more than fifty percent (50%) of the aggregate outstanding principal amount of all Notes then outstanding.
“Obligations” means any and all indebtedness, liabilities, and obligations of every kind and nature of the Company to the Secured Parties under or in connection with the Notes, the Note Purchase Agreement, this Agreement, and any other Transaction Documents, including, without limitation, all principal, interest (including default interest), premiums, fees, costs, expenses, indemnities, and all other amounts payable thereunder or in connection therewith, whether now existing or hereafter arising, absolute or contingent, due or to become due, and whether or not evidenced by any note or other instrument.
“Permitted Liens” means (i) Liens for taxes, assessments, or other governmental charges not yet due or which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (ii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, or other like Liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith by appropriate proceedings; (iii) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance, and other social security legislation; and (iv) Liens in favor of the Secured Parties created under this Agreement.
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of Nevada (Nevada Revised Statutes Chapter 104, Article 9).
ARTICLE II
GRANT OF SECURITY INTEREST
Section 2.1 Grant. As collateral security for the prompt and complete payment and performance when due of all Obligations, the Company hereby pledges, assigns, transfers, hypothecates, and grants to the Secured Parties a continuing first-priority security interest in and to all of the Company’s right, title, and interest in, to, and under the Collateral, whether now owned or hereafter acquired and wherever located.
Section 2.2 Continuing Security Interest. The security interest granted under this Agreement is a continuing security interest and shall remain in full force and effect until all Obligations have been paid in full and this Agreement has been terminated in accordance with its terms.
Section 2.3 Security Agreement. This Agreement shall constitute a security agreement within the meaning of the UCC.
ARTICLE III
OBLIGATIONS SECURED
Section 3.1 Obligations. The security interest granted under this Agreement secures the full, prompt, and complete payment and performance of all Obligations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Secured Parties as of the date hereof and as of the date of each advance under the Notes as follows:
Section 4.1 Organization and Good Standing. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, with full corporate power and authority to own its properties and conduct its business as currently conducted.
Section 4.2 Authority and Enforceability. The Company has full corporate power and authority to enter into this Agreement, to grant the security interest contemplated hereby, and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms.
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Section 4.3 Ownership of Collateral. The Company is the sole legal and beneficial owner of the Collateral, free and clear of all Liens other than Permitted Liens.
Section 4.4 First-Priority Security Interest. The security interest granted hereby constitutes a present, valid, binding, and enforceable first-priority security interest in the Collateral, subject only to Permitted Liens.
Section 4.5 Name, Jurisdiction, and Location. The exact legal name of the Company is Stewards, Inc. The Company’s jurisdiction of organization is the State of Nevada. The chief executive office and principal place of business of the Company is located at 4300 N. University Drive, Suite D105, Lauderhill, Florida 33351.
Section 4.6 No Conflicts. The execution and delivery of this Agreement and the performance of the obligations hereunder do not and will not (a) conflict with or result in a breach of any provision of the Company’s Articles of Incorporation or Bylaws, (b) conflict with or result in a breach of any agreement, instrument, or obligation to which the Company is a party or by which the Company or the Collateral is bound, or (c) result in the creation of any Lien on the Collateral other than the security interest granted hereby.
Section 4.7 No Existing Financing Statements. No financing statement covering any of the Collateral is currently on file in any public office other than financing statements in favor of the Secured Parties that may be filed in connection with this Agreement.
Section 4.8 Solvency. After giving effect to the transactions contemplated by the Note Purchase Agreement and this Agreement, the Company is solvent and able to pay its debts as they become due.
ARTICLE V
COVENANTS
The Company covenants and agrees that, until all Obligations have been paid in full and this Agreement has been terminated:
Section 5.1 Existence and Good Standing. The Company shall preserve and maintain its corporate existence, rights, franchises, and good standing in the State of Nevada and in each other jurisdiction in which the character of its properties or the nature of its business requires such qualification.
Section 5.2 Name and Location Changes. The Company shall not change its name, jurisdiction of organization, or the location of its chief executive office without providing the Secured Parties with at least thirty (30) days’ prior written notice and taking all actions reasonably requested by the Majority in Interest to maintain the perfection and priority of the security interest granted hereby.
Section 5.3 Liens. The Company shall keep the Collateral free and clear of all Liens other than Permitted Liens.
Section 5.4 Insurance. The Company shall maintain insurance with respect to the Collateral against loss or damage by fire, theft, and other risks customarily insured against by companies similarly situated, in such amounts and with such insurers as are customary, and shall cause the Secured Parties to be named as additional loss payees as their interests may appear.
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Section 5.5 Disposition of Collateral. The Company shall not sell, assign, transfer, lease, or otherwise dispose of any material portion of the Collateral without the prior written consent of the Majority in Interest, except for (a) sales of Inventory in the ordinary course of business and (b) dispositions of obsolete or worn-out Equipment in the ordinary course of business.
Section 5.6 Further Assurances. The Company shall, at its sole expense, promptly execute, acknowledge, deliver, file, register, and record such further documents, financing statements, instruments, and agreements, and take such further actions, as the Majority in Interest may reasonably request from time to time to perfect, protect, maintain, preserve, or enforce the security interest granted hereby or to enable the Secured Parties to exercise and enforce their rights and remedies under this Agreement.
Section 5.7 Inspection Rights. The Company shall permit the Secured Parties and their representatives, upon reasonable prior notice and during normal business hours, to visit and inspect the Collateral and the Company’s books and records relating to the Collateral, and to discuss the Company’s affairs relating to the Collateral with its officers.
Section 5.8 Notice of Claims. The Company shall promptly notify the Secured Parties of any material claim, action, or proceeding affecting the Collateral or the security interest granted hereby.
ARTICLE VI
PERFECTION OF SECURITY INTEREST
Section 6.1 Authorization to File Financing Statements. The Company hereby irrevocably authorizes the Secured Parties (or any of them or their counsel) at any time and from time to time to file in any relevant jurisdiction any initial financing statements, amendments, continuations, terminations, and other documents under the UCC that describe the Collateral and contain any information required by the UCC for the sufficiency or filing-office acceptance of any financing statement, including the Company’s type of organization and organizational identification number (if any).
Section 6.2 Control. Upon request of the Majority in Interest, the Company shall take all steps reasonably necessary to give the Secured Parties control (within the meaning of the UCC) of any Deposit Accounts, Investment Property, or Letter-of-Credit Rights included in the Collateral, including executing control agreements in form and substance reasonably satisfactory to the Majority in Interest.
Section 6.3 Cooperation. The Company shall cooperate fully with the Secured Parties in perfecting, maintaining, and protecting the security interest and priority granted hereby.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default. The occurrence of any of the following events shall constitute an Event of Default under this Agreement:
(a) Any Event of Default under any Note or the Note Purchase Agreement shall have occurred and be continuing;
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(b) Any representation or warranty made or deemed made by the Company in this Agreement shall prove to have been false or misleading in any material respect when made or deemed made;
(c) The Company shall fail to perform or observe any covenant, condition, or agreement contained in this Agreement and such failure shall continue unremedied for a period of fifteen (15) days after the earlier of (i) written notice thereof from the Majority in Interest or (ii) the Company obtaining knowledge of such failure; or
(d) Any Lien other than a Permitted Lien shall attach to any material portion of the Collateral and shall not be released or discharged within thirty (30) days.
ARTICLE VIII
REMEDIES
Section 8.1 Rights and Remedies Upon Default. Upon the occurrence and during the continuance of an Event of Default, the Majority in Interest may, without notice or demand (except as required by applicable law):
(a) declare all or any portion of the Obligations immediately due and payable;
(b) exercise any and all rights and remedies available
to a secured party under the UCC or other applicable law;
(c) take possession of the Collateral without judicial process;
(d) require the Company to assemble the Collateral and make it available to the Secured Parties at a place reasonably convenient to the parties;
(e) sell, lease, license, or otherwise dispose of any or all of the Collateral at public or private sale, with or without having the Collateral present at the place of sale; and
(f) collect, receive, and apply any monies, accounts, or other proceeds of the Collateral.
Section 8.2 Notice of Sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Secured Parties shall give the Company at least ten (10) days’ prior written notice of the time and place of any public sale or of the time after which any private sale or other intended disposition of the Collateral is to be made. Such notice shall be deemed commercially reasonable.
Section 8.3 No Obligation to Marshal. The Secured Parties shall have no obligation to marshal any assets in favor of the Company or against or in payment of any of the Obligations.
Section 8.4 Cumulative Remedies. The rights and remedies of the Secured Parties under this Agreement are cumulative and may be exercised concurrently or separately.
ARTICLE IX
APPLICATION OF PROCEEDS
Section 9.1 Application of Proceeds. All proceeds received by the Secured Parties from the collection, sale, or other disposition of the Collateral shall be applied in the following order of priority:
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(a) First, to the reasonable costs and expenses of the Secured Parties
of every kind incurred in connection with the collection, sale, or disposition, including reasonable attorneys’ fees and legal expenses;
(b) Second, to the payment of the Obligations in such order and manner
as the Majority in Interest may determine in their sole discretion; and
(c) Third, any surplus remaining after the indefeasible payment in full of all Obligations shall be paid to the Company or as a court of competent jurisdiction may direct.
ARTICLE X
FULL RECOURSE
The liability of the Company for the Obligations shall not be limited to the Collateral. The Company shall have full personal liability for the Obligations beyond the value of the Collateral.
ARTICLE XI
COSTS OF COLLECTION AND INDEMNIFICATION
Section 11.1 Costs of Collection. The Company agrees to pay on demand all reasonable attorneys’ fees, costs, and expenses incurred by the Secured Parties in connection with the collection, enforcement, protection, or preservation of this Agreement, the Notes, or any of the Obligations, including any fees and expenses incurred in any bankruptcy, insolvency, receivership, or other court proceeding.
Section 11.2 Indemnification. The Company shall indemnify, defend, and hold harmless each Secured Party and its officers, directors, employees, agents, and counsel from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorneys’ fees) arising out of or relating to this Agreement or the security interest granted hereby, except to the extent resulting from the gross negligence or willful misconduct of such Secured Party.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices. All notices, requests, demands, and other communications under this Agreement shall be given in accordance with the notice provisions of the Note Purchase Agreement.
Section 12.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to conflicts of law principles.
Section 12.3 Waiver of Jury Trial. THE COMPANY AND EACH SECURED PARTY HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 12.4 Amendments and Waivers. This Agreement may not be amended, modified, supplemented, or waived except by a written instrument signed by the Company and the Majority in Interest.
Section 12.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The Company may not assign its rights or obligations under this Agreement without the prior written consent of the Majority in Interest.
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Section 12.6 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.7 Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Electronic signatures (including DocuSign or similar platforms) shall be deemed valid and binding for all purposes.
Section 12.8 Entire Agreement. This Agreement, together with the Note Purchase Agreement, the Notes, and the other Transaction Documents, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written.
Section 12.9 Termination and Release. Upon the indefeasible payment in full of all Obligations (including by reason of the automatic conversion of the Notes into Common Stock in accordance with their terms), this Agreement shall automatically terminate, and the Secured Parties shall, at the Company’s sole expense, promptly execute and deliver to the Company such documents and instruments as the Company may reasonably request to evidence the release of the security interest granted hereby, including UCC termination statements.
Section 12.10 Survival. All representations, warranties, covenants, and agreements of the Company contained herein shall survive the execution and delivery of this Agreement and the making of any advances under the Notes.
IN WITNESS WHEREOF, the parties have executed this Security Agreement as of the date first written above.
COMPANY:
STEWARDS, INC.
a Nevada corporation
By: /s/ Shaun Quin________________
Name: Shaun Quin
Title: Chief Executive Officer
SECURED PARTIES:
The Secured Parties listed on Schedule I hereto, by their acceptance of the Notes issued pursuant to the Note Purchase Agreement, are deemed to have accepted and agreed to the terms of this Security Agreement.
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SCHEDULE I
Secured Parties
| Name of Secured Party | Principal Amount of Note | Address for Notices | Email Address |
| Cameron Diviak | $500,000 | [Address to be confirmed] | [email protected] (mailto:[email protected]) |
| Pieter van Staden | $1,500,000 | [Address to be confirmed] | [email protected] (mailto:[email protected]) |
| Philippus and Celeste van Staden, as Tenants by the Entirety | $2,000,000 | 228 N. Park Avenue, Suite K Winter Park, FL 32789 | [email protected] (mailto:[email protected]) |
| Philippus van Staden Roth IRA | $1,000,000 | 228 N. Park Avenue, Suite K Winter Park, FL 32789 | [email protected] (mailto:[email protected]) |
Total Aggregate Principal Amount: up to $5,000,000
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EXHIBIT A
COLLATERAL
The Collateral consists of all of the following property of Stewards, Inc., whether now owned or hereafter acquired, and wherever located:
(a) all Accounts;
(b) all Chattel Paper (whether tangible or electronic);
(c) all Commercial Tort Claims;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures (to the extent Article 9 of the Uniform Commercial Code as enacted in the State of Nevada applies thereto);
(h) all General Intangibles (including all payment intangibles, software, intellectual property, licenses, and customer lists);
(i) all Goods;
(j) all Instruments;
(k) all Inventory;
(l) all Investment Property (including all securities, security entitlements, securities accounts, commodity contracts, and commodity
accounts);
(m) all Letter-of-Credit Rights;
(n) all Supporting Obligations;
(o) all books, records, ledger cards, files, correspondence, computer programs, tapes, disks, and related data processing software that
at any time evidence or contain information relating to any of the foregoing or are otherwise necessary or helpful in the collection thereof
or realization thereon;
(p) all Proceeds and products of any and all of the foregoing (including insurance proceeds and condemnation proceeds); and
(q) all accessions to, substitutions for, and replacements of any of the foregoing.
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT.
CONVERTIBLE PROMISSORY NOTE
$25,000,000.00 (the “Available Amount”
as adjusted in accordance with the terms herein)
July 27, 2026 (the “Closing Date”)
FOR VALUE RECEIVED, HOPCO Intermediate Holdings II, Inc., a Delaware corporation (the “Issuer”), promises to pay to STEWARDS, INC. (the “Holder”), the Repayment Amount (as defined below) of this Convertible Promissory Note (this “Note”) calculated in accordance with Section 3 of this Note.
1. Funded Amounts. Subject to the terms hereof, the Holder shall, in accordance with the schedule below, make loans available to the Issuer by wire transfer in immediately available funds to an account designated by the Issuer, up to an aggregate amount at any time outstanding not to exceed the Available Amount. The aggregate principal amount of all outstanding loans issued hereunder is referred to herein as the “Funded Amount”.
a. On July 27, 2026, the Holder shall loan to the Issuer an initial aggregate principal amount of at least $5,000,000.
b. On or prior to August 31, 2026, the Holder shall loan to the Issuer an aggregate principal amount equal to the remaining Available Amount (i.e., the Available Amount minus any Funded Amount).
2. Maturity Date. On July 27, 2031 (the “Maturity Date”), the Issuer shall repay to the Holder an amount equal to the sum of: (i) the Funded Amount, plus (ii) the aggregate PIK Principal (as defined below) as of such date plus (iii) all accrued and unpaid interest in respect of the amounts described in clause (ii) above (the aggregate sum of the amounts set forth in (x) clauses
(i) and (ii) above, the “Outstanding Amount” and (y) clauses (i), (ii) and (iii) above, the “Repayment Amount”), unless this Note is or has been already converted pursuant to Section 6 below.
3. Interest. Interest shall accrue, compounding annually at a rate per annum equal to eight percent (8%) on the Outstanding Amount under this Note from and including the date hereof but excluding the date on which the Note is paid in full. All accrued and unpaid interest shall be paid in kind annually at the end of each calendar year following the date hereof (any such interest paid in kind, “PIK Principal”), and for the avoidance of doubt, PIK Principal shall accrue interest at the rate and otherwise in accordance with this Section 3. Interest shall be computed on the basis
of a 365- (or 366-, as the case may be) day year and the actual number of days elapsed. Notwithstanding any provisions of this Note, in no event will the amount of interest paid or agreed to be paid by the Issuer exceed an amount computed at the highest rate of interest permissible under applicable law.
4. Representations and Warranties of the Issuer. The Issuer hereby represents and warrants to the Holder as follows:
a. The Issuer is a duly organized corporation, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own its properties and conduct its business as currently conducted.
b. The Issuer has full corporate power and authority to enter into this Note and to consummate the transactions contemplated hereby. The execution and delivery of this Note and the performance by the Issuer of its obligations hereunder have been duly authorized by all necessary corporate action.
c. The execution, delivery and performance of this Note by the Issuer does not and will not (i) conflict with or violate any provision of the Issuer’s certificate of incorporation or bylaws, (ii) conflict with or result in a breach of any agreement, instrument or obligation to which the Issuer is a party or by which it or its properties are bound, or (iii) conflict with or result in a violation of any law, regulation or order applicable to the Issuer.
d. The Issuer is in compliance with all applicable healthcare laws and regulations, including but not limited to the Stark Law, the Anti-Kickback Statute, HIPAA, and all applicable state licensing and billing requirements, except in such instances in which the failure to comply therewith would not reasonably be expected to have a Material Adverse Effect. The Issuer possesses all material licenses, permits and authorizations necessary to conduct its business.
e. There are no actions, suits, proceedings, claims or investigations pending or, to the knowledge of the Issuer, threatened against the Issuer before any court or governmental authority that would reasonably be expected to have a Material Adverse Effect.
f. The present fair saleable value of the property of each of the Issuer and its subsidiaries, on a consolidated basis, is greater than the amount that will be required to pay the probable liability of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured and each of the Issuer and its subsidiaries, on a consolidated basis, is able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured.
g. For the purposes of this Note, “Material Adverse Effect” means an effect on the business, assets, financial condition, litigation, or results of operations of the Issuer and its subsidiaries, taken as a whole, that materially and adversely impacts the Issuer’s ability perform its obligations under this Note or consummate of the transactions contemplated hereby.
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5. Affirmative Covenants. Until this Note has been paid in full or converted, the Issuer covenants and agrees as follows:
a. The Issuer shall deliver, or caused to be delivered, to the Holder:
i. within forty-five (45) days after the end of each fiscal quarter, unaudited financial statements of the Issuer and its subsidiaries; and
ii. prompt written notice of any Event of Default or Material Adverse Effect promptly after an executive officer of the Issuer or any of its subsidiaries becomes aware thereof.
b. The Issuer shall maintain its corporate existence and all licenses and permits necessary to conduct its business, except in such instances in which the failure to maintain such licenses or permits would not reasonably be expected to have a Material Adverse Effect.
6. Conversion and Repayment.
a. In the event that the Equity Closing (as defined below) does not occur on or prior to October 31, 2026 (the “Conversion Date”), this Note shall be automatically contributed to HOPCo Group Holdings, L.P. (“Group Holdings”), on the Conversion Date, in exchange for a number of Class A2 Units of Group Holdings (the “Class A2 Units”) equal to the Repayment Amount as of the Conversion Date divided by the Conversion Price (the “Note Contribution”). For the purposes of this Note, the “Conversion Price” means a price per Class A2 Unit determined based on an enterprise value for Group Holdings and its subsidiaries, as of the Conversion Date, equal to 20x Adjusted EBITDA (as defined below) for the period beginning on September 1, 2025 and ending on August 31, 2026; provided, that Group Holdings and the Holder shall jointly engage VMG Health (the “Valuation Firm”) to confirm that Adjusted EBITDA was calculated in a manner consistent with the definition of Adjusted EBITDA set forth in Section 6(e) below. The fees and expenses of the Valuation Firm shall be borne equally by Group Holdings and the Holder.
b. As a condition to the receipt of the Class A2 Units, the Holder shall sign and deliver a contribution and subscription agreement in the form provided by Group Holdings (the “Subscription Agreement”) and shall be made party to the Third Amended and Restated Limited Partnership Agreement of Group Holdings, dated as of December 1, 2023 (as amended or otherwise modified as of the date of the Conversion Date, the “LP Agreement”). All of the Class A2 Units issued upon the Note Contribution shall be subject to the restrictions and obligations contained in the LP Agreement and the Subscription Agreement. Immediately after the Note Contribution, Group Holdings shall contribute to the Issuer this Note, as a contribution to capital (the “Group Holdings Contribution”). Group Holdings shall receive no new stock from the Issuer in connection with the Group Holdings Contribution. Following the Group Holdings Contribution, the Issuer will be forever released from all of its obligations and liabilities solely with regard to this Note, including without limitation the obligation to pay the principal amount or any accrued interest.
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c. For federal income tax purposes, the Note Contribution is intended to be treated as a nontaxable exchange pursuant to Section 721(a) of the Internal Revenue Code of 1986, as amended.
d. Upon the consummation of an investment, directly or indirectly, by the Holder (or its affiliate) of at least $205,000,000 in Class A2 Units of Group Holdings (an “Equity Closing”), the Issuer shall repay, or cause to be repaid, in full the Repayment Amount then outstanding under this Note. Such repayment shall be made by wire transfer of immediately available funds on the date of the Equity Closing; provided, however, that the parties may mutually agree in writing at the time of the Equity Closing to net the Repayment Amount against the purchase price payable by the Holder for the Class A2 Units in lieu of a separate wire repayment.
e. For the purposes of this Note, “Adjusted EBITDA” means, for any period, the consolidated net income (or loss) of Group Holdings and its subsidiaries for such period, determined in accordance with GAAP, plus (to the extent deducted in determining such net income) without duplication: (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization expense, (iv) non-cash charges, losses or expenses (including non-cash stock-based compensation expense), (v) non-recurring or one-time charges, costs or expenses (including transaction expenses, restructuring charges, severance costs and integration costs), (vi) extraordinary, unusual or non-recurring losses or charges, (vii) losses from discontinued operations, (viii) any fees, costs or expenses incurred in connection with the transactions contemplated by this Note or that certain Letter of Intent, dated June 2, 2026, among The Center for Orthopedic and Research Excellence, Inc. (“HOPCo”), Group Holdings and the Holder (the “Letter of Intent”), (ix) to the extent not already included, the full run-rate effect of revenue items (taking into account the costs and expenses corresponding to such revenue items), cost savings, operating expense reductions and other synergies reasonably expected to be realized within twelve (12) months following any acquisition, investment or cost reduction initiative, (x) payments, costs, fees and expenses paid to members of the board of directors (or equivalent governing body) of Group Holdings or any of its subsidiaries, (xi) management fees, costs and expenses and transaction fees paid to Audax Management Company, LLC, Linden Capital Partners IV LP, Linden Capital Partners IV-A LP, or any of its respective affiliates (excluding Group Holdings and its subsidiaries), (xii) start-up costs and losses and other expenses, including those associated with new providers, ASC’s and arising from de novo transactions, (xiii) retention, recruiting, relocation and signing bonuses and expenses, and severance costs and expenses, (xiv) credit for annualized EBITDA calculated pursuant to analyses regularly performed by HOPCo to determine expected savings payable under the terms of HOPCo’s value-based care agreements, and based on historical claims, agreed upon cost trends, benchmarks, and the observed impact of other HOPCo value-based care program performance, and (xv) such other adjustments as may be mutually agreed upon in writing by the Issuer and the Holder within thirty (30) days after the Closing Date. For the avoidance of doubt, Adjusted EBITDA shall be calculated on a run-rate basis to reflect the annualized effect of any acquisitions, new contracts or other items that occurred during the applicable period.
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7. Subordination. The Issuer and the Holder acknowledge and agree that the payment of any amount due under this Note is structurally subordinate to the obligations of the Issuer and its subsidiaries under certain senior secured debt financing agreements of the Issuer or any of its subsidiaries (each such agreement, an “Issuer Loan Agreement”). If a payment of any amount due hereunder is prohibited or blocked under any such Issuer Loan Agreement or a default exists under any Issuer Loan Agreement at the time of such contemplated payments, the Issuer shall not be obligated to pay, or cause to be paid, all or any portion of such amount, provided that, such payment shall be made as soon as any such restriction or default is no longer in effect, as applicable. The Issuer and the Holder acknowledge and agree such subordination shall not relieve the Issuer of its obligations to promptly pay or cause to be paid such amount when permitted under such Issuer Loan Agreement. The Issuer shall provide the Holder with prompt written notice of (i) any default or event of default under any Issuer Loan Agreement after an executive officer of the Issuer becomes aware thereof and (ii) any amendment, modification, waiver or refinancing of any Issuer Loan Agreement that would reasonably be expected to have a material adverse effect on the Holder’s rights or remedies under this Note. Upon the occurrence of an Event of Default or the Maturity Date under this Note, the Holder shall retain all rights and remedies available to it under this Note and applicable law, subject to the terms of any applicable subordination provisions. The Holder covenants and agrees that (a) any amounts due under this Note are and shall remain unsecured obligations of the Issuer, (b) notwithstanding anything to the contrary in this Note will not be effective to decrease the rights of any holder of senior indebtedness under any Issuer Loan Agreement under this Section 7 without such holder’s prior written consent, and (c) the holders of senior indebtedness under any Issuer Loan Agreement are express third party beneficiaries of the provisions of this Section 7 and may enforce them against the Holder directly.
8. Events of Default. This Note shall become immediately due and payable without notice or demand (but subject to the conversion rights and requirements set forth herein) upon the occurrence at any time of any of the following events of default (individually, an “Event of Default” and collectively, “Events of Default”):
a. the Issuer fails to pay any of the Funded Amount, PIK Principal, accrued interest or any other amounts payable under this Note when due and payable (subject to extensions of the Maturity Date that may be approved by the Holder) and fails to cure such failure within three (3) Business Days after receiving written notice of such failure from the Holder;
b. the Issuer files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or seeks the appointment of a custodian, receiver, trustee (or other similar official) of the Issuer or all or any substantial portion of the Issuer’s assets, or makes any assignment for the benefit of creditors or takes any action in furtherance of any of the foregoing, or fails to generally pay its debts as they become due;
c. an involuntary petition is filed, or any proceeding or case is commenced, against the Issuer (unless such proceeding or case is dismissed or discharged within sixty (60) days
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of the filing or commencement thereof) under any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt, liquidation or moratorium statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is applied or appointed for the Issuer or to take possession, custody or control of any substantial portion of the assets and property of the Issuer, or an order for relief is entered against the Issuer in any of the foregoing;
d. the Issuer materially breaches any representation, warranty or covenant contained in this Note and such breach is not cured within thirty (30) days after written notice thereof (or immediately if such breach is not reasonably capable of cure); or
e. a Sale of the Partnership (as defined in the LP Agreement) occurs without the prior written consent of the Holder.
9. Payment. Unless otherwise directed by the Holder, all payments by the Issuer under this Note will be made in U.S. dollars by wire transfer of immediately available funds to the bank account(s) designated to the Issuer by the Holder. All payments made by the Issuer under this Note must be applied (i) first, to the payment in full of any costs incurred in the collection of any sum due under this Note, (ii) second, to the payment in full of accrued and unpaid interest and
(iii) third, to the remaining outstanding Repayment Amount.
10. Prepayment. With prior written notice to the Holder, all or any portion of the Repayment Amount may be prepaid, in whole or in part without any penalty, on the Business Day immediately prior the Conversion Date in event that the Equity Closing has not occurred and is not reasonably expected to occur on or prior to the Conversion Date.
11. Transfer. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. This Note may be transferred by the Holder without the consent of the Issuer to any controlled affiliate of the Holder. Any other transfer by the Holder shall require the prior written consent of the Issuer. Upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Issuer, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee. Interest and principal are payable only to the registered holder of this Note.
12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
a. This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware, without regard to its conflicts of law principles. The parties agree that any action arising under or relating to this Note may be brought in any United States District Court or State Court located in Wilmington, Delaware having subject matter jurisdiction over such matters, and each of the parties hereby consents and agrees to such personal jurisdiction and waives any objection to the placement of venue therein, for purposes of any such action.
b. EACH PARTY HERETO FURTHER WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS NOTE.
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13. Notices. All notices shall be made in writing and shall be delivered personally, by facsimile, electronic mail or mailed first class postage prepaid, to the Issuer or to the Holder as set forth below:
a. If to the Issuer, then to:
HOPCo Intermediate Holdings II, Inc.
c/o The Center for Orthopedic and Research Excellence, Inc.
18444 N 25th Avenue Suite 320
Phoenix, AZ 85023
Attn: David Jacofsky, MD Phone: (623) 474-3421
Email: [email protected]
with a copy (which shall not constitute notice) to:
Audax Management Company, LLC 101 Huntington Avenue, Floor 24
Boston, Massachusetts 02199 Attention: Tamarah Belczyk, Deputy General Counsel
Phone: (617) 859-1572
Email: [email protected] and:
Ropes & Gray LLP Prudential Tower, 800 Boylston Street
Boston, MA 02199-3600
Attention: Kendrick Chow Phone: (617) 951-7799
Email: [email protected]
b. If to the Holder, then to:
Stewards, Inc.
4300 N. University Drive Suite D105
Lauderhill, Florida 33351 Attention: Shaun Quin Phone: (833) 328-6477
Email: [email protected]
with a copy (which shall not constitute notice) to:
The Doney Law Firm 3651 Lindell Rd Ste D121 Las Vegas, NV 89103
Attention: Scott Doney, Esq. Phone: (702) 982-5686
Email: [email protected]
14. Amendments and Waivers. The terms and provisions of this Note may be modified or amended only by a written instrument duly executed by the Issuer and by the Holder. Any amendment or waiver effected in accordance with this Section 14 shall be binding upon the Issuer, the Holder and each transferee of the Note.
15. Counterparts. This Note may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will constitute a single agreement. Electronic signatures shall be deemed original signatures for all purposes.
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16. Failure or Delay Not Waiver. No delay or omission on the part of the Holder in exercising any right under this Note shall operate as a waiver of such right or of any other right of the Holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion.
17. Waiver of Notice. The Issuer and every endorser or guarantor of this Note, regardless of the time, order or place of signing, hereby waives presentment, demand, protest and notices of every kind and assents to any permitted extension of the time of payment and to the addition or release of any other party primarily or secondarily liable hereunder.
18. Usury Savings Clause. Anything in this Note to the contrary notwithstanding, the obligation of the Issuer to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made to the extent that the Holder’s receipt thereof would not be permissible under the law or laws applicable to it limiting rates of interest which may be charged or collected by it. Any such amount of interest which is not paid as a result of the limitation referred to in the preceding sentence shall be carried forward and paid by the Issuer to the Holder on the earliest date or dates on which any interest is payable under this Note and on which the receipt thereof is permissible under the laws applicable to the Holder limiting rates of interest which may be charged or collected by the Holder.
19. Entire Agreement. This Note, together with the Letter of Intent, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written.
20. Severability. If any provision of this Note is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.
21. Further Assurances. Each party agrees to execute and deliver such further documents and instruments and take such further actions as may be reasonably necessary or desirable to carry out the terms and provisions of this Note.
22. Expenses. In any action, suit or proceeding arising out of or relating to the enforcement of this Note or any provision hereof, the prevailing party in such action, suit or proceeding shall be entitled to recover from the non-prevailing party all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by the prevailing party in connection with such action, suit or proceeding.
23. Guarantee by Parent. HOPCo Group Holdings, L.P. (the “Guarantor”) hereby unconditionally, absolutely, and irrevocably guarantees to the Holder the full, prompt, and complete payment and performance when due (whether at stated maturity, upon acceleration, or otherwise) of all present and future obligations, liabilities, and indebtedness of the Issuer under this Note, including without limitation the payment of principal, interest (including PIK Principal), fees, costs, expenses, and any other amounts payable by the Issuer hereunder (collectively, the “Guaranteed Obligations”). This guarantee is a continuing, absolute, and unconditional guarantee and shall remain in full force and effect until the Guaranteed Obligations have been paid in full or this Note has been converted in accordance with its terms. The Guarantor waives diligence, presentment, demand of payment, protest, notice of acceptance of this guarantee, notice of any default by the Issuer, and all other notices and demands to which the Guarantor may otherwise be entitled. The Holder may enforce this guarantee without first exhausting its remedies against the Issuer or any collateral. The liability of the Guarantor hereunder is joint and several with the Issuer.
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IN WITNESS WHEREOF, the Issuer has caused this Convertible Promissory Note to be executed and delivered in its name as of the date first written above.
HOPCO INTERMEDIATE HOLDINGS II, INC.
By: /s/ David Jacofsky
Name: David Jacofsky
Title: Chief Executive Officer
HOLDER:
STEWARDS, INC.
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Chief Executive Officer
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