Stewards, Inc 8-K, filed Sep 29, 2026
Stewards, Inc. (SWRD)
About this 8-K
Stewards, Inc filed this 8-K on September 29, 2026, reporting on events of September 21, 2026.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 2.03: New debt or off-balance-sheet obligation
- Item 3.02: Unregistered sale of equity
- Item 9.01: Financial statements and exhibits
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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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
On September 21, 2026, Stewards, Inc. (the “Company”) and its wholly owned subsidiary, SRC Envy Holdco LLC (the “Purchaser”), entered into a Membership Interests Purchase and Sale Agreement (the “Purchase Agreement”) with Envy Development PB, LLC, HSU Gamma Investments LP, Michael Hsiao, the Estate of Christopher Longsworth, The Myelin Group, LLC, Envy Development DE, LLC and Envy Recreational, LLC. The Purchase Agreement provided for the Purchaser to acquire all of the outstanding membership interests of Envy Development DE, LLC and Envy Recreational, LLC, which own the real estate and related assets comprising Envy Pompano Beach. The acquisition closed on September 23, 2026. The information set forth under Item 2.01 of this Current Report on Form 8-K is incorporated into this Item 1.01 by reference.
Purchase Consideration and Escrowed Shares
The Purchase Agreement provides for an aggregate contractual purchase price of $90.0 million, subject to credits, prorations and closing adjustments. The consideration included a credit for the Company’s acquisition deposit, the refinancing of $44,557,435.93 of existing property-level indebtedness, the issuance of 14,263,025 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), calculated at the contractual price of $3.00 per share and having an aggregate contractual value of $42,789,075, and a $2.0 million unsecured promissory note made by the Company in favor of Envy Development PB, LLC. Of those shares, 13,788,066 were issued to Envy Development PB, LLC and 474,959 were issued to The Myelin Group, LLC. The $3.00 per-share figure is the negotiated contractual value used solely to determine the number of shares issued. It is not the Nasdaq closing price and is not the fair value of the shares for accounting purposes under ASC 805-50.
In connection with the closing, the Company, Envy Development PB, LLC, The Myelin Group, LLC and ClearTrust, LLC entered into an Escrow Agreement effective as of September 23, 2026. Under the Escrow Agreement, 7,000,000 of the issued shares, having an agreed contractual value of $21.0 million, were deposited with ClearTrust, LLC as escrow agent. Beginning October 5, 2026, and generally on the fifth day of each month thereafter through April 5, 2027, the Company is required to make a cash payment of $3.0 million to the sellers and, concurrently with each payment, 1,000,000 escrowed shares are to be cancelled. The parties are required to pursue registered sales, privately negotiated sales and borrowings against the escrowed shares as potential sources of liquidity. If those measures generate less than the required cash payment, the Company must fund the shortfall. The Company is obligated to pay daily liquidated damages for late redemption payments, initially at $1,000 per day for each outstanding redemption and increasing to $2,000 per day after the first calendar month.
If any redemption payment, related late-payment damages, delisting liquidated damages or extension fee remains unpaid one year after closing, the sellers may direct a sale of the property or extend the payment period month to month for a fee equal to 2% of the then-outstanding unpaid amount per month. The sellers also have a payment-priority right, subject to the LoanCore financing described below, and may record a vendee’s lien against the property while an unpaid obligation remains outstanding. Stewards International Funds PCC, on behalf of the Stewards Private Credit Fund, guarantees the Company’s redemption-payment obligations, related late-payment damages and certain other payment obligations under the Purchase Agreement. Glen Steward, the Company’s Chairman of the Board and a director, and Shaun Quin, the Company’s Chief Executive Officer and a director, guarantee the late-payment damages and compliance with specified payment-priority and distribution covenants.
The Purchase Agreement also provides that if the Common Stock is delisted from Nasdaq and is not relisted within 120 days, the Company must pay the sellers $5.5 million within ten days after the cure period and on each of the first five anniversaries of the delisting while the delisting continues, subject to an aggregate cap of $33.0 million. At the sellers’ election, each such payment may be made in cash, in additional shares of Common Stock valued at $3.00 per share or in a combination of cash and shares. Stewards International Funds PCC, on behalf of the Stewards Private Credit Fund, guarantees these obligations. Stewards International Funds PCC is affiliated with Mr. Steward.
Registration Rights Agreement
At closing, the Company, the sellers and Stewards International Funds PCC, on behalf of the Stewards Private Credit Fund, entered into a Registration Rights Agreement. The Company is required to use commercially reasonable efforts to file a resale registration statement covering the 7,000,000 escrowed shares no later than 30 days after September 23, 2026 and to cause it to become effective no later than 60 days after that date, or 90 days after that date if the Securities and Exchange Commission reviews and comments on the registration statement. The agreement also provides customary demand and piggyback registration rights and requires the Company to bear specified registration expenses, other than underwriting discounts and selling commissions.
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Guaranty Fees and Reimbursement Agreement
In consideration of the guaranties supporting the LoanCore financing, the Purchaser agreed to pay each of Bernard Hsiao, Michael Hsiao, Mr. Steward, Mr. Quin and the Company an annual fee equal to 0.30% of the outstanding principal balance of the LoanCore financing, for an aggregate annual fee of 1.50%, prorated for 2026 and payable in monthly installments after closing. Mr. Steward and Mr. Quin are related parties of the Company.
At closing, Bernard Hsiao, Michael Hsiao, Mr. Steward, Mr. Quin, the Company and Stewards International Funds PCC, on behalf of the Stewards Private Credit Fund, also entered into a Reimbursement Agreement allocating liability under the recourse guaranty. Under that agreement, the Hsiao parties are responsible for obligations attributable to their intentional fraud or willful misconduct, and the Stewards parties are responsible for the other obligations arising under the recourse guaranty and must indemnify the Hsiao parties for those obligations, subject to the terms of the agreement.
The foregoing descriptions of the Purchase Agreement, the Registration Rights Agreement and the Escrow Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of those agreements, which are filed as Exhibits 2.1, 4.1 and 10.10, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The description of the Reimbursement Agreement is qualified in its entirety by reference to Exhibit 10.9.
Item 2.01 Completion of Acquisition or Disposition of Assets
On September 23, 2026, the Company completed the acquisition contemplated by the Purchase Agreement. Through the Purchaser, the Company acquired 100% of the membership interests in Envy Development DE, LLC and Envy Recreational, LLC and, indirectly, the real estate and related operating assets commonly known as Envy Pompano Beach, located at 425-475 East Atlantic Boulevard, Pompano Beach, Florida.
Envy Pompano Beach is a Class A mixed-use real estate project situated on approximately 1.61 acres and includes 214 residential apartments in two 11-story buildings completed in 2020, approximately 5,575 square feet of ground-floor commercial space, a marina with 26 boat slips, a three-story commercial community center and related leases, deposits, furniture, fixtures, equipment, permits and other operating assets. The Company intends to continue operating the property as a multifamily and mixed-use real estate asset.
The sellers of the acquired membership interests were Envy Development PB, LLC and The Myelin Group, LLC. Glen Steward, the Company’s Chairman of the Board and a director, holds an immaterial, indirect passive investment through an entity owned or controlled by another investor that has an interest in the Envy ownership structure. Mr. Steward does not control that entity, had no ability to influence decision-making on behalf of the sellers or the acquired entities, and did not participate in the sellers’ approval of the transaction. Based on the immaterial nature of Mr. Steward’s indirect interest and his lack of control or influence over the sellers or the acquired entities, the Company determined that the acquisition did not constitute a related-party transaction solely by reason of that interest. Except for this indirect interest and the transaction documents, financing guaranty arrangements and guaranty-fee arrangements described in this report, the Company is not aware of any material relationship between the sellers and the Company or any of its affiliates, directors or officers.
The contractual purchase price and the consideration delivered at closing are described under Item 1.01 above and are incorporated into this Item 2.01 by reference. The acquisition was financed in part through the property-level financing described under Item 2.03 below, which refinanced $44,557,435.93 of existing property-level indebtedness and funded reserves and closing costs. The acquisition is accounted for as an asset acquisition under ASC 805-50.
Historical revenues and certain operating expenses of the acquired real estate operation are presented under Rule 3-14 of Regulation S-X in Exhibits 99.1 and 99.2. Those statements exclude mortgage interest, depreciation, amortization, management fees and income taxes and are not indicative of future GAAP results. The six months ended June 30, 2026 include an approximately $202,000 real-estate tax refund that is non-recurring.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
LoanCore Financing
On September 23, 2026, Envy Development DE, LLC and Envy Recreational, LLC, each a wholly owned subsidiary of the Company following the acquisition, entered into a Loan Agreement with LoanCore Capital Credit REIT LLC, as lender, providing for a $47.7 million mortgage loan. The loan refinanced $44,557,435.93 of existing indebtedness secured by the property and funded reserves and transaction costs. The loan is evidenced by an amended and restated renewal promissory note issued by Envy Development DE, LLC. The note reflects a future advance of $3,142,564.07, bringing the outstanding principal to $47,700,000.
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The loan bears interest at one-month Term SOFR, subject to a 3.35% floor, plus 3.60% per annum. The loan is interest-only, with monthly interest payments beginning November 9, 2026, and matures on October 9, 2028. Subject to specified conditions, including no continuing event of default, maintenance of an interest-rate cap, a debt yield of at least 6.50% and payment of a 0.50% extension fee, the borrowers may extend the maturity date to October 9, 2029. The borrowers are required to maintain an interest-rate cap with a 4.50% strike rate. The loan also provides for a 1.0% origination fee, a 1.0% exit fee, a $1,000 monthly administrative fee and a spread-maintenance premium for specified repayments before the eighteenth payment date.
The loan is secured by first-priority mortgages on the apartment, marina and community-center properties, assignments of leases and rents, security interests in related personal property and accounts, and a pledge by the Purchaser of its equity interests in the borrowers. The loan documents establish springing cash-management arrangements at PNC Bank, National Association. Those arrangements are unsprung at closing and may be activated upon a trigger event under the Loan Agreement. The loan documents also require specified tax, insurance, repair, leasing, capital-expenditure, security-upgrade and interest reserves. The borrowers also agreed to use best efforts to clear specified outstanding fire-code violations within 30 days after closing. Subject to written notice and an additional 30-day cure period, failure to do so may constitute an event of default.
The Purchaser and Envy Recreational, LLC delivered payment guaranties. In addition, Bernard Hsiao, Michael Hsiao, Mr. Quin, Mr. Steward and the Company delivered a guaranty of recourse and other obligations. That guaranty covers specified recourse liabilities, scheduled monthly debt-service payments and specified property operating expenses, and it provides for full recourse upon specified springing-recourse events. The allocation of responsibility among the guarantors is governed by the Reimbursement Agreement described under Item 1.01.
Seller Promissory Note
On September 23, 2026, in connection with the closing of the Envy acquisition, Envy Development PB, LLC advanced $2.0 million to the Company, and the Company issued and delivered to Envy Development PB, LLC an unsecured promissory note in the original principal amount of $2.0 million. Although the note bears an “Effective Date” of September 17, 2026, the note was not released or delivered, the loan was not funded, and the Company did not become obligated to repay the loan until the closing occurred and the funds were advanced on September 23, 2026. Accordingly, the Company’s direct financial obligation under the note arose on September 23, 2026.
The note accrues interest at a fixed rate of $1,333.33 per day on the outstanding principal balance. The entire principal balance, together with all accrued and unpaid interest, is due on October 5, 2026. The Company may prepay the note without premium or penalty. The note contains customary events of default and permits the lender, following an event of default, to accelerate the outstanding principal, accrued interest and other amounts due. The note is unsecured and does not require a personal guaranty.
Item 3.02 Unregistered Sales of Equity Securities
On September 23, 2026, as partial consideration for the acquisition, the Company issued an aggregate of 14,263,025 shares of Common Stock at the contractual value of $3.00 per share, consisting of 13,788,066 shares issued to Envy Development PB, LLC and 474,959 shares issued to The Myelin Group, LLC. Of those shares, 6,766,900 shares allocated to Envy Development PB, LLC and 233,100 shares allocated to The Myelin Group, LLC, for an aggregate of 7,000,000 shares, were deposited in escrow as described in Item 1.01. After the issuance, 225,625,627 shares of Common Stock were outstanding.
The shares were issued in a transaction not involving a public offering in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and, to the extent applicable, Regulation D promulgated thereunder. The recipients made customary investment-intent and accredited-investor representations. The shares are restricted securities and may be resold only pursuant to an effective registration statement or an available exemption from registration. No underwriter or placement agent participated in the issuance, and the Company received no cash proceeds from the issuance.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Real Estate Operation Acquired
The audited statement of revenues and certain operating expenses of Envy Development PB, LLC for the year ended December 31, 2025, together with the related notes and the report of Turner, Stone & Company, L.L.P., is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
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The unaudited statement of revenues and certain operating expenses of the Envy real estate operation for the six months ended June 30, 2026 and 2025, together with the related notes, is filed as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.
(b) Pro Forma Financial Information
The unaudited pro forma condensed combined financial information giving effect to the acquisition is filed as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein by reference.
(d) Exhibits
The Company has omitted certain schedules and exhibits from Exhibit 2.1 pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish copies of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.
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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 September 28, 2026
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MEMBERSHIP INTERESTS PURCHASE AND SALE AGREEMENT
THIS MEMBERSHIP INTERESTS PURCHASE AND SALE AGREEMENT (“Agreement”) is made as of September 21, 2026 (“Effective Date”), by and among ENVY DEVELOPMENT PB, LLC, a Florida limited liability company (“Envy Seller”), HSU GAMMA INVESTMENTS LP, a Delaware limited partnership (“HGI”), MICHAEL HSIAO, an individual (“Hsiao”), ESTATE OF CHRISTOPHER LONGSWORTH (“Longsworth,” and together with Hsiao and HGI, the “Myelin Group Owners”); THE MYELIN GROUP, LLC, a Florida limited liability company (“Myelin Seller”), ENVY DEVELOPMENT DE, LLC, a Delaware limited liability company (“Envy Propco”), solely with respect to Section 10.1 hereof, ENVY RECREATIONAL, LLC, a Delaware limited liability company (“Myelin Propco”), solely with respect to Section 11.1 hereof, SRC ENVY HOLDCO LLC, a Delaware limited liability company (“Purchaser”), and STEWARDS, INC., a Nevada corporation (OTC: SWRD) (the “Issuer”). Envy Seller, Myelin Group Owners, Myelin Seller, Purchaser, Envy Propco, Myelin Propco, and Issuer are referred to herein individually as a “Party,” and collectively, as the “Parties.”
RECITALS
A. Envy Propco is the owner of those certain parcels of real property defined in the CC&Rs (hereafter defined) as the “Envy Property” (collectively, the “Envy Parcels,” as more particularly described in the attached Exhibit A), upon which are located a mixed-use project commonly known as “Envy Pompano Beach”, which Envy Parcels are located in Pompano, Florida. “CC&Rs” means that certain Declaration of Covenants, Conditions, Restrictions and Easements for KOI Residences and Marina dated May 18, 2016 and recorded in the Broward County, Florida Official Records (the “Official Records”) on May 26, 2016 as Instrument No. 113719830, as amended by that certain First Amendment to Declaration of Covenants, Conditions, Restrictions and Easements for KOI Residences and Marina Master Owners Association, Inc. dated September 21, 2016 and recorded in the Official Records on September 21, 2016 as Instrument No. 113944911, together with Phase 1 Sketch of Marina Parcel, recorded September 14, 2016, in Instrument No. 113930934, as further amended by that certain Second Amendment and Supplemental Declaration of Covenants and Restrictions for KOI Residences and Marina Master Owners Association, Inc. dated November 20, 2017 and recorded in the Official Records on November 21, 2017 as Instrument No. 114734060, as further amended by that certain Third Amendment to Declaration of Covenants, Conditions, Restrictions and Easements for KOI Residences and Marina dated May 6, 2025 and recorded in the Official Records on July 29, 2025 as Instrument No. 120350354.
B. As of the Effective Date, Myelin Seller is the owner of those certain parcels of real property defined in the CC&Rs (hereafter defined) as (i) the “Marina Parcel” (the “Marina Parcel,” as more particularly described in the attached Exhibit B), upon which Myelin Seller operates, directly or indirectly, a marina with twenty-six (26) boat slips and related facilities, including, but not limited to, watercraft docking, watercraft minor repair service, and watercraft rental (the “Marina Operations”), and
(ii) the “Community Center” (the “Community Center Parcel,” as more particularly described in the attached Exhibit C), upon which Myelin Seller operates, directly or indirectly, a three (3)-story commercial building. The Envy Parcels, the Marina Parcel and the Community Center Parcel are collectively referred to herein as the “Parcels.”
C. Envy Seller is the owner of a 100% limited liability company interest in Envy Propco (the “Envy Membership Interest”).
D. HGI, Hsiao, and Longsworth are the owners of 1%, 49.5% and 49.5%, respectively, of the membership interests of Myelin Seller.
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E. Prior to and as a condition of Closing (as such term is defined herein), the Myelin Group Owners will cause Myelin Seller to convey fee simple title to the Marina Parcel and the Community Center Parcel to Myelin Propco in exchange for or in respect of one hundred percent (100%) of the limited liability company interests in Myelin Propco (the “Myelin Restructuring”). From and after the consummation of the Myelin Restructuring, Myelin Seller will be the owner of a 100% limited liability company interest in Myelin Propco (the “Myelin Membership Interest”), which Myelin Seller shall own until Closing. As used in this Agreement, the capitalized terms (i) “Owner” or “Owners” shall mean and refer to, individually or collectively as the context implies, Envy Propco and (x) Myelin Seller, prior to the consummation of the Myelin Restructuring, and (y) Myelin Propco, from and after the consummation of the Myelin Restructuring; and (ii) “Seller” or “Sellers” shall mean and refer to, individually or collectively as the context implies, Envy Seller and (x) Myelin Group Owners and Myelin Seller, prior to the consummation of the Myelin Restructuring, and (y) Myelin Seller, from and after the consummation of the Myelin Restructuring.
F. Envy Seller and Myelin Seller desire to sell the Envy Membership Interest and the Myelin Membership Interest (collectively, the “Membership Interests”), respectively, and Purchaser desires to purchase, at Closing (as hereinafter defined), the Membership Interests, upon and subject to the terms, conditions and provisions set forth herein.
NOW THEREFORE, in consideration of the above Recitals, the covenants and agreements herein set forth and the benefits to be derived therefrom, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. PROPERTY. Subject to the terms and conditions of this Agreement, at the Closing, Envy Seller and Myelin Seller shall convey the Envy Membership Interest and the Myelin Membership Interest, respectively, to Purchaser in accordance with the provisions of this Agreement, whereupon, Purchaser shall own, by virtue of its ownership of the Envy Propco and the Myelin Propco, all of the beneficial right, title and interest of each Owner (if any) in and to the following (collectively, the “Property”):
1.1 the Parcels, together with all and singular easements, covenants, agreements, rights, privileges, tenements, entitlements, development rights, air rights, water or riparian rights which are necessary for Marina Operations, hereditaments and appurtenances thereunto now or hereafter belonging or appertaining thereto (collectively, the “Real Property”);
1.2 all buildings and improvements located on the Real Property (“Improvements”);
1.3 any land lying in the bed of any street, alley, road or avenue (whether open, closed or proposed) within, in front of, behind or otherwise adjoining the Real Property or any of it, to the extent such land is appurtenant only to the Real Property and not any other adjacent property owned by the Owners;
1.4 all leases, licenses and other occupancy agreements of all or any portion of the Real Property or the Improvements (but specifically excluding Slip Leases, as hereafter defined), including, without limitation, any leases entered into by Owners between the Effective Date and the Closing to the extent permitted hereunder, and all amendments, modifications, supplements, additions, extensions, renewals, side letters and guaranties thereof or thereto (collectively, the “Leases”);
1.5 all space leases related to Marina Operations, including without limitation, leases of any boat slips, dry stack storage and other storage spaces by any non-commercial tenant, and all
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amendments, modifications, supplements, additions, extensions, renewals, side letters and guaranties thereof or thereto (collectively the “Slip Leases”);
1.6 all security deposits held by Owners under the Leases on the Closing Date,
including those in the form of letters of credit (the “Security Deposits”),
1.7 all books, records, and rate lists (whether in electronic format or reduced to paper) related to the Marina Operations and all rental deposits, reservation deposits, and any prepaid rent, dry or wet dock fees, fueling fees, storage fees and other revenues attributable to Marina Operations on or after the Closing Date (hereinafter defined) (the “Marina Revenue”);
1.8 all merchandise, supplies, inventory and other items owned by Owners and used solely in connection with the Marina Operations and/or the ownership, use or operation of the Community Center;
1.9 all furniture, furnishings, fixtures, machinery, equipment (including all telephone equipment, routers, touchscreen technology, and computer hardware and software owned by Sellers or Owners), tools and other tangible property owned by the Owners, located on the Real Property and used solely in connection with or attached or appurtenant to or at or upon all or any portion of the Real Property or the Improvements (collectively, the “Personal Property”);
1.10 subject to Section 9.2 below, all contracts, agreements and equipment leases relating to the repair, improvement, service, supply, maintenance or operation of the Real Property, the Improvements and/or the Personal Property, including, without limitation, the Marina Operations (but specifically excluding Slip Leases), and all amendments, supplements and modifications thereto (collectively, the “Contracts”); and
1.11 to the extent assignable, all intangible personal property relating to the Real Property, the Improvements and/or the Personal Property (including, without limitation, governmental permits, licenses, registrations, approvals and entitlements, including, without limitation, marina operating permits, riparian rights, environmental permits, dredging permits, and other marina-specific or navigable water-related permits, approvals and authorizations (“Marina Permits”); warranties and guarantees; architectural drawings, surveys, plans and specifications, and as-built drawings for the Real Property and Improvements; logos, advertising material, the name “Envy Pompano Beach”, other naming rights, and telephone exchange numbers; and websites, trademarks, domain names and URLs, in each case, held for use in connection with all or any portion of the Real Property, the Improvements and/or the Personal Property and/or the development, ownership, use or operation thereof (the “Intangible Property”).
Notwithstanding the foregoing, the Property expressly excludes: (A) any personal property and fixtures owned, financed and/or leased by the tenants under Leases or Slip Leases; (B) the names, trademarks and/or trade names of “Invesca”, in whatsoever form; (C) any cash-on-hand, petty cash, bank accounts or other funds of Sellers or Owners in whatsoever form the same are held, to the extent not expressly included as provided herein; (D) any and all uncollected rents, all of which shall be separately adjusted between the Parties pursuant to this Agreement; (E) any and all insurance Claims held by either Owner as of the Closing and all rights, entitlements, and remedies with respect thereto; (F) any bonds with respect to the Property shall remain the sole property of Sellers; (G) except to the extent included in the Due Diligence Materials, appraisals or valuations or other reports and studies (of whatsoever form or nature and whether or not prepared by Sellers or Owners or any other Person) of the Property; (H) materials relating to the marketing of or market information regarding the leasing or sale of the Property, but only to
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the extent the same includes the name, trademark and/or trade name of “Invesca”, in whatsoever form, if “Invesca” cannot be removed from such materials or information in accordance with Section 14.3; (I) intentionally deleted; (J) except to the extent included in the Due Diligence Materials, internal analyses and communications (of whatsoever form or nature) of the Sellers or Owners relating to the Property or any other matter (including inspections, evaluations, approvals, work summaries and work product); (K) confidential communications prepared by or exchanged with legal counsel (whether internal or external) of the Sellers or Owners; (L) intentionally deleted; (M) communications prepared by or exchanged with any current or former lender of Owner, and financial analyses, budgets and projections (by whomsoever prepared) relating to the Property or otherwise prepared for the internal use of Sellers or Owners; (N) intentionally deleted; and (O) any website for the Property and any URL or domain names for the Property if the name “Invesca” is included therein (collectively, “Excluded Property”). This paragraph shall survive the Closing.
2. PURCHASE PRICE; DEPOSIT.
2.1 The aggregate purchase price for the Membership Interests is $90,000,000.00 (the “Purchase Price”), which shall be paid in accordance with Section 2.2 and shall be allocated between the Sellers in accordance with Exhibit D attached hereto (the “Sale Allocation”), and shall be allocated among the assets deemed to be purchased hereunder in accordance with the Asset Allocation described in Section
5.8 below.
2.2 Purchaser shall pay the Purchase Price as follows:
2.2.1 Deposit. Prior to the Effective Date, (i) 475 SE 1ST ST, LLC, a Florida limited liability company (“475”), which entity is owned and/or co-managed by one (1) or more direct or indirect owners of Issuer, and Envy Seller entered into that certain Bridge Loan Agreement (the “Bridge Loan Agreement”) dated February 18, 2026, whereby 475 agreed to provide a loan to Envy Seller in the maximum principal amount of $3,000,000.00 (“Bridge Loan”); and (ii) Owners made in favor of Issuer that certain (A) Promissory Note dated May 15, 2026 in the principal sum of $500,000.00; (B) Promissory Note dated May 19, 2026 in the principal sum of $500,000.00; and (C) Promissory Note dated June 8, 2026 in the principal sum of $500,000.00 (“Note C”; the Promissory Notes described in clause (A), (B) and (C), collectively, the “Notes”, and the loans evidenced thereby, the “Stewards Loans”). The Parties acknowledge and agree that (1) as of the Effective Date, the total obligations outstanding under the Bridge Loan are $1,500,000, and the total obligations outstanding under the Notes are $1,500,000 in the aggregate; and (2) the total obligations now or hereafter outstanding under Stewards Loans shall constitute the “Deposit” under this Agreement. If the sale of the Membership Interests is consummated under this Agreement, the Deposit shall be applied against the Purchase Price at Closing. If Purchaser is entitled to the Deposit in accordance with the terms of this Agreement, the Stewards Loans shall be repaid in accordance with the terms of the Bridge Loan Agreement and the Notes (and such other promissory note(s) as may be delivered by Owners from time to time in connection with any future advances under the Bridge Loan Agreement), notwithstanding the termination of this Agreement. If Sellers are entitled to the Deposit in accordance with the terms of this Agreement, the Stewards Loans shall be deemed satisfied and paid in full without recourse to Sellers. Notwithstanding anything to the contrary contained in this Agreement, $100.00 of the Deposit is non-refundable to Purchaser and is given as partial consideration for Sellers entering into this Agreement. In the event Purchaser terminates this Agreement for any reason, $100.00 of the Deposit shall be paid to Sellers, without limiting any Party’s rights and remedies hereunder.
2.2.2 Issuance of Common Shares of Issuer.
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(a) Rollover Shares. The common stock comprising a part of the shares of capital stock currently authorized by Issuer consists of a single class of common stock (par value of $0.0001) (the “Common Shares”). At Closing, a portion of the Purchase Price shall be paid in Common Shares (the “Rollover Shares”), calculated at $3.00 per share. The aggregate dollar value of the Rollover Shares shall equal the Purchase Price minus (i) a $1,500,000.00 Deposit, (ii) the outstanding principal balance of Owner’s existing loan encumbering the Property in the approximate amount of $44,557,435.93, and (iii) any credits, prorations or adjustments expressly provided for in this Agreement. Issuer shall issue to each Seller at Closing the number of Rollover Shares set forth opposite such Seller’s name on Exhibit D attached hereto.
(b) Escrowed Shares. At Closing, 7,000,000.00 of the Rollover Shares, equal to the agreed value of $21,000,000.00, as indicated on Exhibit D attached hereto (the “Escrowed Shares”), shall be deposited into escrow with ClearTrust (the “Shares Escrow Agent”) having an address at 16540 Pointe Village Dr, Suite 210 Lutz, Florida 33558, Inbox@ClearTrustTransfer.com. Subject to Section 11.3 below, the Escrowed Shares shall be held through April 5, 2027 (the “Escrow Period”) in accordance with the terms of a mutually acceptable escrow agreement (“Escrow Agreement”), which shall be negotiated in good faith and mutually prepared and finalized by the Parties prior to Closing. Except as may be expressly set forth herein, all escrow fees and other charges incurred in connection with the Escrowed Shares and the Escrow Agreement shall be paid by Issuer. Commencing no later than October 5, 2026 (the “October Redemption”), and continuing on the fifth (5th) day of each subsequent calendar month thereafter within the Escrow Period (or, if such day falls on a Saturday, Sunday, or legal holiday, such payment shall be made on the next business day (each, a “Redemption Payment Date”)), Issuer shall pay to Sellers the sum of $3,000,000.00 in cash (each such payment, a “Required Redemption”) and, concurrently with each such payment made in accordance herewith, cancel 1,000,000 Escrowed Shares. During the Escrow Period, subject to Section 11.3 below, Sellers and Issuer shall pursue the following liquidity methods in parallel (not sequentially and in any order) to fund the Required Redemption payments; provided that mutual agreement between Issuer and Sellers shall be required before any such method is actioned to ensure mutually acceptable terms and to protect both parties from potential adverse effects, including market flooding and depression of the Common Shares (each of the following clauses (i), (ii), and (iii), a “Liquidity Measure”): (i) cause Issuer to comply with and enforce Issuer’s obligations under the Registration Rights Agreement (as defined in Section 2.2.2(c) below); (ii) engage in privately negotiated transactions for the sale of the Escrowed Shares; provided that any transfer of Escrowed Shares will be in compliance with federal and state securities laws, and Sellers have an available exemption from registration under such laws; and (iii) borrow against all or any portion of the Escrowed Shares; provided, however, that if Sellers does not wish to borrow against the Escrowed Shares but Issuer believes borrowing is preferable, then Issuer may elect to take such Escrowed Shares back into its own name, borrow against them, and bear all interest, principal, capital calls, fees, and other costs associated with such borrowing, and Sellers shall receive the full Required Redemption in cash for the applicable Redemption Payment Date. The Parties shall adhere to the milestone schedule set forth on Exhibit P regarding the Liquidity Measures and Required Redemption payments. Regardless of which Liquidity Measure or combination of Liquidity Measures Issuer uses to source liquidity, if the proceeds generated for any Redemption Payment Date are less than $3,000,000.00, Issuer shall nonetheless pay to Sellers the full Required Redemption, making up any shortfall so that Sellers receive the full $3,000,000.00 cash payment for Redemption Payment Date. By way of example, if the Liquidity Measure under clause (ii) yields $2,000,000.00 in cash from selling Escrowed Shares at $2.00 per share, then Issuer shall contribute $1,000,000.00 in cash to achieve the full $3,000,000.00 Required Redemption payment due to Sellers on the applicable Redemption Payment Date. Until such time that Sellers delivers the 2025 Audited Financials (as hereinafter defined), the Parties shall have no right to exercise the Required Redemption (excluding the October Redemption). Notwithstanding
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anything to the contrary herein, if Issuer in good faith disputes any portion of a Required Redemption payment, Issuer shall pay the undisputed portion directly to Sellers when due and, concurrently therewith, deposit the disputed portion into an independent escrow account held by the Shares Escrow Agent pending resolution of the dispute. By way of example, if Issuer disputes $300,000.00 of the Required Redemption, Issuer shall pay $2,700,000.00 directly to Sellers on the Redemption Payment Date and deposit $300,000.00 into escrow with Shares Escrow Agent. Any failure by Issuer to pay the undisputed portion directly to Sellers on the Redemption Payment Date shall constitute a failure to timely pay for purposes of Required Redemption Late Payment Damages, which shall accrue on the unpaid undisputed portion. Upon expiration of the Escrow Period, if any Escrowed Shares remain in escrow, such shares shall be disbursed in accordance with the terms of the Escrow Agreement. Issuer represents that it was previously a “shell company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), but has been an operating company with more than nominal revenues and assets for more than three (3) years and that Issuer filed information equivalent to that required by a general form for registration of securities on Form 10 under the Exchange Act in its Registration Statement on Form S-1 filed with the Commission in November 2025. As a result, Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), may not be available (or may be significantly limited) for resales of the Escrowed Shares and other Registrable Securities by affiliates of Issuer until November 2026 (one year after Issuer filed such Form 10-type information). Furthermore, because Issuer was previously a shell company, Rule 144 is not available to any holder for resales of the Registrable Securities unless and until Issuer satisfies all of the conditions set forth in Rule 144(i)(2), including, without limitation: (w) Issuer has ceased to be a shell company; (x) Issuer is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (y) Issuer has filed all Exchange Act reports required during the preceding twelve (12) months (or such shorter period as Issuer was required to file); and (z) at least one (1) year has elapsed since Issuer filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer a shell company. Issuer shall maintain its status as a non-shell company and use commercially reasonable efforts to satisfy all applicable reporting and seasoning requirements under the Exchange Act and Rule 144 as promptly as practicable following the Closing. Stewards International Funds PCC on behalf of the Stewards Private Credit Fund, a Mauritius Protected Cell Company (“Guarantor”), shall guarantee Issuer’s and Purchaser’s obligations with respect to payments required to be made under this Section 2.2.2(b) with respect to a Required Redemption and all Required Redemption Late Payment Damages (as hereinafter defined) pursuant to that certain Joinder attached hereto (the “Stewards Joinder”). If Purchaser or Issuer fails to timely pay any amount due in connection with a Required Redemption payment required in accordance herewith, then, without limiting Sellers’ other rights and remedies, Purchaser, Issuer and the Guarantor shall be jointly and severally obligated to pay to Sellers, as liquidated damages for such late payment (the “Required Redemption Late Payment Damages”), for each outstanding Required Redemption, an amount equal to $1,000.00 per day for the first calendar month during which such Required Redemption remains unpaid, increasing to $2,000.00 per day for the second calendar month and each subsequent calendar month that such Required Redemption remains unpaid (for example, $1,000.00 per day during the first month, and $2,000.00 per day during the second month and thereafter). The Required Redemption Late Payment Damages shall be due and payable upon demand, shall be in addition to (and not in lieu of) the $3,000,000.00 payment due with respect to each Required Redemption, and shall not offset, reduce or otherwise affect any other amount payable to Sellers. This paragraph shall survive the Closing.
(c) Registration of Shares. The Issuer shall use commercially reasonable efforts to effect the registration of only the Escrowed Shares issued pursuant to this Agreement in accordance with the terms of the Registration Rights Agreement (collectively, the “Registrable Securities”). For the avoidance of doubt, the Escrowed Shares shall constitute Registrable Securities, and
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Issuer shall have the obligation to register all such shares pursuant to the Registration Rights Agreement. Issuer represents that it was previously a shell company as defined in Rule 12b-2 under the Exchange Act, but has been an operating company with substantial revenues and assets for more than three (3) years and filed Form 10-type information in its Registration Statement on Form S-1 in November 2025. As a result, Rule 144 may not be available (or may be significantly limited) for resales of the Registrable Securities by affiliates of Issuer until November 2026. In addition, because Issuer was previously a shell company, Rule 144 is not available to any holder for resales of the Registrable Securities unless and until Issuer satisfies all of the conditions set forth in Rule 144(i)(2), including, without limitation: (i) Issuer has ceased to be a shell company; (ii) Issuer is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (iii) Issuer has filed all Exchange Act reports required during the preceding twelve (12) months (or such shorter period as Issuer was required to file); and (iv) at least one (1) year has elapsed since Issuer filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer a shell company. Accordingly, registration pursuant to the Registration Rights Agreement is expected to be the primary means by which Sellers may achieve liquidity with respect to the Registrable Securities. The registration rights of the Sellers with respect to the Registrable Securities, and all related obligations of Issuer with respect thereto, are set forth in the Registration Rights Agreement to be entered into at Closing in the form attached hereto as Exhibit O (the “Registration Rights Agreement”).
2.2.3 LoanCore Loan.
(a) Purchaser intends to obtain a loan from LoanCore Capital Credit REIT LLC (“Lender”) on the terms described in the term sheet attached hereto as Exhibit E (the “LoanCore Loan”). The principal amount of the LoanCore Loan is anticipated to be approximately $47,500,000.00. Purchaser acknowledges that Owner’s existing lender has, prior to the Effective Date, delivered such documents to permit Lender to take an assignment of the existing loan documents in connection with the LoanCore Loan (collectively, the “Loan Restatement Documents”). Purchaser shall be solely responsible for any costs or fees charged by the Owner’s existing lender, including additional reasonable attorneys’ fees of the Owner’s lender or of Seller or the Owner, if any, associated with the Loan Restatement Documents and the structuring Purchaser’s loan transaction in the manner described in this Section 2.2.3
(b) At Closing, Purchaser shall receive a credit against the Purchase Price in the maximum principal amount of the Owner’s existing loan (specifically excluding any interest and other reserves held by Owner’s existing lender which are to be refunded to Seller).
(c) In connection with the LoanCore Loan, BERNARD HSIAO, an individual, and MICHAEL HSIAO, an individual (individually and/or collectively as context may require, the “Hsiao Guarantor”) shall at Closing execute and deliver to Lender the “Guaranty of Recourse Obligations” (the “Guaranty Documents”). For the avoidance of doubt, Glen Steward, Shaun Quin and Issuer (individually and/or collectively as context may require, the “Stewards Guarantor”) shall act as co-guarantors of the LoanCore Loan in addition to the Hsiao Guarantors. In consideration of Hsiao Guarantor and Stewards Guarantor each executing and delivering such guaranties and indemnities required to facilitate the LoanCore Loan, Purchaser shall pay each of Bernard Hsiao, Michael Hsiao, Glen Steward, Shaun Quin, and Issuer a fee in an amount equal to 0.30% (i.e., an aggregate 1.50% fee) of the outstanding principal balance of the LoanCore Loan (to be prorated for the 2026 year) (the “Guaranty Fee”). The first installment of the Guaranty Fee shall be paid at Closing in cash, and thereafter the Guaranty Fee shall be paid monthly on the last day of each calendar month, commencing on October 31, 2026, for so long as the Hsiao Guarantors remain as guarantors under the LoanCore Loan. Each installment of the Guaranty Fee shall be paid in cash or, in the case of the portion of the Guaranty Fee due to Hsiao Guarantor, at Seller’s
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option, in Common Shares. If paid in cash, Purchaser shall pay such installment by wire transfer of immediately available funds to an account of the applicable payee specified by such payee in writing. This paragraph shall survive the Closing. Further, Hsiao Guarantor, Purchaser, Issuer and Guarantor shall enter into a reimbursement and indemnity agreement pursuant to which Purchaser, Issuer and Guarantor shall irrevocably agree to pay, reimburse, indemnify, defend, protect and hold Hsiao Guarantor harmless from and against any and all debt service payments and all other Claims (including without limitation reasonable attorneys’ fees and costs of enforcement) arising out of, relating to, or incurred in connection with the LoanCore Loan, including any Guaranty Documents, but specifically excluding intentional fraud or other intentional misconduct of the Hsiao Guarantor (the “Reimbursement Agreement”). The Parties shall negotiate in good faith and mutually prepare and finalize the Reimbursement Agreement prior to Closing.
2.2.4 Balance of Purchase Price. Purchaser shall pay the balance of the Purchase Price, subject to the adjustments, prorations, and credits provided under this Agreement, at the Closing by federal funds wire transfer of immediately available funds to an account designated by the Title Company.
3. EVIDENCE OF TITLE.
3.1 Title Insurance. Nelson Mullins Riley & Scarborough LLP, as agent for a national title insurance company (“Title Company” or “Escrow Agent”), has previously delivered to Purchaser a title insurance commitment (“Title Commitment”), together with copies of all exception and other documents referenced therein, and has delivered or will deliver to Purchaser a municipal lien, open permit and violation search covering the Property from all municipalities and counties having jurisdiction over the Property. The Title Commitment shall evidence the Title Company’s commitment to issue an ALTA Owner’s Policy in the current form utilized for similar transactions in Florida, including Florida Modifications, in the amount of the Purchase Price, insuring that fee simple title to the Real Property and the Improvements is vested in the Owners, and will be subject only to the Permitted Exceptions (hereafter defined) and including such available endorsements as Sellers, Purchaser or Title Company have agreed or as are required hereunder (the “Title Policy”). At Closing, the Title Policy will except from coverage any exception arising out of an act of Purchaser or its Representatives or independent contractors; rights of tenants under Leases and Slip Leases; real estate taxes which are not yet due and payable, subject to adjustment as herein provided; any installment not yet due and payable of assessments and special district levies affecting the Property; zoning, subdivision and other regulatory laws and ordinances affecting the Property; such documents which are recorded (or to be recorded) in the Public Records of Broward County, Florida in accordance with the terms of this Agreement (i.e. the Skywalk Easement (as hereinafter defined), etc.); and any other matters of record to which Purchaser does not timely raise an Updated Title Defect (hereafter defined), or, having objected, Purchaser waives or is deemed to have waived in accordance with the provisions of this Section 3 below (collectively, the “Permitted Exceptions”).
3.2 Survey. Sellers have delivered to Purchaser the most recent existing survey of the Envy Parcels and the Improvements thereon and a copy of the most recent site plan for the Marina Parcels and the Improvements thereon (collectively, the “Existing Plans”) in Sellers’ possession. Sellers and Purchaser shall work together in good faith to obtain updates of the Existing Plans or obtain a new ALTA/ACSM Land Title Survey of the Real Property and Improvements (such update or new survey, the “Survey”).
3.3 Title Review. Prior to the Effective Date, Purchaser has received and reviewed the Title Commitment and the Survey and is satisfied with its review thereof. Accordingly, Purchaser shall be deemed to have accepted all matters currently shown on the Title Commitment and the Survey, other than Must Cure Items or matters disclosed in an Update pursuant to Section 3.4 hereof, and such matters shall
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be deemed Permitted Exceptions hereunder. Purchaser shall have no right to object to, and shall not raise any matter currently shown on the Title Commitment or the Survey, other than Must Cure Items.
3.4 Updated Title Defect Notice. At any time from and after the Effective Date, until the Closing, if any new encumbrance or title exception is disclosed on any update or supplement to the Title Commitment or the Survey (each, an “Update”) and same was not already reflected on the Title Commitment and/or Survey issued prior to the expiration of the Effective Date, then Purchaser shall have five (5) days following receipt of such Update (the “Updated Title Review Period”) to make any objections (each, an “Updated Title Defects”) thereto, said objections to be made in writing (each such written notice, an “Updated Title Defect Notice”) and delivered to Sellers prior to the expiration of the Updated Title Review Period; provided, however, Purchaser shall not have the right to object to matters arising out of an act of Purchaser or its Representatives or independent contractors, nor to any document recorded (or to be recorded) in the Public Records of Broward County, Florida in accordance with the terms of this Agreement. If Sellers receive one or more Updated Title Defect Notice(s) within the Updated Title Review Period, Sellers may elect (but shall not be obligated except as otherwise provided herein) to attempt to cure, or cause to be cured, any of the Updated Title Defect(s) identified therein, and shall provide Purchaser with written notice, within three (3) days after Sellers’ receipt of each such Updated Title Defect Notice, of such intention to cure any such Updated Title Defect(s). If Sellers fail to notify Purchaser, in writing, of Sellers’ intention to cure any Updated Title Defect(s), Sellers shall be deemed to have elected not to cure such Updated Title Defect(s). If by Sellers’ written notice or silence Sellers elect not to cure any Updated Title Defect(s), then Purchaser may, on or prior to the earlier of two (2) days of receipt of such notice or deemed election, and the then-scheduled Closing Date, deliver written notice to Sellers indicating Purchaser’s election to (A) terminate this Agreement, in which event the Deposit will be repaid in accordance with Section 2.2.1, or (B) proceed to Closing without any reduction in the Purchase Price, in which event any Updated Title Defect(s) not elected to be cured by Sellers shall be deemed Permitted Exceptions. If Purchaser fails to notify Sellers, in writing, of Purchaser’s intention to proceed under subsection (A) or (B) above, then Purchaser shall be deemed to have elected to proceed under subsection
(B) above.
3.5 Curing Title Defects. As to those Updated Title Defects agreed to be cured by Sellers in writing, curing such Updated Title Defects shall be a condition precedent to Purchaser’s obligation to close and shall be cured and removed by Sellers or Owners on or before the Closing Date; provided, however, Sellers shall have the right to extend the Closing Date for up to an aggregate of fifteen (15) days as to such Updated Title Defects elected to be cured by Sellers upon written notice to Purchaser delivered prior to the then-scheduled Closing Date. If Sellers fail to remove, discharge or correct the agreed Updated Title Defects on or prior to the Closing Date (as the same may be extended), then Purchaser may, at its option and as its sole remedy, either: (i) terminate this Agreement by written notice to Sellers on the then-scheduled Closing Date; or (ii) proceed to close and accept title “as is” without reduction in the Purchase Price, in which event the Updated Title Defects shall be deemed to be waived for all purposes.
3.6 Termination. If Purchaser shall elect to terminate this Agreement pursuant to this Section 3, then the Deposit will be repaid in accordance with Section 2.2.1 and this Agreement shall be null and void and of no further force and effect, and neither Sellers nor Purchase shall have any further obligation to the other under this Agreement except for any obligations hereunder that shall survive the Closing or termination of this Agreement.
3.7 Must Cure Items. Notwithstanding anything to the contrary contained herein, Permitted Exceptions shall not be deemed to include any monetary liens against the Property and all other encumbrances voluntarily placed on title for the Property by Sellers or the Owners after the Effective Date
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unless approved by Purchaser in accordance with Section 14.1 (the items described in this Section 3.7 are referred to as the “Must Cure Items”). Sellers shall cause the Must Cure Items to be paid from the closing proceeds, removed of record or bonded off on or prior to the Closing.
4. CONDITIONS TO CLOSING.
4.1 Sellers’ Conditions. Notwithstanding anything to the contrary contained herein, the obligation of Sellers to consummate the transactions contemplated herein is expressly conditioned upon the fulfillment by and as of the Closing Date of each of the conditions listed below, provided that Sellers, at their election (in their sole and absolute discretion), evidenced by written notice delivered to Purchaser at or prior to the Closing, may waive any of such conditions:
4.1.1 Purchaser shall have executed and delivered (or caused to be delivered) to Sellers, Escrow Agent or Shares Escrow Agent, as applicable, all of the documents set forth in Section 5.3 and shall have paid all sums of money required to be delivered by Purchaser at the Closing and shall have performed in all other material respects the obligations and covenants of Purchaser in this Agreement to be performed and observed by Purchaser as of the Closing Date.
4.1.2 All representations and warranties made by Purchaser and/or Issuer, as applicable in Sections 11.4, 11.5, and 11.6 of this Agreement shall be true and correct in all material respects as of the Closing Date.
4.1.3 Purchaser shall have performed all covenants, agreements and conditions required by this Agreement to be performed by Purchaser prior to or as of the Closing Date (except for covenants, agreements and conditions unable to be performed because of Sellers’ or Owners’ wrongful acts or omissions).
4.1.4 At Closing, Issuer shall have (a) issued the Rollover Shares as provided herein and (b) deposited the Escrowed Shares with Shares Escrow Agent.
4.1.5 Sellers shall have received a certificate, dated as of the Closing Date and signed by a duly authorized person on behalf of Purchaser, certifying that each of the conditions set forth in Section 4.1.2 and Section 4.1.3 have been satisfied (“Purchaser’s Bring-Down Certificate”).
4.2 Purchaser’s Conditions. Notwithstanding anything to the contrary contained herein, the obligation of Purchaser and Issuer to consummate the transactions contemplated herein is expressly conditioned upon the fulfillment by and as of the Closing Date of each of the conditions listed below, provided that Purchaser, at its election (in its sole and absolute discretion), evidenced by written notice delivered to Sellers at or prior to the Closing, may waive any of such conditions:
4.2.1 Sellers shall have executed and delivered (or caused to be delivered) to Purchaser, Escrow Agent or Shares Escrow Agent, as applicable, all of the documents set forth in Section
5.2 required to be delivered by Sellers at the Closing and shall have performed in all other material respects the obligations and covenants of Sellers in this Agreement.
4.2.2 All representations and warranties made by Sellers in Section 11.1 of this Agreement shall be true and correct in all material respects as of the Closing Date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all respects as of that specified date).
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4.2.3 Sellers and Owners shall have performed in all material respects all covenants, agreements and conditions required by this Agreement to be performed by Sellers and Owners prior to or as of the Closing Date (except for covenants, agreements and conditions unable to be performed because of Purchaser’s wrongful acts or omissions).
4.2.4 Title Company shall have irrevocably committed to issue the Title Policy to Purchaser at the Closing in accordance with the terms of this Agreement.
4.2.5 Lender shall be irrevocably committed to close the LoanCore Loan. Hsiao Guarantor shall have executed and delivered the Guaranty Documents to Lender.
4.2.6 Purchaser shall have received an executed estoppel certificate from KOI Residences and Marina Master Owners’ Association, Inc. (the “Association”), the owners’ association pursuant to the CC&Rs, in substantially the form attached hereto as Exhibit F (the “Association Estoppel”).
4.2.7 Purchaser shall have received an executed tenant estoppel certificate from the Association with respect to the Community Center Lease (as such term is defined in the CC&Rs) in substantially the form attached hereto as Exhibit G (the “Community Center Lease Estoppel”).
4.2.8 Purchaser shall have received a certificate, dated as of the Closing Date and signed by a duly authorized person on behalf of Sellers, certifying that each of the conditions set forth in Section 4.2.2 and Section 4.2.3 have been satisfied (“Seller’s Bring-Down Certificate”).
4.3 Failure of Conditions.
4.3.1 If any condition set forth in Section 4.1 above is not satisfied as of the Closing Date, Sellers may (a) waive any such condition (if and to the extent such condition can be waived under applicable law) and proceed to Closing on the Closing Date, (b) extend the Closing Date for up to an aggregate of fifteen (15) days to allow for such condition(s) to be satisfied, or (c) notify Purchaser of Sellers’ election to terminate this Agreement; provided, however, if the failure of the condition to be met constitutes a default by Purchaser or Issuer under this Agreement, then Sellers may, subject to the terms of Section 8.2 below, exercise any of its remedies pursuant to Section 8.2 below.
4.3.2 If any condition set forth in Section 4.2 above is not satisfied as of the Closing Date, Purchaser may (a) waive any such condition (if and to the extent such condition can be waived under applicable law) and proceed to Closing on the Closing Date without a reduction in, abatement of, or credit against, the Purchase Price, (b) extend the Closing Date for up to an aggregate of fifteen (15) days to allow for such condition(s) to be satisfied, or (c) notify Sellers of Purchaser’s election to terminate this Agreement; provided, however, if the failure of the condition to be met constitutes, or is the result of, a default by Sellers under this Agreement, then Purchaser may, subject to the terms of Section 8.1 below, exercise any of its remedies pursuant to Section 8.1 below.
5. CLOSING.
5.1 Closing Date. The “Closing” of the transactions contemplated by this Agreement (that is, the payment of the Purchase Price pursuant to an escrow closing, the assignment of the Membership Interests, and the satisfaction of all other terms and conditions of this Agreement to be performed at Closing) shall occur through escrow at 2:00 p.m. (Eastern Time) on or before September 23_, 2026 (“Closing
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Date”); and, in connection therewith, the Rollover Shares (other than the Escrowed Shares) shall be issued to Sellers in accordance with Exhibit D.
The Closing will be held at the offices of the Escrow Agent, or at such other place as the Parties may mutually agree in writing, through an escrow closing arrangement, or effected via a “mail away” closing (i.e. in which funds are sent via wire transfer and closing documents are delivered via overnight delivery or courier delivery service to the Escrow Agent or a Party, as applicable).
5.2 Sellers’ Closing Deliveries. At or prior to Closing, each Seller and Owner shall deliver, or cause to be delivered, to Purchaser, Escrow Agent or Shares Escrow Agent, as applicable, the following, which shall be duly executed and acknowledged (if applicable) by the applicable Seller and/or such other parties indicated below:
5.2.1 an Assignment and Assumption of the applicable Membership Interests in the form attached hereto as Exhibit H (each, an “Assignment of Membership Interests”);
5.2.2 such evidence that Title Company may reasonably require for the proper consummation of the transaction contemplated by this Agreement, including, without limitation, an Owner’s Affidavit in the form of Exhibit I;
5.2.3 a closing statement (the “Closing Statement”) setting forth the prorations and adjustments to the Purchase Price required by this Agreement;
5.2.4 such evidence of such Seller’s power and authority as Title Company may
reasonably require;
5.2.5 letters to each tenant under the Leases and Slip Leases in a form reasonably acceptable to Purchaser and Sellers, notifying tenants of the change of address for all future payments of rent;
5.2.6 Seller’s Bring-Down Certificate;
5.2.7 updated Rent Rolls (as defined in Section 11.1.24) for the portion of the Property owned by such Seller, effective as of a date no more than two (2) business days prior to the Closing Date, certified by such Seller (a) as true, correct and complete in all material respects and (b) to be the Rent Roll(s) used by the applicable Owner or its property manager in the ordinary course of business;
5.2.8 evidence that each manager, director, officer or other authorized person appointed to an owners’ association or similar body by Sellers or any Affiliate of Sellers (including, without limitation, the Owners) to the extent attributable to its ownership of the Property or any portion thereof has tendered his or her resignation from such position in such owners’ association or similar body under any applicable covenants, conditions or restrictions affecting the Property or any portion thereof, effective as of the Closing Date;
5.2.9 the Association Estoppel, duly executed by the Association;
5.2.10 the Community Center Lease Estoppel, duly executed by the Association;
5.2.11 the Guaranty Documents, duly executed and acknowledged (as applicable) by each Hsiao Guarantor;
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5.2.12 the Escrow Agreement;
5.2.13 the Registration Rights Agreement;
5.2.14 the Asset Allocation;
5.2.15 a recordable special warranty deed conveying the Marina Parcel and the Community Center Parcel (“Marina and Community Center Deed”) from Myelin Seller to Myelin Propco, which the Parties shall negotiate in good faith prior to Closing;
5.2.16 a bill of sale in the form attached hereto as Exhibit M whereby Myelin Seller conveys to Myelin Propco all of Myelin Seller’s right, title and interest in and to all Marina Revenue and all Personal Property, Intangible Property, and merchandise, supplies, inventory and other items, in each case, owned by Myelin Seller and used solely in connection with the Marina Operations and/or the ownership, use or operation of the Community Center (but excluding Excluded Property);
5.2.17 an assignment and assumption agreement in the form attached hereto as Exhibit N whereby Myelin Seller assigns to Myelin Propco all of Myelin Seller’s right, title and interest in and to all Leases, Slip Leases, Security Deposits, Contracts and Marina Permits (but excluding any Excluded Property);
5.2.18 a recordable quitclaim deed conveying the dog park facility from Myelin Seller to Envy Propco (“Dog Park Deed”), which the Parties shall negotiate in good faith prior to Closing;
5.2.19 a recordable quitclaim deed conveying certain sliver parcels from Myelin Seller to Envy Propco (“Sliver Parcel Deed”), which the Parties shall negotiate in good faith prior to Closing;
5.2.20 a recordable skywalk easement granted from Myelin Propco in favor of Envy Propco (the “Skywalk Easement”). Sellers shall prepare the proposed Skywalk Easement for Purchaser’s review and the Parties shall negotiate in good faith to finalize the Skywalk Easement prior to Closing;
5.2.21 the Reimbursement Agreement (by each Hsiao Guarantor)
5.2.22 a recordable assignment of the “declarant” rights under the CC&Rs which the Parties shall negotiate in good faith prior to Closing;
5.2.23 a recordable Fourth Amendment to Declaration of Covenants, Conditions, Restrictions and Easements for KOI Residences and Marina, which the Parties shall negotiate in good faith prior to Closing;
5.2.24 a Florida Department of Revenue Form DR 228, completed and duly executed by Envy Seller solely as it pertains to the Dog Park Deed and the Sliver Parcel Deed, which Form, together with the payment due thereunder, shall be submitted by Escrow Agent to the Florida Department of Revenue promptly following Closing; and
5.2.25 such other documents and instruments required to be delivered by or on behalf of Sellers or Owners hereunder or reasonably required by Purchaser, Title Company, Escrow Agent, or Shares Escrow Agent in order to consummate the transactions described in this Agreement.
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At Closing, Sellers will deliver or cause to be delivered to Purchaser possession of the Property through each Owner, subject to the Leases and Slip Leases, and, to the extent not previously delivered to Purchaser, Sellers shall also deliver to Purchaser all keys for the Property in the possession or subject to the control of Sellers, including, without limitation, master keys as well as combinations, codes, key fobs, card keys and cards for the Property or its security systems, if any; copies of the Leases, Slip Leases, and Assumed Service Contracts; all records within Sellers’ or the Owners’ possession reasonably required for the operation of the Property, including, without limitation, tenant files and tenant information (including, without limitation, the date of birth and social security numbers, with respect to all tenants under the Leases and Slip Leases, in an electronic format), and records of expenditures for repairs and maintenance; all books, records and other documents relating to the ownership, operation and management of the Sellers and the Property; originals or copies of the Intangible Property, but specifically excluding any Excluded Property and provided that the foregoing shall be deemed delivered by Sellers for purposes hereof if left in the on-site property management office at the Property or posted at the Property.
5.3 Purchaser’s Closing Deliveries. At or prior to Closing, Purchaser shall deliver, or cause to be delivered, to Sellers, Escrow Agent or Shares Escrow Agent, as applicable, the following, which shall be duly executed and acknowledged (if applicable) by Purchaser, Issuer and/or the Guarantor, as applicable:
5.3.1 the balance of the Purchase Price, subject to the adjustments, prorations, and credits provided under this Agreement, to be disbursed to Sellers in accordance with the Sale Allocation by wire transfer of immediately available to an account of each Seller specified by such Seller in writing;
5.3.2 a counterpart of the Closing Statement;
5.3.3 counterparts of each Assignment of Membership Interests;
5.3.4 such evidence of Purchaser’s power and authority as Title Company may
reasonably require;
5.3.5 the Florida Section 692.204 Affidavit (as such term is defined in Section
13.4 below);
5.3.6 Purchaser’s Bring-Down Certificate;
5.3.7 the Escrow Agreement, duly executed by Issuer;
5.3.8 the Registration Rights Agreement;
5.3.9 the Asset Allocation;
5.3.10 evidence that the Rollover Shares have been issued in accordance with Exhibit D and the Escrowed Shares have been delivered to Escrow Company;
5.3.11 the Reimbursement Agreement;
5.3.12 the Guaranty Documents, duly executed and acknowledged (as applicable) by each Stewards Guarantor;
5.3.13 the Stewards Joinder, duly executed by Guarantor;
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5.3.14 the Section 5.9(b) Joinder, duly executed by each Personal Guarantor;
5.3.15 evidence reasonably satisfactory to Sellers and the Title Company that the Stewards Loans have been satisfied and paid in full without recourse to Sellers or any of their Affiliates;
5.3.16 a Florida Department of Revenue Form DR 228, completed and duly executed by Envy Seller solely as it pertains to the Marina and Community Center Deed, which Form, together with the payment due thereunder, shall be submitted by Escrow Agent to the Florida Department of Revenue promptly following Closing; and
5.3.17 such other documents and instruments required to be delivered by or on behalf of Purchaser or Issuer hereunder or reasonably required by Sellers, Owners, Title Company, Escrow Agent, or Shares Escrow Agent in order to consummate the transactions described in this Agreement.
5.4 Closing Prorations and Adjustments. Sellers shall prepare a schedule of the prorations and adjustments required by this Agreement (the “Prorations Schedule”) and submit the proposed Prorations Schedule to Purchaser at least three (3) business days prior to the Closing Date. The following items are to be prorated, adjusted or credited (as appropriate) as of the day immediately preceding the Closing Date, it being understood that for purposes of prorations and adjustments, Sellers shall be deemed to be the owners of the applicable Membership Interests up to 11:59 p.m. on the day immediately preceding the Closing Date and Purchaser shall be deemed to be the owners of the Membership Interests as of midnight on the date of the Closing Date; provided, however, that the Parties may elect to prorate all matters outlined in this Section 5.4, other than the real estate taxes and assessments in Section 5.4.1 (which shall be prorated as of the Closing Date), post-Closing:
5.4.1 real estate taxes and assessments (including special assessments) based on the maximum discount available for early payment, business improvement district charges, unmetered water and sewer charges and vault charges, if any, and any and all other municipal or governmental assessments of any and every nature levied or imposed upon the Property in respect of the current fiscal year of the applicable taxing authority in which the Closing Date occurs (the “Current Tax Year”), or the most recent available tax bill if the tax bill for the Current Tax Year is not then available, and in any case, calculated taking into account the maximum allowable discount.
5.4.2 the fixed rent payable by tenants under the Leases and Slip Leases; provided, however, that rent and all other sums which are due and payable to Owners by any tenants but uncollected as of the Closing (collectively, the “Delinquent Amounts”) shall not be adjusted. If fixed rent in respect of the month in which Closing occurs (the “Current Month”) is unpaid by any tenant, or any fixed rent is past due by any tenant for periods prior to the Current Month, Sellers and Purchaser agree that the first moneys received after the Closing Date by Sellers or Purchaser, as the case may be, from such tenant shall be received and held by Purchaser or Sellers, as applicable, in trust, and shall be promptly disbursed as follows: (i) first, to Sellers and Purchaser, in an amount equal to all fixed rent owing by such tenant to Sellers and Purchaser in respect of the Current Month on a per diem basis based upon the number of days in the Current Month prior to the Closing Date (which shall be allocated to Sellers) and the number of days in the Current Month on and after the Closing Date (which shall be allocated to Purchaser); (ii) second, to Purchaser, in an amount equal to all other fixed rent then due and owing by such tenant in respect of all periods after the Current Month; (iii) third, to Sellers, in an amount equal to all other fixed rent then due and owing by such tenant to Sellers in respect of all periods prior to the Current Month; and (iv) the balance, if any, to Purchaser. At Closing, Sellers shall deliver to Purchaser a schedule of all such Delinquent Amounts. In the event any Delinquent Amount is inadvertently omitted from such schedule, Sellers shall
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not be deemed to have waived its rights to such Delinquent Amount. Purchaser shall cause Owners to include any and all Delinquent Amounts in the first bills submitted to the tenants in question after the Closing and shall continue to do so for three (3) months thereafter, provided that Purchaser shall not be obligated to take any other action to collect any Delinquent Amounts. Sellers shall not have the right to commence any legal action to collect any Delinquent Amounts following the Closing Date from any tenant in possession. Purchaser shall cause Owners to promptly remit to Sellers any Delinquent Amounts, net of costs of collection, in accordance with this Section;
5.4.3 promptly after Closing, Sellers shall transfer control of the Marina Revenue and the Security Deposit account(s) to Purchaser or its designee, which funds shall be the sole property of Purchaser.
5.4.4 if applicable, water, electric, telephone and all other utility and fuel charges (other than such charges the payment of which are the direct obligations of tenants under their respective Leases or Slip Leases or otherwise), fuel on hand (at cost plus sales tax); provided, however, that any deposits with utility companies shall remain the property of Owners and Sellers shall receive a credit in the amount of any such deposit (to the extent possible, utility prorations will be handled by meter readings on the day immediately preceding the Closing Date);
5.4.5 operating expenses for the Property, including amounts due and payable by Owners under the Assumed Contracts, but excluding initial inducement (or “up front”) payments made to Owners by vendors, and any sums due by Owners to the association under the CC&Rs;
5.4.6 Sellers shall not be required to assign any policies of insurance in respect of the Property to Purchaser or maintain any policies of insurance in the Owners’ names beyond Closing. Purchaser shall be responsible for obtaining its own insurance as of the Closing Date, and no adjustment shall be made for any insurance premiums.
5.4.7 assignable license and permit fees, if any;
5.4.8 other similar items of income and expense in connection with the operation
of the Property; and
5.4.9 at least three (3) business days’ prior to the Closing Date, Sellers shall endeavor to deliver to Purchaser (a) an estimated proforma balance sheet of each Owner dated as of the Closing Date (collectively, the “Proforma Balance Sheet”), (b) Sellers’ good faith estimate of the net amount of unapplied security deposits in each Owner’s operating account (and, at Sellers’ sole discretion, any other cash retained in an Owner’s operating account as of Closing), accounts receivable and accounts payable with respect to such Owner and the portion of the Property owned by it as of the Closing Date (such net amount, the “Estimated Adjustment Amount”), which Estimated Adjustment Amount shall be consistent with (and not duplicative of) the income and expenses to be prorated at Closing under this Section 5.4, and (c) reasonably detailed documentation in form and substance reasonably acceptable to Purchaser supporting the Proforma Balance Sheet and the Estimated Adjustment Amount. Notwithstanding the foregoing, Sellers’ failure to deliver the Pro Forma Balance Sheet and/or the Estimated Adjustment Amount prior to the Closing Date shall not delay or otherwise affect the Closing. In such event (i) the Estimated Adjustment Amount shall be prepared, and adjustments shall be made, based on the balance sheet contained in the most recent Financial Statements (as defined in Section 11.1.11), and (ii) the Pro Forma Balance Sheet, the Estimated Adjustment Amount and the adjustment contemplated by this Section 5.4 shall be prepared and finalized following the Closing in accordance with the procedures set forth below. If the Estimated Adjustment Amount, is delivered prior to Closing, whether based on the Pro Forma Balance
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Sheet, or most recent balance sheet as provided herein, then at Closing, the Purchase Price shall be increased or decreased (as applicable) by an amount equal to the Estimated Adjustment Amount. If the Estimated Adjustment Amount based on the Pro Forma Balance Sheet is not delivered prior to Closing, a final adjustment shall be determined and paid post-Closing as provided herein. Within thirty (30) days following the Closing Date, Purchaser shall prepare and deliver to Sellers a statement reflecting Purchaser’s calculation of the final amount of the adjustments to be made under this Section 5.4 (such amount, the “Final Adjustment Amount”), together with reasonable supporting documentation therefor. Sellers shall have ten (10) business days after receipt of the Final Adjustment Amount to review the same and to notify Purchaser in writing of any objections thereto (a “Seller Objection Notice”), which notice shall describe Sellers’ objections in reasonable detail. If Sellers do not timely deliver a Seller Objection Notice, the Final Adjustment Amount shall be deemed accepted by Sellers and shall be final and binding on the parties. If Sellers timely deliver a Seller Objection Notice, Purchaser and Sellers shall use good-faith efforts to resolve such objections within ten (10) business days following Purchaser’s receipt thereof. If the parties are unable to resolve all such objections within such period, then any unresolved matters shall be submitted to an independent nationally recognized accounting firm mutually agreed upon by Sellers and Purchaser (the “Independent Accountant”), which shall act as an expert and not as an arbitrator and whose determination shall be final and binding on the parties. The Independent Accountant shall be instructed to resolve only those items specifically in dispute and strictly within the range of the positions asserted by Sellers and Purchaser. The fees and expenses of the Independent Accountant shall be borne equally by Sellers and Purchaser, unless the Independent Accountant determines that one Party’s position was not taken in good faith, in which case such Party shall bear all such fees and expenses. The “True-Up Amount” shall mean (x) the Estimated Adjustment Amount (if any) minus (y) the Final Adjustment Amount. If the True-Up Amount is a positive number, then Sellers shall pay Purchaser an amount equal to the True-Up Amount within five (5) business days after the Final Adjustment Amount becomes final and binding. If the True-Up Amount is a negative number, then Purchaser shall pay Sellers an amount equal to the absolute value of the True-Up Amount within five (5) business days after the Final Adjustment Amount becomes final and binding. Notwithstanding anything to the contrary herein, (i) Purchaser shall not be entitled to include in the Final Adjustment Amount any items expressly prorated under Section 5.4 or any items that would result in a duplication of income, expenses or liabilities, (ii) no adjustment shall be made for any cash, accounts or liabilities other than those specifically contemplated by this Section 5.4, and (iii) the adjustment mechanism set forth herein is intended solely to true-up working capital-type items and shall not result in a windfall to Purchaser.
Not later than the date that is ninety (90) days after the Closing Date, Sellers and Purchaser shall re-prorate the adjustments and prorations provided for herein, other than the proration for the real estate taxes and assessments, respecting any items that were not capable of being determined as of the Closing Date or that previously were wrongfully determined and need to be corrected and the manner in which such items shall be determined and paid. The net amount due Sellers or Purchaser, if any, by reason of adjustments to the Closing Statement shall be paid in cash by the Party obligated therefor within five (5) business days following the final agreed re-proration by Sellers and Purchaser. The re-prorations agreed to by Sellers and Purchaser not later than ninety (90) days after the Closing Date shall be conclusive and binding on the Parties hereto. Prior to and following the Closing Date, each Party shall provide the other with such information as the other shall reasonably request in order to make the preliminary and final adjustments and prorations provided for herein. Notwithstanding anything herein to the contrary, when the actual amount of taxes for the 2026 year is finally ascertained, any further adjustment will be promptly made between the Parties in cash. The obligations of Purchaser and Sellers under this Section 5.4 shall survive the Closing.
5.5 Transaction Costs. At Closing, Sellers shall pay (a) one-half (1/2) of Escrow Agent’s fees and costs, (b) fees and disbursements of Sellers’ attorneys, (c) costs of releasing any Must
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Cure Items; and (d) one-half (1/2) of all documentary stamps and/or similar transfer taxes imposed by the State of Florida in connection with the Dog Park Deed, the Sliver Parcel Deed, and the Marina and Community Center Deed. At Closing, Purchaser shall pay the (i) costs related to the Survey and Purchaser’s due diligence; (ii) one-half (1/2) of Escrow Agent’s fees and costs and all of Shares Escrow Agent’s fees and charges; (iii) all charges and costs for any the Title Commitment and Title Policy, lender policy and any endorsements requested by Purchaser (other than those which are Sellers’ responsibility hereunder); (iv) fees and disbursements of Purchaser’s attorneys; (v) the recording cost of the Marina and Community Center Deed, the Dog Park Deed, the Sliver Parcel Deed and the Skywalk Easement; (vi) one-half (1/2) of all documentary stamps and/or similar transfer taxes imposed by the State of Florida in connection with the Dog Park Deed, the Sliver Parcel Deed, and the Marina and Community Center Deed; and (vii) interest charges accruing under the Owners’ existing loan encumbering the Property from and after July 25, 2026 through the Closing. Any other costs or charges of closing this transaction not specifically mentioned in this Agreement shall be paid and adjusted in accordance with local custom in the County in which the Property is located to the extent mutually acceptable to Purchaser and Sellers. The obligations of Purchaser and Sellers under this Section 5.5 shall survive the Closing.
5.6 Notice of Transfer. Upon Closing, Purchaser, at its sole cost and expense, shall deliver to the Broward County Florida County Property Appraiser, a Department of Revenue Form DR-430 notice of the change of ownership and control in the Property in accordance with Florida Statutes §193.1556. Purchaser shall indemnify, defend and hold Sellers, Owner and Sellers’ Affiliates harmless from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable attorneys’ fees incurred in connection therewith) arising out of or resulting from Purchaser’s failure to comply with the terms of this Section 5.6. The obligations of Purchaser under Section 5.6 of this Agreement shall survive the Closing.
5.7 Delisting. Sellers acknowledge that, as of September 10, 2026, Issuer is listed and approved by the Commission for trading on the Nasdaq stock market (“Nasdaq”). Purchaser acknowledges that as material inducement for Sellers to enter into this Agreement, Sellers relied on the Issuer becoming listed and approved for trading on the Nasdaq. In the event the Issuer is delisted from the Nasdaq (“Delisting”), Issuer shall have one hundred twenty (120) days from the date of such Delisting to become relisted on the Nasdaq (the “Relisting Cure Period”). If Issuer fails to become relisted within the Relisting Cure Period, the Issuer shall pay to Sellers, within ten (10) days after the expiration of the Relisting Cure Period, and on each of the first five (5) yearly anniversaries of such Delisting, if the Delisting remains by each such date, the amount of Five Million Five Hundred Thousand Dollars ($5,500,000.00) per each such payment date (up to a total, cumulative amount of Thirty-Three Million Dollars ($33,000,000.00)) as liquidated damages (the “Liquidated Damages”). Sellers shall have the sole and absolute discretion to direct the Issuer in writing to satisfy the Liquidated Damages obligation (and each component thereof) by: (i) paying Sellers the full amount in cash or (ii) issuing to Sellers additional Common Shares of Issuer equal in value to the Liquidated Damages amount (calculated at $3.00 per share) (“Additional Shares”) or (iii) by satisfying the Liquidated Damages obligation (any component thereof) partially by payment in cash and partially by issuance of Additional Shares. If Sellers elect to direct Issuer to issue Additional Shares in satisfaction of the Liquidated Damages, such Additional Shares shall be duly authorized, validly issued, fully paid, and non-assessable and shall constitute Registrable Securities entitled to registration rights. The Parties agree that the Liquidated Damages amount is a reasonable pre-estimate of Sellers’ potential damages and does not constitute a penalty. The Parties acknowledge and agree that the Sellers’ harm caused by a Delisting as provided herein would be impossible or very difficult to accurately estimate as of the Effective Date, and that the Liquidated Damages are a reasonable estimate of the anticipated or actual harm that might arise from such a breach. Subject to Sellers’ rights that survive Closing, payment (or issuance, as directed by Sellers hereunder) of the Liquidated Damages (and the recovery of any attorneys’ fees and expenses in
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accordance with Section 15.15) shall be Sellers’ sole and exclusive remedy for Issuer’s Delisting. Except
as expressly provided in any provision hereof that survives Closing, in no event shall the Delisting result in
(i) any reversion of the Property to Sellers, (ii) forfeiture of any deposits, payments, or other amounts previously paid or advanced by Purchaser, or (iii) any other damages, termination rights, or remedies whatsoever. Guarantor shall guarantee Issuer’s obligations with respect to the payment of any Liquidated Damages due hereunder pursuant to the Stewards Joinder. Notwithstanding the foregoing, this Section shall survive the Closing.
5.8 Asset Allocation. Purchaser and Sellers agree to allocate the Purchase Price (together with any assumed liabilities) for the Property, as set forth in Exhibit D hereof (the “Asset Allocation”). Part I of the Asset Allocation shall be completed in the manner required by Section 1060 of the Code. Purchaser and Sellers further agree to comply with all filing, notice and reporting requirements described in Section 1060 of the Code and the Treasury Regulations promulgated thereunder, including the timely preparation and filing of Form 8594 based on the Asset Allocation. Part II of the Asset Allocation allocates the portion of the Purchase Price allocated to Real Property (the “Real Property Value”). The Real Property Value shall be allocated among the Parcels comprising the Real Property and the Improvements thereon, as set forth in the Asset Allocation. Purchaser and Sellers hereby agree that they will report the federal, state, foreign and other Tax consequences of the transactions contemplated by this Agreement in a manner consistent with the Asset Allocation.
5.9 Unpaid Obligations.
(a) Notwithstanding anything to the contrary herein or in the Agreement, if any portion of the following (individually and/or collectively as context may require, the “Unpaid Obligation”): (i) the Required Redemption, including all Required Redemption Late Payment Damages; (ii) the Liquidated Damages; or (iii) the Extension Fee (as hereinafter defined), have not been fully paid within one (1) year after the Closing Date, then the amount of such Unpaid Obligation shall be subject to the remedies set forth in this Section. Sellers shall have the right, in their sole and absolute discretion, to either: (a) direct a forced sale of the Property, in which event Sellers shall be entitled to cause the Property to be sold, on such market terms and conditions as Sellers may reasonably determine, and to apply the net proceeds of such sale to the payment of the Unpaid Obligation (a “Forced Sale”), or (b) to extend the time for payment of all or any portion of the Unpaid Obligation on a month-to-month basis in consideration of an extension fee equal to two percent (2%) of the then-outstanding Unpaid Obligation per month (the “Extension Fee”). Sellers may make or change such election on a monthly basis for so long as any Unpaid Obligation remain outstanding, in each case in Sellers’ sole and absolute discretion. In furtherance of any Forced Sale directed by Sellers under clause (a) above, Purchaser shall fully cooperate with Sellers and take all actions reasonably requested by Sellers to consummate such Forced Sale, including, without limitation, promptly executing and delivering all deeds, assignments, listing agreements, purchase and sale agreements, closing documents, and other instruments; providing access to the Property for inspections, appraisals, and showings; furnishing all books, records, and information relating to the Property; and refraining from taking any action that would delay, impair, or interfere with such Forced Sale. In connection therewith, Purchaser hereby irrevocably constitutes and appoints Sellers as Purchaser's attorney-in-fact, coupled with an interest, with full power of substitution, to execute, acknowledge, and deliver any and all such instruments and to take any and all such actions in Purchaser’s name and on Purchaser’s behalf if Purchaser fails to do so within five (5) business days after Sellers’ written request. All costs and expenses incurred by Sellers in connection with a Forced Sale, including reasonable attorneys’ fees, brokerage commissions, and closing costs, shall be paid out of the proceeds of the Forced Sale. Any Extension Fee shall be due and payable in advance on the first calendar day of each month, shall be in addition to, and shall not reduce or be credited against, any Unpaid Obligation or any other amount due to Sellers.
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(b) From and after Closing, if any portion of the Unpaid Obligation remains outstanding, if Sellers elect a Forced Sale or if Purchaser sells, transfers, refinances, or otherwise disposes of the Property or any portion thereof, then the Unpaid Obligation shall be paid to Sellers out of the proceeds of any such Forced Sale, sale, transfer, refinancing, or other monetization proceeds before any distribution, dividend, return of capital, or other payment is made to Purchaser, Issuer, any of their respective Affiliates, or any direct or indirect equity holder of any of the foregoing. Not less than ten (10) business days prior to consummating any such transaction, Purchaser shall deliver written notice thereof to Sellers, together with reasonable detail as to the anticipated proceeds and closing date. Sellers shall have a second-position payment right in and to such proceeds until all such cash proceeds payable to Sellers under this Agreement have been paid in full, subject only to the LoanCore Loan. Except for the LoanCore Loan, Purchaser shall not create, incur, assume, permit, or suffer to exist any additional indebtedness, monetary lien, security interest, pledge, or other claim against the Property or such proceeds that is senior to Sellers' payment right under this Section without the prior written consent of Sellers. To secure the payment and performance of the Unpaid Obligation, Sellers shall have the right, for so long as any portion of the Unpaid Obligation remains outstanding, to unilaterally record a vendee's lien against the Property in the land records of Broward County, Florida, without the execution, joinder, or acknowledgment of Purchaser. Purchaser and Issuer shall not, and shall cause their respective Affiliates not to, make or permit any distribution or payment in violation of this Section. As a material inducement to Sellers entering into this Agreement, Glen Steward and Shaun Quin (each, a “Personal Guarantor” and, collectively, the “Personal Guarantors”) hereby jointly and severally, and absolutely, unconditionally, and irrevocably, guaranty to Sellers the full and prompt payment of the Required Redemption Late Payment Damages and compliance with the payment-priority, second-position payment right, and distribution covenants set forth in this Section 5.9(b). The obligations of the Personal Guarantors under this guaranty, and the covenants of Purchaser and Issuer under this Section, shall survive the Closing and shall remain in full force and effect until the Unpaid Obligation has been paid and performed in full. This Section shall be binding upon each Personal Guarantor and its heirs, executors, administrators, successors, and assigns, and shall inure to the benefit of Sellers and their successors and assigns.
(c) The parties acknowledge that a breach of the covenants set forth in this Section would cause Sellers irreparable harm for which monetary damages would be an inadequate remedy, and accordingly Sellers shall be entitled to seek specific performance and injunctive relief to enforce this Section, without the necessity of posting any bond or other security, in addition to all other remedies available at law or in equity. This Section shall survive the Closing.
6. CASUALTY AND CONDEMNATION.
6.1 Notice by Sellers. If, prior to the Closing, all or any portion of the Property is damaged by fire or any other cause whatsoever or any Seller receives written notice of condemnation or sale in lieu of condemnation of any portion of the Property, Sellers shall promptly give Purchaser written notice of such damage or condemnation.
6.2 Minor Loss. If a casualty or condemnation does not result in a Major Loss (hereafter defined), Sellers shall have no obligation to repair any damage caused by such casualty or condemnation and Purchaser shall be bound to purchase the Property and Sellers will either (a) if all insurance or condemnation proceeds have been received by Closing, credit to Purchaser at Closing an amount equal to the amount of casualty insurance proceeds (net any sums used by Sellers for the protection of or emergency repairs to the Property) and condemnation proceeds (net any expenses actually incurred by Sellers, including attorney’s fees of collecting the same) collected by such Sellers as a result of such damage or destruction or condemnation, or (b) if any portion of the insurance proceeds or condemnation
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proceeds have not been received by Closing, credit to Purchaser at Closing an amount equal to the amount of casualty insurance proceeds (net any sums used by Sellers for the protection of or emergency repairs to the Property) and condemnation proceeds (net any expenses actually incurred by such Sellers, including attorney’s fees of collecting the same) collected by such Sellers prior to Closing as a result of such damage or destruction or condemnation, and give Purchaser an assignment of Sellers’ rights to receive insurance or condemnation proceeds that have not been collected before the Closing. The proceeds of any rent insurance paid in respect of any casualty will be apportioned between Sellers and Purchaser as if the same were rent, as and when received. If the damage or destruction arises out of an uninsured risk, Sellers shall either repair the casualty or provide Purchaser with a credit to the Purchase Price for the cost to repair the same; provided, that, if the cost to repair such casualty exceeds $250,000.00, Sellers may elect not to do either of the foregoing (i.e., repair or provide a credit), in which case Purchaser, upon written notice to Sellers, may terminate this Agreement and the Deposit will be repaid to Purchaser in accordance with Section 2.2.1.
6.3 Major Loss. If (a) the Property or any portion thereof is taken or threatened to be taken by condemnation, or (b) the Property is destroyed or damaged by fire or other casualty and the estimated cost to repair such damage or destruction exceeds $1,000,000.00 (each of the events described in clauses (a) and (b) above, a “Major Loss”), then Purchaser shall have the right to terminate this Agreement upon written notice to Sellers delivered within ten (10) days after Sellers’ notice of damage or condemnation to Purchaser (but in no event later than the Closing). If Purchaser elects to terminate this Agreement, the Deposit will be repaid to Purchaser in accordance with Section 2.2.1, and neither Party will have any further rights or obligations hereunder, except for any obligations that expressly survive termination. If Purchaser fails to notify Sellers of Purchaser’s election to terminate this Agreement within such ten (10) day period (or such shorter period so as to permit Closing to occur not later than the Closing Date, time being strictly of the essence), then Purchaser shall be deemed to have elected to proceed to Closing in accordance with Section 6.2 above.
Notwithstanding the foregoing, the Parties acknowledge that an insurance claim is pending in the name of Owners for damage occurring to the Property prior to the Effective Date. This provision shall survive the Closing.
7. BROKERAGE. Purchaser, Issuer and Sellers each represent and warrant to the other that no brokers have been engaged or consulted by or on behalf of the warranting Party or any Affiliate of such Party or are in any way entitled to compensation as a consequence of the sale of the Membership Interests to Purchaser. Purchaser and Issuer agree to indemnify and hold harmless the Sellers from and against any and all Claims and expenses for any brokerage or agent commission or fee arising out of this transaction by any broker or agent with whom Purchaser has dealt. Each Seller agrees to indemnify and hold harmless the Purchaser and Issuer from and against any and all Claims and expenses for any brokerage or agent commission or fee arising out of this transaction by any broker or agent with whom such Seller has dealt. Each Party shall have the right, however, to participate in the defense of any action brought by such agent or broker. Notwithstanding the foregoing or anything to the contrary herein, Purchaser shall pay a commission to BayBridge Real Estate Capital in connection with the closing of the LoanCore Loan in accordance with a separate written agreement. The provisions of this Section 7 shall survive the Closing.
8. DEFAULT AND REMEDIES.
8.1 Purchaser’s Remedies. Subject to Section 8.3 below, in the event that one (1) or more of the Sellers or Owners are in material breach of any of the terms, covenants, conditions, warranties, representations or obligations hereunder applicable to it, and the same prevents the Closing hereunder, then Purchaser may, at its option and as its sole and exclusive remedy (and the recovery of any attorneys’ fees
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and expenses in accordance with Section 15.15), either (a) terminate this Agreement, in which event the Deposit will be repaid to Purchaser in accordance with Section 2.2.1, and Sellers shall reimburse Purchaser for the actual out-of-pocket third-party costs incurred by Purchaser in connection with this Agreement and its review of the Property and the Membership Interests in an amount not to exceed $100,000.00 (“Pursuit Costs”), (b) waive the default and proceed to Closing without any reduction in the Purchase Price, or (c) pursue an action for specific performance of this Agreement; provided, if specific performance is unavailable to Purchaser because Sellers have voluntarily conveyed the Property or any portion thereof to one or more third parties in violation of the terms of this Agreement, Sellers shall be liable to Purchaser for damages equal to the difference between the Purchase Price hereunder and the price at which Sellers sold the Property or portion thereof to the third party(ies), in addition to the Purchaser’s Pursuit Costs and repayment of the Deposit in accordance with Section 2.2.1 as outlined in clause (a) of this Section 8.1. As a condition precedent to Purchaser’s exercising any right it may have to bring an action for specific performance hereunder, Purchaser must commence such action for specific performance within forty-five (45) days after the date scheduled for Closing. Purchaser agrees that its failure to timely commence such an action for specific performance within such forty-five (45) day period shall be deemed a waiver by it of its right to commence an action for specific performance as well as a waiver by it of any right it may have to file or record a notice of lis pendens against the Property. Notwithstanding the foregoing, nothing in this Section 8.1 shall limit any indemnification or other obligations of Sellers under this Agreement from and after the Closing.
8.2 Sellers’ Remedies. Subject to Section 8.3 below, in the event that Purchaser is in material breach of any of its terms, covenants, conditions, warranties, representations or obligations hereunder, and the same prevents the Closing hereunder, then at the option of Sellers, and as Seller’s sole and exclusive remedy (and the recovery of any attorneys’ fees and expenses in accordance with Section 15.15), the Stewards Loans shall be deemed satisfied and paid in full without recourse to Sellers or any of their Affiliates in accordance with Section 2.2.1, such sum being agreed upon as liquidated damages for such breach or failure of performance by Purchaser and because of the difficulty, inconvenience and uncertainty of ascertaining actual damages, and the Parties shall thereupon be relieved and released from all other and further obligations under this Agreement except for the obligations which expressly survive this Agreement. Notwithstanding the foregoing, nothing in this Section 8.2 shall limit any indemnification or other obligations of Purchaser or Issuer under this Agreement from and after the Closing.
8.3 Notice and Cure. Except for Sellers’ or Purchaser’s failure to close on the scheduled Closing Date, neither Sellers nor Purchaser shall be deemed in default under this Agreement unless such Party is given written notice of its failure to comply with this Agreement and such failure continues for a period of three (3) business days following the date such notice is given; provided, however, that the notice and cure period set forth in this Section 8.3 shall not under any circumstances be deemed to extend the Review Period hereunder.
9. DUE DILIGENCE.
9.1 Review Period.
9.1.1 Prior to the Effective Date, Sellers have made available to Purchaser and Purchaser’s employees, agents, officers, prospective lenders and investors, directors, attorneys, consultants, contractors, architects and other Representatives (collectively, the “Purchaser’s Representatives”) certain materials which pertain to the Owners, the Property and other current assets and current liabilities of the Owners, including, without limitation, drawings, plans, appraisals, existing leases, surveys, zoning reports, environmental site assessments, rent rolls, restrictive covenants, title commitments and title policies, active
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permits, certificates of occupancy, the Financial Statements and available tax returns for fiscal years 2024 and 2025, and Sellers will make available to Purchaser such other documents, instruments and information related to the Property or the ownership or operation thereof as reasonably requested by Purchaser, to the extent in Sellers’ or Owners’ possession or control (such documents made available to Purchaser, the “Due Diligence Materials”). Purchaser shall keep such Due Diligence Materials confidential, subject to Purchaser’s right to disseminate Due Diligence Materials to or among Purchaser’s Representatives, in each case on a need-to-know basis. The aforementioned shall not preclude the disclosure to potential investors of the proposed purchase price, the net operating income of the Property and the approximate rate of return on the investment. Sellers make no representation or warranty as to the truth or accuracy of the Due Diligence Materials provided to Purchaser, except as otherwise expressly provided in this Agreement or the documents to be delivered by Sellers at Closing.
9.1.2 Purchaser and Purchaser’s Representatives shall have the right to enter upon the Property at any reasonable time during normal business hours during the term of this Agreement upon 24 hours’ prior notice to Sellers (which shall be delivered to Bernard Hsiao via electronic mail at bh@invesca.com) for the limited purpose of performing investigations, inspections, tests, studies, and surveys (collectively, “Inspections”). In conducting any Inspections of the Property, Purchaser shall at all times comply with all applicable laws and regulations of all applicable governmental authorities with respect to such Inspections, and neither Purchaser nor any of Purchaser’s Representatives shall interview any tenants (including, without limitation, telephone conversations or electronic mail messages) at, or contractors providing services to, the Property, unless in each case Purchaser obtains the prior written consent of Sellers (which may be given via electronic mail), which consent shall not be unreasonably withheld, it being agreed that all requests for such contacts or discussions shall be directed to Bernard Hsiao via electronic mail (at bh@invesca.com). In conducting any Inspections or otherwise accessing the Property, Purchaser and Purchaser’s Representatives shall at all times comply with, and shall be subject to, the rights of the tenants of the Property (and any persons claiming by, under or through such tenants), and Purchaser shall use commercially reasonable efforts to ensure that neither it nor any of Purchaser’s Representatives shall materially adversely interfere, subject to the rights granted to Purchaser herein, with the business of Sellers conducted at the Property or unreasonably disturb the use or occupancy of any tenant or occupant of the Property. Sellers may from time to time establish reasonable rules of conduct for Purchaser and Purchaser’s Representatives in furtherance of the foregoing, and Purchaser shall comply with all of Sellers’ reasonable requirements regarding entry upon the Property of which Purchaser has received prior written notice. Sellers shall be entitled to have a representative present at all times during each such Inspection or other access; provided, however, if Sellers fail to make a representative present for a scheduled Inspection or access, Purchaser and Purchaser’s Representatives shall have the right to proceed with such Inspection or access without Sellers’ representative present. Purchaser shall, at its own expense, repair or restore any damage to the Property caused by the Inspections to substantially the condition existing prior to Purchaser’s or Purchaser’s Representatives entry. Neither Purchaser nor any Purchaser’s Representative shall intentionally damage any part of the Property.
9.1.3 All inspection fees, appraisal fees, engineering fees and other costs and expenses of any kind incurred by Purchaser or Purchaser’s Representatives relating to such Inspections and its other access shall be at the sole expense of Purchaser. Except as expressly permitted herein, Purchaser shall keep all information obtained during its inspections and access to the Property confidential. If the Closing shall not occur for any reason whatsoever, Purchaser shall: (A) if requested by Sellers, and upon receipt of the reimbursement of the costs therefor, deliver to Sellers without representation or warranty of any kind, express or implied, copies of all tests, reports and inspections of the Property, made and conducted by Purchaser or Purchaser’s Representatives, or for Purchaser’s benefit, that are in the possession or control of Purchaser or Purchaser’s Representatives within a reasonable period of time (not to exceed ten (10) days)
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after receipt of Sellers’ request and reimbursement by Sellers; (B) promptly return to Sellers all original Due Diligence Materials delivered by Sellers to Purchaser; and (C) promptly destroy all copies and abstracts of the materials referenced in (A) and (B) above. Purchaser and Purchaser’s Representatives shall not be permitted to conduct borings of the Property or drilling in or on the Property, or any other invasive, intrusive or destructive testing in connection with the preparation of an environmental audit or in connection with any other Inspections of the Property without the prior written consent of Sellers, which consent shall not be unreasonably withheld, conditioned or delayed (and, if such consent is given, Purchaser shall be obligated to repair or restore any damage to the Property as aforesaid). This Section 9.1.3 shall survive the Closing or any termination of this Agreement.
9.1.4 Purchaser acknowledges that its period to inspect the Property (“Review Period”) has expired as of the Effective Date, and that Purchaser has completed its Inspections of the Property to its satisfaction. Subject to the terms of this Agreement, Purchaser hereby accepts the Property in its "AS IS" condition and shall have no right to terminate this Agreement based on the results of any Inspections of the Property.
9.1.5 Concurrently with the execution of this Agreement and during the term of this Agreement, Purchaser shall cause any and all parties that access the Property pursuant to the rights granted herein to maintain, at its expense, (i) workers’ compensation insurance in accordance with applicable law, and (ii) commercial general liability (“CGL”) insurance, issued on a form at least as broad as Insurance Services Office (“ISO”) Commercial General Liability Coverage “occurrence” form CG 00 01 10 01 or another “occurrence” form providing equivalent coverage, including contractual liability and personal injury liability coverage, with limits of not less than One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00) in the aggregate. Sellers, and its property manager (ZRS MANAGEMENT, LLC), shall be covered as additional insureds on the CGL insurance policies with respect to liability arising out of the named insured’s acts or omissions relating to the Property. Prior to making any entry upon the Property, Purchaser shall furnish to Sellers a certificate of insurance evidencing the foregoing coverages, which certificate of insurance shall be in form and substance reasonably satisfactory to Sellers. Additionally, Purchaser agrees that it shall not directly access the Property pursuant to the rights granted herein unless and until Purchaser provides Sellers with proof that Purchaser has the insurance required herein.
9.1.6 Purchaser shall pay for all Inspections performed on the Property by or on behalf of Purchaser and shall not permit the creation of any lien in favor of any contractor, subcontractor, materialman, mechanic, surveyor, architect or laborer. Purchaser hereby expressly agrees to indemnify and hold Sellers harmless against any Claim, including without limitation damage or injury to either persons or property (collectively, “Losses”), arising out of Purchaser’s or its agent’s or representative’s actions under this paragraph, other than any Losses incurred solely as the result of (a) the mere discovery of existing conditions so long as not exacerbated by Purchaser, or (b) the gross negligence or willful misconduct of Sellers or their respective agents or representatives. This Section 9.1.6 shall survive the Closing or any termination of this Agreement.
9.2 Service Contracts. On or prior to the last day of the Review Period, Purchaser shall advise Sellers in writing of which Contracts Purchaser will assume and which Contracts Purchaser requests that Sellers deliver written termination at or prior to Closing, provided, however, if under any of the Service Contracts for which Purchaser requests Sellers deliver written termination the applicable Seller has no right to terminate same on or prior to Closing with the delivery of notice, or if a termination fee or charge is due thereunder as a result of such termination, Purchaser shall either (i) assume at Closing all obligations thereunder from the Closing until the expiration dates of such Contract; or (ii) reimburse such Seller for the
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payment of the termination related fee or charge, as applicable, at Closing. If Purchaser fails to timely notify Sellers with respect to a specific Contract, Purchaser will be deemed to have elected to assume such Contract and to have waived its right to require the applicable Seller to give a termination notice with respect to such Contract at Closing. Purchaser must assume the obligations arising from and after the Closing Date under those Contracts (1) that Purchaser has agreed to assume or deemed to have elected to assume, or that Purchaser is obligated to assume pursuant to this Section 9.2, and (2) for which a termination notice is delivered as of or prior to Closing but for which termination is not effective until after Closing (collectively, the “Assumed Service Contracts”). Sellers shall deliver written notices of termination to the service providers under the Contracts Purchaser has requested to terminate promptly after the expiration of the Review Period.
10. RESERVED.
11. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
11.1 Representations and Warranties by Sellers and Owners. Each Seller and Owner (unless a particular Seller or Owner is expressly indicated below, in which event, the representation or warranty shall be deemed to be made only by the Seller and/or Owner indicated) separately (and not jointly and severally) makes the following representations and warranties to Purchaser and the Issuer, which representations and warranties shall be true and correct as of the Effective Date (unless another date is specified below) and shall be deemed to be made by each such Seller and Owner only with respect to itself, the applicable Membership Interests owned by such Seller, and the applicable portion of the Property owned directly or indirectly by such Seller or Owner, as applicable:
11.1.1 Envy Propco is a limited liability company validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in the State of Florida.
11.1.2 Myelin Propco is a limited liability company validly existing and in active status under the laws of the State of Florida.
11.1.3 Envy Seller has delivered to Purchaser true and complete copies of the certificate of formation and limited liability company agreement of the Envy Propco (that certain Limited Liability Company Agreement of Envy Propco dated as of December 10, 2021; the “Envy Propco LLC Agreement”), and all amendments thereto, and such certificate of formation and limited liability company agreement (as the same have been amended, if applicable) remain in full force and effect.
11.1.4 (i) Myelin Group Owners have delivered to Purchaser true and complete copies of the articles of organization and operating agreement of the Myelin Seller, and all amendments thereto, and such articles of organization and operating agreement (as the same have been amended, if applicable) remain in full force and effect; and (ii) as of the Closing Date only, Myelin Seller has delivered to Purchaser true and complete copies of the articles of organization and operating agreement of the Myelin Propco (the “Myelin Propco Operating Agreement”), and all amendments thereto, and such articles of organization and operating agreement (as the same have been amended, if applicable) remain in full force and effect.
11.1.5 Each Seller possesses all requisite power and authority, and has taken all actions required by its organizational documents (as applicable) and applicable law, to execute and deliver this Agreement and will by Closing have taken all actions required by its organizational documents and applicable law, to consummate the transactions contemplated by this Agreement. The execution and
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delivery of this Agreement by such Seller and such Seller’s consummation of the transactions contemplated hereby does not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the organizational documents of such Seller (as applicable) or the applicable Owner; (b) conflict with or result in a violation or breach of any provision of any federal, state or other law or regulation applicable to such Seller or the applicable Owner; or (c) require the consent, notice or other action (other than consent, notices or other actions that have been obtained or will be obtained at or before the Closing) by any individual, corporation, limited partnership, general partnership, joint venture, limited liability company, trust, estate, unincorporated organization, association or other entity (each, a “Person”) under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any contracts or agreements to which such Seller or the applicable Owner is a party or by which such Seller or the applicable Owner is bound or to which any of their respective properties and assets are subject.
11.1.6 This Agreement constitutes, and each document and instrument contemplated hereby to be executed and delivered by such Seller, when executed and delivered, shall constitute the legal, valid and binding obligation of such Seller enforceable against such Seller in accordance with its respective terms (subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally). The person(s) signing this Agreement on behalf of such Seller is authorized to do so.
11.1.7 To Sellers’ knowledge, no law, statute, rule, regulation, judgment, order, writ, injunction or decree which is binding upon such Seller or the applicable Owner prohibits the execution, delivery or performance of this Agreement by such Seller or the consummation of the transactions contemplated hereby, or requires such Seller or the applicable Owner to obtain any consent, authorization, approval or registration which such Seller or the applicable Owner have not obtained.
11.1.8 The Envy Membership Interest is the sole outstanding limited liability company interest of Envy Propco. Envy Seller is the sole legal and beneficial owner of the Envy Membership Interest, and it owns such interest free and clear of all Claims and Encumbrances and has not sold, pledged, hypothecated or otherwise encumbered all or any portion of the Envy Membership Interest, and no other Person has any right, title or interest in and to the Envy Membership Interest. There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the Envy Membership Interest or any other equity interests in Envy Propco, other than the Envy Propco LLC Agreement, or obligating Envy Seller to sell the Envy Membership Interest, or obligating Envy Propco to issue any other interest in Envy Propco. Other than the organizational documents of Envy Propco, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of the Envy Membership Interest.
11.1.9 From and after the effective date of the Myelin Restructuring:
(a) the Myelin Membership Interest is the sole outstanding membership interest of Myelin Propco;
(b) Myelin Seller is the sole legal and beneficial owner of the Myelin Membership Interest, and it owns such interest free and clear of all Claims and Encumbrances and has not sold, pledged, hypothecated or otherwise encumbered all or any portion of the
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Myelin Membership Interest, and no other Person has any right, title or interest in and to the Myelin Membership Interest;
(c) there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the Myelin Membership Interest or any other equity interests in Myelin Propco, other than the Myelin Propco Operating Agreement, or obligating Myelin Seller to sell the Myelin Membership Interest, or obligating Myelin Propco to issue any other interest in Myelin Propco;
(d) other than the organizational documents of Myelin Propco, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of the Myelin Membership Interest.
11.1.10 None of the Membership Interests are evidenced by or represented by a certificate or certificates, and no certificates have ever been issued with respect to any of the Membership Interests. Other than this Agreement, such Seller has not entered into any agreement to sell or otherwise encumber or dispose of any or all of the Membership Interests. Such Seller has the full right, power and authority to sell, assign, transfer and deliver the applicable Membership Interests to Purchaser pursuant to this Agreement.
11.1.11 Exhibit J sets forth (i) reserved, (ii) unaudited statements of revenues and expenses of the Owners for calendar year 2026 through the most recently ended calendar month, (iii) unaudited balance sheets of Owners for calendar years 2024, 2025 and 2026 through the most recently ended calendar month of 2026 (collectively, the “Financial Statements”). The Financial Statements fairly represent in all material respects the financial condition of the applicable Owner as of the respective dates they were prepared and the results of the operations for the periods indicated, provided that the 2026 Financial Statements will be subject to normal year-end and other adjustments. The Owners have no material liabilities other than as are disclosed on the Financial Statements for calendar year 2026 as of August 31, 2026 other than any liabilities adequately reflected or reserved against in the applicable Owner’s balance sheet as of the date of such report or incurred in the ordinary course of business since the date of such most recent report.
11.1.12 Except as disclosed to Purchaser, all material Tax Returns (hereafter defined) required to be filed by the Owners and the Sellers have been timely filed (or proper extensions thereof have been obtained and maintained). All such Tax Returns are true and correct in all material respects. No deficiencies for federal, state or other applicable Taxes (hereafter defined) have been claimed, assessed or, to Sellers’ knowledge, proposed against such Owners or Sellers by any governmental authority. All Taxes due and payable by such Owners and Sellers (whether or not shown or required to be shown on any Tax Return) have been paid, except for any Taxes the amount or validity of which is being contested in good faith. No Claim has ever been made by an authority in a jurisdiction where such Owner or Sellers do not file Tax Returns that such Owners or Sellers are or may be subject to taxation by that jurisdiction. There are no pending or, to each Seller’s knowledge, threatened, audits, investigations or Claims for or relating to any liability in respect of federal, state or other applicable taxes, and there are no matters under discussion with any governmental authorities with respect to Federal, state or other applicable Taxes that could result in an assessment of Federal, state or other applicable Taxes against the Owners or Sellers. No Owner or Seller has been notified in writing that any taxing authority intends to audit a Federal, state or
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other applicable tax return for any other period for such Owner or Seller. Each Owner and Seller has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, or other third party, and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed, in each case, in all material respects. There are no liens on any of such Owner’s or Seller’s assets that arose in connection with any failure (or alleged failure) to pay any Tax, other than any statutory liens with respect to Taxes not yet due and payable. For purposes of this Agreement, (a) “Tax” or “Taxes” means any federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalty, or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person, and (b) “Tax Return” means any return, declaration, report, Claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
11.1.13 At all times since its formation, each of Envy Propco and Myelin Propco have been properly classified as an entity that is disregarded from its owner under Treasury Regulations Section 301.7701-3(b)(1)(ii), and applicable provisions of Florida income tax law.
11.1.14 Such Seller acknowledges that it and its legal, financial, tax and other advisors, if any, have been provided with a reasonable opportunity to make inquiries to the Purchaser and the Issuer, including with respect to their current financial condition and future prospects, and this Agreement and the transactions contemplated hereby, and that all information so requested has been fully and satisfactorily provided to such parties by the Purchaser and the Issuer. Such Seller has had the right to consult independent legal counsel of its own choosing and has had a reasonable amount of time to confer with such counsel. Such Seller acknowledges that it has relied solely upon the advice, if any, of such Seller’s legal counsel, financial advisors and/or accountants with respect to this Agreement to the extent it has deemed necessary, and has not been advised or directed by the Purchaser, the Issuer or any of their respective Representatives with respect to any such matters and has not relied on any such parties in connection with this Agreement and the transactions contemplated hereby.
11.1.15 This Agreement is made with such Seller in reliance upon such Seller’s representations and warranties to the Purchaser and the Issuer, which by such Seller’s execution of this Agreement, such Seller hereby confirms, that the Rollover Shares and Escrowed Shares to be acquired by such Seller as contemplated herein will be acquired for investment for such Seller’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Seller has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Seller further represents that such Seller does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person, with respect to any of the Rollover Shares or Escrowed Shares.
11.1.16 Such Seller understands that the Rollover Shares and Escrowed Shares have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Seller’s representations as expressed herein. Such Seller is acquiring the Rollover Shares and Escrowed Shares for its own account for investment purposes only and not with a view to, or for resale in connection with, any distribution thereof in violation of the Securities Act or any other applicable securities laws. Such Seller is an “accredited investor” as defined in Rule 501(a)
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of Regulation D promulgated under the Securities Act. Such Seller understands that the Rollover Shares and Escrowed Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, such Seller must hold the Rollover Shares and Escrowed Shares indefinitely unless they are registered with the Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Such Seller acknowledges that, except as expressly set forth in this Agreement (including the registration rights provided pursuant to the Registration Rights Agreement), the Issuer has no obligation to register or qualify the Rollover Shares or Escrowed Shares. Such Seller further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Rollover Shares and Escrowed Shares, and on requirements relating to the Issuer which are outside of such Seller’s control, and which the Issuer is under no obligation except as set forth herein and may not be able to satisfy. Such Seller acknowledges that because Issuer was previously a shell company as defined in Rule 12b-2 under the Exchange Act, Rule 144 under the Securities Act is not available for resales of the Rollover Shares or Escrowed Shares by any holder unless and until all of the conditions set forth in Rule 144(i)(2) are satisfied, including, without limitation: (i) Issuer has ceased to be a shell company; (ii) Issuer is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (iii) Issuer has filed all Exchange Act reports required during the preceding twelve (12) months (or such shorter period as Issuer was required to file); and (iv) at least one (1) year has elapsed since Issuer filed current Form 10-type information with the Commission reflecting its status as an entity that is no longer a shell company (which, based on Issuer’s November 2025 Form S-1 filing, is expected to occur in November 2026 for affiliates, subject to satisfaction of all other conditions). Accordingly, registration pursuant to the Registration Rights Agreement is expected to be the primary means by which such Seller may achieve liquidity with respect to the Rollover Shares and Escrowed Shares. Such Seller has had the opportunity to ask questions of, and receive answers from, the Issuer or its representatives concerning the terms and conditions of the offering of the Rollover Shares and Escrowed Shares and the business and affairs of the Issuer, and to obtain any additional information which the Issuer possesses or can acquire without unreasonable effort or expense.
11.1.17 Such Seller understands that no public market now exists for Rollover Shares or Escrowed Shares, and that the Purchaser and the Issuer have made no assurances that a public market will ever exist for the Rollover Shares or Escrowed Shares.
11.1.18 Such Seller understands that the Rollover Shares including the Escrowed Shares, and any securities issued in respect of or exchanged for the Rollover Shares including the Escrowed Shares, may be notated with one or all of the following legends:
(a) “THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
(b) Any legend set forth in, or required by, the other agreements contemplated hereby.
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(c) Any legend required by the securities laws of any state to the extent such laws are applicable to the Shares represented by the certificate, instrument, or book entry so legended.
11.1.19 Neither such Seller, nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including, through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement, in connection with an offer and sale of the Rollover Shares including the Escrowed Shares to be issued by Issuer hereunder.
11.1.20 The address of each office or offices in which such Seller and the applicable Owner have their principal place of business is set forth on Schedule 11.1.27.
11.1.21 Such Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code 1986, as amended, or any regulations promulgated thereunder (collectively, the “Code”).
11.1.22 Neither such Seller nor the applicable Owner has made any general assignment for the benefit of creditors, filed any petition in bankruptcy, been adjudicated insolvent or bankrupt, petitioned or applied to any tribunal for any receiver, conservator or trustee, or commenced any proceeding under any dissolution or liquidation law or statute or any jurisdiction.
11.1.23 As of the Closing Date, except as may be provided in any Permitted Exception or Assumed Service Contract, the Owners will not be obligated under any guaranty or indemnity agreement in favor of any third party.
11.1.24 The rent rolls attached as Schedule 11.1.234-A (the “Rent Rolls”) are in the form prepared by Sellers’ property manager in the ordinary course of business and used by such Seller to manage the Property, and to Sellers’ knowledge, are true, correct and complete in all material respects as of the date(s) set forth on the applicable Rent Roll. Such Seller has delivered to Purchaser, or made available to Purchaser for review, true and complete copies in all material respects of all Leases and Slip Leases in Sellers’ possession or control. To Sellers’ knowledge, there are no leases, subleases, occupancy agreements or similar arrangements affecting the Property entered into by the applicable Owner other than the Leases and Slip Leases set forth in the Rent Rolls. The Leases and Slip Leases contain the entire agreement between the landlord and tenants named therein, to such Seller’s knowledge are in full force and effect in accordance with their terms, and no party has given written notice of any default under any Lease and Slip Lease which has not been cured beyond any applicable notice and/or cure period. Schedule 11.1.23-B is a true, correct and complete list in all material respects of all Marina Revenue and Security Deposits currently held by the Company under the Leases and the Slip Leases (including letters of credit, if any). No tenant under the Leases or the Slip Leases has paid rent more than thirty (30) days in advance. There are no unpaid obligations to tenants under the Leases or the Slip Leases for tenant improvement work at the Property.
11.1.25 The applicable Owner and such Seller do not currently have, and have never had, any employees. All employees at the Property are employees of the applicable Owner’s property manager employed with respect to the Property or employees of third party vendors engaged by the applicable Owner’s property manager.
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11.1.26 The applicable Owner is not a party to any collective bargaining agreement or other contract or agreement related to the Property with any labor organization or makes or is required to make contributions to any multiemployer benefit plans.
11.1.27 To such Seller’s actual knowledge, Schedule 11.1.27 is a true, correct and complete list in all material respects of all Contracts in effect as of the Effective Date. Such Seller has delivered to Purchaser, or made available to Purchaser for review, true and complete copies in all material respects of all Contracts set forth on Schedule 11.1.27. To such Seller’s actual knowledge, the Contracts are in full force and effect, and neither party has given written notice of any default under any Contract which has not been cured beyond any applicable notice and/or cure period.
11.1.28 There are no brokerage agreements for the payment of leasing commissions with respect to the Property or any portion thereof that will remain unpaid as of Closing. No commissions or other fees are or will be due from the applicable Owner to brokers or other procurers in connection with the Leases or Slip Leases under any agreement which will survive the Closing and be binding on Purchaser following Closing.
11.1.29 No tax certiorari proceeding is pending for the reduction of the assessed real estate tax valuation of the Real Property or the Improvements or any portion thereof for the Current Tax Year or any tax years thereafter.
11.1.30 Other than the Arbitration (as hereinafter defined) and eviction proceeding conducted in the ordinary course of business, there are no actions, suits, or proceedings pending or, to such Seller’s actual knowledge, threatened (in writing) against such Seller or the applicable Owner or with respect to the Property in any court of law or in equity or before any governmental instrumentality that are not covered by insurance and which would (x) materially adversely affect the ability of such Seller to perform its obligations under this Agreement or (y) be binding on Purchaser and materially adversely affect the Owners or the use or operation of the Property.
11.1.31 Neither such Seller nor the applicable Owner has received written notice from any governmental body or agency of any pending or, to such Seller’s actual knowledge, threatened condemnation proceeding against the Property which has not been finalized, settled or discontinued.
11.1.32 Such Seller and, to such Seller’s actual knowledge, each Person owning a ten percent (10%) or greater direct or indirect interest in such Seller, is not, and will not become, a Person with whom United States Persons are restricted or prohibited from doing business under regulations of the Office of Foreign Asset Control of the Department of the Treasury (“OFAC”), including those named on OFAC’s specially designated and blocked persons list (the “Lists”) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto (collectively, the “Orders”) and is currently and will at all times during the term of this Agreement remain in compliance therewith.
11.1.33 No petition has been filed by or, to such Seller’s actual knowledge, threatened against such Seller or the applicable Owner under the Federal Bankruptcy Code or any similar laws, nor is such Seller or the applicable Owner the subject of any bankruptcy or insolvency proceedings.
11.1.34 Neither such Seller nor the applicable Owner is (a) an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
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(“ERISA”)), whether or not subject to Title I of ERISA, (b) a plan as defined in Section 4975(e)(1) of the Code, or (c) an entity the assets of which, under applicable law, are deemed to constitute the assets of a plan described in the foregoing clauses (a) or (b). Neither such Seller nor the applicable Owner is a “governmental plan” within the meaning of Section 3(32) of ERISA, and the assets of such Seller and the applicable Owner do not constitute plan assets of such plans. Transactions by or with such Seller or the applicable Owner are not in violation of state statutes applicable to such Seller or the applicable Owner regulating investments of and fiduciary obligations with respect to governmental plans.
11.1.35 Neither such Seller nor the applicable Owner has received written notice that the Property violates any applicable laws, rules, ordinances, judgments, regulations, or orders which violation remains uncured.
11.1.36 Neither such Seller nor the applicable Owner has, during the period of such Owner’s ownership of the Property, received written notice that there exists any Hazardous Materials (hereafter defined) at the Property.
11.1.37 Since its formation, Envy Propco has been, and as of the Effective Date and the Closing Date is, a single purpose entity. Envy Seller has not owned any assets, conducted any business, or incurred any liabilities other than in connection with its ownership of the Envy Membership Interest. Envy Propco has not owned any assets, conducted any business, or incurred any liabilities other than in connection with the Envy Parcels.
11.2 Sellers’ Knowledge. When used in this Agreement, the terms “to such Seller’s knowledge” or “to such Seller’s actual knowledge” and similar phrases shall mean and be limited to the actual (and not imputed, implied or constructive) current knowledge, without inquiry or any duty of inquiry, of Bernard Hsiao. Notwithstanding anything to the contrary set forth in this Agreement, the foregoing individual shall have no personal liability or liability whatsoever with respect to any matters set forth in this Agreement or any of Sellers’ representations and/or warranties herein being or becoming untrue, inaccurate or incomplete.
11.3 Survival of Sellers’ and Owners’ Representations and Warranties; Other Terms. The representations and warranties of Sellers and Owners contained in Section 11.1, as updated by the Seller’s Bring-Down Certificate to be delivered to Purchaser at Closing in accordance with Section 5.2.6 hereof, shall survive the Closing for (a) three (3) years following the Closing Date, and no longer (except as expressly set forth in Section 11.9.3), with respect to the representations and warranties set forth in Section 7 and Section 11.1.1 through and including Section 11.1.22 (the “Fundamental Reps”), and (b) seven (7) months following the Closing Date, and no longer (except as expressly set forth in Section 11.9.3), for all representations and warranties of Sellers other than the Fundamental Reps (as applicable, the “Limitation Period”). Each such representation and warranty shall automatically be null and void and of no further force and effect following the expiration of the applicable Limitation Period unless, on or prior to the expiration of such Limitation Period, Purchaser or Issuer shall have provided Sellers with a written notice in accordance herewith alleging that Seller(s) is/are in breach of such representation or warranty, specifying in reasonable detail the nature of such breach and Purchaser’s or Issuer’s reasonable calculation of the aggregate actual damages subject to the provisions of Section 2.2.2(b) (the “Damages”) Purchaser or Issuer suffered by reason of such breach, and filed a Proceeding (as hereinafter defined) on or before the end of the Limitation Period. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, Sellers shall have no liability in connection with this Agreement by reason of any inaccuracy of a representation or warranty if, and to the extent that, such inaccuracy is known to Purchaser or Issuer (whether by disclosure of the Due Diligence Materials or otherwise) prior to the Closing Date and Purchaser
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elects, nevertheless, to consummate the transaction contemplated hereby. Notwithstanding anything to the contrary in Section 2.2.2(b), if a Claim for a breach of a Sellers’ representations and/or warranties is brought by Purchaser or Issuer during the Escrow Period in accordance with the terms of this Agreement, the Escrowed Shares shall remain in escrow with Shares Escrow Agent, and Sellers’ rights under Section 2.2.2(b) with respect to the Escrowed Shares shall be suspended, pending final resolution of such Claim pursuant to this Agreement. Notwithstanding any provision to the contrary herein, if the Damages for any breach of representation or warranty (i) do not exceed $75,000.00 (the “Threshold Amount”), Sellers shall have no obligation to cure such breach or otherwise be liable to Purchaser with respect thereto, and (ii) equal or exceed the Threshold Amount, Purchaser shall allow Sellers ten (10) business days after its written notice within which to cure such breach (“Cure Period”). If Sellers fail to cure such breach after written notice thereof within such Cure Period, Claims from the first dollar shall be actionable up to the Maximum Liability Amount (as hereinafter defined). If Purchaser or Issuer shall have timely commenced a Proceeding (as such term is defined in Section 11.9.3) in accordance with Section 11.9.3 and a court of competent jurisdiction, pursuant to a final, non-appealable order in connection with such Proceeding, determines that (A) Sellers were in breach of the applicable representation or warranty at the Closing, and (B) Purchaser or Issuer suffered Damages by reason of such breach, and (C) Purchaser and Issuer did not have actual knowledge of such breach on or prior to the Closing Date, then Purchaser or Issuer as applicable shall be entitled to receive an amount equal to the Damages up to but not exceeding one and one-half percent (1.5%) of the Purchase Price (the “Maximum Liability Amount”). Purchaser and Issuer each hereby irrevocably waives all rights to sue or recover from Sellers in connection with an alleged breach of this Section any amount greater than the Maximum Liability Amount. Notwithstanding the foregoing, neither the Threshold Amount nor the Maximum Liability Amount shall be applicable with respect to the brokerage indemnity under Section 7, the post-Closing obligations under Section 5.4, or the obligation regarding attorneys’ fees under Section 16.15.
11.4 Representations and Warranties by Purchaser. Purchaser makes the following representations and warranties to Sellers, which representations and warranties shall be true and correct as of the Effective Date and as of the Closing Date.
11.4.1 Purchaser is a limited liability company, validly existing and in good standing under the laws of the State of its formation and is, or will at the time of Closing be, qualified to do business in the State in which the Property is located. Purchaser possesses all requisite power and authority, and has taken all actions required by its organizational documents and applicable law, to execute and deliver this Agreement and will by Closing have taken all actions required by its organizational documents and applicable law, to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by Purchaser and Purchaser’s consummation of the transactions contemplated hereby (a) does not conflict with or contravene any provisions of Purchaser’s constitutive or organizational documents, (b) does not require any consents or approvals from any third party or any direct or indirect owner or member of Purchaser, other than consents or approvals that have been obtained or will be obtained at or before the Closing, and (c) is not prohibited by any statute, rule, regulation, judgment, order, writ, injunction, decree agreement or instrument to which Purchaser is a party or by which Purchaser is bound. The person(s) signing this Agreement on behalf of Purchaser is authorized to do so. This Agreement constitutes, and each document and instrument contemplated hereby to be executed and delivered by Purchaser, when executed and delivered, shall constitute the legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its respective terms (subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally).
11.4.2 Purchaser and, to Purchaser’s actual knowledge, each Person owning a ten percent (10%) or greater direct or indirect interest in Purchaser, is not, and will not become, a Person with
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whom United States Persons are restricted or prohibited from doing business under regulations of OFAC, including those named on the Lists or under any Orders and is currently and will at all times during the term of this Agreement remain in compliance therewith.
11.4.3 Purchaser is not (a) an employee benefit plan (as defined in Section 3(3) of ERISA), whether or not subject to Title I of ERISA, (b) a plan as defined in Section 4975(e)(1) of the Code, or (c) an entity the assets of which, under applicable law, are deemed to constitute the assets of a plan described in the foregoing clauses (a) or (b). Purchaser is not a “governmental plan” within the meaning of Section 3(32) of ERISA, and assets of Purchaser do not constitute plan assets of such plans and transactions by or with Purchaser are not in violation of state statutes applicable to Purchaser regulating investments of and fiduciary obligations with respect to governmental plans.
11.4.4 Purchaser is acquiring the Membership Interests solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof.
11.4.5 There are no Claims, actions, suits, investigations or other legal proceedings pending or, to Purchaser’s knowledge, threatened against or by Purchaser or any Affiliate of Purchaser that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
The representations and warranties of Purchaser contained in this Section 11.4 shall survive the Closing for a period of three (3) years following the Closing Date, and no longer (except as expressly set forth in Section 11.9.3).
11.5 Representations and Warranties by Issuer. Issuer hereby represents and warrants to Sellers, as a material inducement to Sellers to enter into this Agreement, that: (a) Issuer has the full right, power and authority to enter into this Agreement and to carry out its covenants and obligations hereunder; (b) Issuer has taken all actions required by its organizational documents and applicable law, to execute and deliver this Agreement and will by Closing have taken all actions required by its organizational documents and applicable law, to consummate the transactions contemplated by this Agreement; (c) none of the execution, delivery or performance of this Agreement by Issuer does or will, with or without the giving of notice, lapse of time or both (i) violate, conflict with or constitute a default under (A) the constitutive or organizational documents of Issuer or any material agreement, instrument or other document to which Issuer is a party or by which it is bound, or (B) any judgment, decree, order, statute, injunction, rule or regulation of a governmental unit applicable to Issuer, or (ii) require the approval or waiver of or filing with any Person, including, without limitation, any governmental unit, agency or instrumentality; (d) this Agreement constitutes and, when so executed and delivered, the other agreements and instruments delivered by Issuer under or in connection with this Agreement will constitute, the legal, valid and binding obligations of Issuer, enforceable against Issuer in accordance with their respective terms; (e) Issuer has and shall have, or has access to and shall have access to, sufficient financial resources and liquid funds (or the ability to obtain such resources or funds) to enable Purchaser to consummate the purchase of the Membership Interests and to perform the other transactions contemplated by this Agreement; (f) Issuer and, to Issuer’s actual knowledge, each Person owning a ten percent (10%) or greater direct or indirect interest in Issuer, is not, and will not become, a Person with whom United States Persons are restricted or prohibited from doing business under regulations of OFAC, including those named on the Lists or under any Orders and is currently and will at all times during the term of this Agreement remain in compliance therewith; and (g) there are no Claims, actions, suits, investigations or other legal proceedings pending or, to Issuer’s
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knowledge, threatened against or by Issuer or any Affiliate of Issuer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
The representations and warranties of Issuer contained in this Section 11.5 shall survive the Closing until (1) the date that is sixty (60) days after the applicable statute of limitations for any associated Claim expires; or, if sooner, (2) March 9, 2027 (i.e., the date that is one hundred eighty (180) days after Issuer becoming listed on the Nasdaq) (except as expressly set forth in Section 11.9.3).
11.6 Additional Representations by Purchaser and Issuer. Purchaser and Issuer hereby jointly and severally represent and warrant to Seller, as a material inducement to Seller to enter into this Agreement, as follows:
11.6.1 Reserved.
11.6.2 Upon issuance by Issuer at Closing, (a) the Rollover Shares shall be duly authorized, validly issued, fully paid, and non-assessable; and (b) Sellers shall receive good and valid title to the Rollover Shares, and the Shares Escrow Agent shall receive good and valid title to the Escrowed Shares, in each case free and clear of all Claims and Encumbrances other than Permitted Encumbrances. The certificates (or book-entry notations) representing the Rollover Shares and the Escrowed Shares may bear such legends as are required by applicable federal and state securities laws. “Encumbrance” means any Claim, charge, lien, security interest, deed of trust, pledge, contractual restriction (whether with respect to voting, transfer, receipt of distributions or proceeds, exercise of any other attribute of ownership, or otherwise), option, warrant, preemptive or participation right, right of first refusal, right of first offer, subscription right, equitable interest, hypothecation, community property or marital or partner property interest, and other adverse interest, in each case of any kind or nature whatsoever. “Permitted Encumbrance” means (i) applicable securities laws (including any legends required thereunder), (ii) those certain agreements identified on Exhibit L attached hereto, and (iii) with respect to the Escrowed Shares, the Escrow Agreement.
11.6.3 All shares of capital stock issued by Issuer, were duly authorized and validly issued and are fully paid and non-assessable, issued in compliance with applicable laws, and no such shares were issued in violation of any agreement, arrangement, or commitment to which Issuer, Purchaser or any of their respective Affiliates is a party or is subject to or in violation of any preemptive or other rights of any Person.
11.6.4 The Rollover Shares, and, as applicable, any Additional Shares, shall, as of the date of issuance, be issued by Issuer in compliance with applicable laws, and no Rollover Shares shall be issued in violation of any agreement, arrangement, or commitment to which Issuer, Purchaser or any of their respective Affiliates is a party or is subject to or in violation of any preemptive or other rights of any Person.
11.6.5 Myelin Propco has been duly formed in accordance with all applicable Law. Prior to the Closing, neither Purchaser nor Issuer, nor any Person acting on behalf of either of them, has: (a) taken, caused, or permitted any action with respect to the admission of any Person as a member of Myelin Propco; (b) other than the filing of Myelin Propco’s Certificate of Formation, entered into, approved, or authorized any agreement, commitment, arrangement, or understanding, whether written or oral, by or with respect to Myelin Propco, including with respect to the issuance by Myelin Propco of any debt securities or equity securities; or (c) incurred, or caused Myelin Propco to incur, any liabilities or obligations, whether accrued, absolute, contingent, or otherwise.
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The representations and warranties of Purchaser and Issuer contained in this Section 11.6 shall survive the Closing until (1) the date that is sixty (60) days after the applicable statute of limitations for any associated Claim expires; or, if sooner, (2) March 9, 2027 (i.e., the date that is one hundred eighty (180) days after Issuer becoming listed on the Nasdaq) (except as expressly set forth in Section 11.9.3).
11.7 Purchaser’s Knowledge.
11.7.1 When used in this Agreement, the terms “to Purchaser’s knowledge”, “to Purchaser’s actual knowledge” or “to Issuer’s knowledge” and similar phrases shall mean and be limited to the actual (and not imputed, implied or constructive) current knowledge, without inquiry or duty of inquiry, of Shaun Quin. Notwithstanding anything to the contrary set forth in this Agreement, the foregoing individual shall have no personal liability or liability whatsoever with respect to any matters set forth in this Agreement or any of Purchaser’s representations and/or warranties herein being or becoming untrue, inaccurate or incomplete.
11.7.2 Notwithstanding anything to the contrary set forth in this Agreement, Purchaser is prohibited from making any Claims against Sellers after the Closing with respect to any breaches of Sellers’ representations and warranties contained in this Agreement of which Purchaser has actual knowledge prior to Closing. Further, in the event the representation and warranty in Section 11.1.31 above (concerning condemnation) becomes untrue and Purchaser does not have the right to terminate this Agreement under Section 6 above, then Purchaser shall not have the right to terminate this Agreement under this Section 11.7 (however, Purchaser shall have the rights provided under Section 6 above). For purposes hereof, a representation or warranty shall not be deemed to have been breached if the representation or warranty is not true and correct in all material respects as of the Closing Date by reason of changed facts or circumstances which (i) pursuant to the terms of this Agreement are permitted to have occurred or which have been consented to by Purchaser; or (ii) do not have a materially adverse effect on the Property or the Membership Interests, as determined by Purchaser in its sole but reasonable discretion.
11.8 Limitation of Damages. The Parties agree that no Party shall be liable to any other Party for, and that Damages shall not include, lost revenue or profits, diminution in value, or consequential, indirect, incidental, special, exemplary, punitive, or enhanced damages of any kind arising from, relating to or in connection with any breach of this Agreement, regardless of (a) whether such damages were foreseeable, (b) whether or not Purchaser or Issuer was advised of the possibility of such damages, and (c) the legal or equitable theory (contract, tort, or otherwise) upon which the Claim is based.
11.9 Indemnification.
11.9.1 and the other provisions of this Agreement, including, without limitation, Section 12, from and after Closing:
(a) Each Seller separately (and not jointly and severally) shall indemnify Purchaser, Issuer, and their Affiliates against, and shall hold such indemnitees harmless from and against, any and all actual out-of-pocket losses, damages, liabilities, costs or expenses, including reasonable attorneys’ fees, incurred or sustained by, or imposed upon, such indemnitees based upon, arising out of, with respect to or by reason of (i) any inaccuracy in or breach of any of the representations or warranties of such Seller expressly set forth in this Agreement; or (ii) any breach or non-fulfillment of any
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covenant, agreement or obligation pursuant to this Agreement that by the terms hereof is to be performed by such Seller after the Closing; and
(b) Purchaser and Issuer jointly and severally shall indemnify Sellers and their Affiliates against, and shall hold such indemnitees harmless from and against, any and all actual out-of-pocket losses, damages, liabilities, costs or expenses, including reasonable attorneys’ fees, incurred or sustained by, or imposed upon, such indemnitees based upon, arising out of, with respect to or by reason of (i) any inaccuracy in or breach of any of the representations or warranties of Purchaser or Issuer expressly set forth in this Agreement; or (ii) any breach or non-fulfillment of any covenant, agreement or obligation pursuant to this Agreement that by the terms hereof is to be performed by Purchaser or Issuer after the Closing.
For purposes of this Agreement, each Party with an obligation of indemnification under this Section 11 is referred to herein as an “Indemnifying Party”, and each Party or other Person which is entitled to be indemnified pursuant to this Section 11 is referred to herein as an “Indemnitee”.
11.9.2 Indemnification Claims.
(a) The express indemnifications contained in this Section 11.9, and contained in Sections 5.6, 7, and 9.1.6 of this Agreement, shall be subject to the provisions of this Section 11.9. The Indemnitee shall notify the Indemnifying Party in writing of any Claim for indemnification asserted by the Indemnitee hereunder, specifying the factual basis of such Claim in reasonable detail, within twenty (20) days after the Indemnitee has actual knowledge of such Claim, but no later than the expiration of the applicable survival period. Where such asserted Claim is a Third Party Claim, the Indemnitee shall give such written notice to the Indemnifying Party within twenty (20) days after the Indemnitee has written notice or other actual knowledge of such Third Party Claim, but no later than the expiration of the applicable survival period. Any failure to give such notice shall in no case prejudice the rights of the Indemnitee under this Agreement unless the Indemnifying Party shall be prejudiced by such failure and then only to the extent of such prejudice. For purposes of this Agreement, a “Third Party Claim” means any Claim made or brought by any Person who is not a Party to this Agreement, an Affiliate of a Party to this Agreement, or Representative of any of the foregoing.
(b) To the extent permitted by applicable law, the Indemnifying Party shall have the right to appear, defend, settle and/or compromise any Third Party Claims at its cost (including by selecting counsel to represent it with respect to such Obligations) for which it may have an indemnification obligation under this Agreement, and/or otherwise to direct the Indemnitee with respect to appearances, defense, settlement and/or compromise of such Third Party Claims (and the selection of counsel with respect therewith) by making all decisions and determinations with respect thereto (and the Indemnitee shall follow such decisions and determinations); provided that (i) the Indemnifying Party shall consult regularly with the Indemnitee regarding communications with the claiming third party and other matters relating to the Third Party Claim; (ii) the settlement or compromise shall not include any non-cash payments to the claimant or its Affiliates; (iii) any such settlement or compromise shall include a full and unconditional release by the claimant and its Affiliates of the Indemnitee and the Indemnitee’s Affiliates with respect to the events giving rise to the Third Party Claim; and (iv) the Indemnifying Party shall not enter into any settlement or compromise agreement with respect to any such Third Party Claim without the
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prior written consent of the Indemnitee, such consent not to be unreasonably withheld, conditioned, or delayed.
(c) Should the Indemnifying Party fail to discharge or undertake to defend the Indemnitee against any such Third Party Claim within fifteen (15) business days after the indemnitee gives the indemnitor written notice of the same in accordance herewith, then the Indemnitee may undertake the defense of such Third Party Claim, and the cost of such defense shall be included in any indemnified amount. The Indemnitee shall not enter into any settlement or compromise agreement with respect to any such Third Party Claim without the prior written consent of the Indemnifying Party, such consent not to be unreasonably withheld, conditioned, or delayed.
(d) Sellers, Purchaser, and Issuer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 16.19) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending Party, management employees of the non-defending Party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.
11.9.3 Timeliness of Claims. Notwithstanding anything to the contrary set forth in this Agreement, if any written notice of Claim (including, without limitation, Third Party Claims) for indemnification is given in writing in accordance with this Agreement within the applicable survival period provided herein, then the indemnification Claims (including, without limitation, Third Party Claims) expressly set forth in such written notice will survive until such time as such Claims are finally resolved.
11.9.4 Exclusive Remedies. Except as expressly set forth in this Agreement (including, without limitation, the last two sentences of this Section 11.9.4), (a) an Indemnitee’s sole remedy with respect to any indemnification Claims (including, without limitation, Third Party Claims) shall be to commence an action at law for actual damages against the applicable Indemnifying Party alleging that that such Indemnifying Party has breached such representation, warranty covenant or obligation hereunder and that Indemnitee has suffered actual damages as a result thereof (a “Proceeding”), which Proceeding must be commenced, if at all, before the expiration of the applicable survival period; (b) the Parties acknowledge and agree that from and after Closing their sole and exclusive remedy with respect to any and all Claims for any breach of any representation, warranty, covenant, agreement or obligation set forth in this Agreement or otherwise relating to the subject matter of this Agreement shall be pursuant to the provisions set forth in this Section 11.9; and, in furtherance of the foregoing, (c) each Party hereby irrevocably waives, from and after Closing, to the fullest extent permitted under law, any and all rights and Claims for any breach of any representation, warranty, covenant, agreement or obligation set forth in this Agreement or otherwise relating to the subject matter of this Agreement it may have against any other Party and its Affiliates arising under or based upon any law, except pursuant to the provisions set forth in this Section 11.9. Notwithstanding the foregoing, this Section 11.9 shall not limit, and each Party shall have, the right (i) to enforce any and all rights to indemnification expressly provided to such Party under Sections 5.6, 7, and 9.1.6 of this Agreement; (ii) to seek the specific performance of or other equitable relief with respect to the covenants and obligations set forth in this Agreement; (iii) to pursue a Claim for intentional misrepresentation or intentional fraud (“Fraud”) against a Party committing Fraud, in the case of each of the foregoing, outside of the provisions set forth in this Section 11.9; and (iv) to recover attorneys’ fees and expenses in accordance with 16.15. Additionally, notwithstanding the foregoing, this Section 11.9 shall not limit, and Sellers shall have, the right to enforce their rights, entitlements and remedies pursuant to and in accordance with Section 5.9.
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11.9.5 Survival. The obligations set forth in this Section 11.9 shall survive the
Closing.
12. AS-IS.
12.1 AS-IS CONDITION. SUBJECT TO SELLERS’ AND OWNERS’ REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT OR EXPRESSLY SET FORTH IN ANY DOCUMENTS DELIVERED PURSUANT TO THE TERMS HEREOF BY SELLERS OR OWNERS TO PURCHASER AT CLOSING, AND ACKNOWLEDGING PURCHASER’S AND ISSUER’S OPPORTUNITY TO INSPECT THE PROPERTY, PURCHASER AGREES TO PURCHASE THE MEMBERSHIP INTERESTS (AND INDIRECTLY, THE PROPERTY) “AS IS”, “WHERE IS”, WITH ALL FAULTS AND CONDITIONS THEREON. ANY WRITTEN INFORMATION, REPORTS, STATEMENTS, DOCUMENTS OR RECORDS CONCERNING THE MEMBERSHIP INTERESTS OR THE PROPERTY (“DISCLOSURES”) PROVIDED OR MADE AVAILABLE TO PURCHASER OR ISSUER, THEIR RESPECTIVE AGENTS OR CONSTITUENTS BY SELLERS, SELLERS’ AGENTS, EMPLOYEES OR THIRD PARTIES REPRESENTING OR PURPORTING TO REPRESENT SELLERS OR OWNERS, SHALL NOT BE REPRESENTATIONS OR WARRANTIES, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT. IN PURCHASING THE MEMBERSHIP INTERESTS (AND INDIRECTLY, THE PROPERTY), PURCHASER AND ISSUER HAVE NOT AND SHALL NOT RELY ON ANY SUCH DISCLOSURES, BUT RATHER, PURCHASER AND ISSUER SHALL RELY ONLY ON SELLERS’ AND OWNERS’ REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT OR EXPRESSLY SET FORTH IN ANY DOCUMENTS DELIVERED PURSUANT TO THE TERMS HEREOF BY SELLERS TO PURCHASER AT CLOSING, AND PURCHASER’S AND ISSUER’S OWN INVESTIGATION OF THE MEMBERSHIP INTERESTS AND THE PROPERTY. PURCHASER AND ISSUER EACH ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE MEMBERSHIP INTERESTS (AND INDIRECTLY, THE PROPERTY) ARE BEING SOLD “AS IS”.
12.2 NO ADDITIONAL REPRESENTATIONS. PURCHASER AND ISSUER EACH ACKNOWLEDGES AND AGREES THAT EXCEPT FOR SELLERS’ AND OWNERS’ REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT OR EXPRESSLY SET FORTH IN ANY DOCUMENTS DELIVERED PURSUANT TO THE TERMS HEREOF BY SELLERS OR OWNERS TO PURCHASER AT CLOSING, SELLERS AND OWNERS (AND PERSONS ACTING ON BEHALF OF SELLERS OR OWNERS) HAVE NOT MADE, DO NOT MAKE AND SPECIFICALLY DISCLAIM ANY REPRESENTATIONS AND WARRANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO THE MEMBERSHIP INTERESTS, THE PROPERTY, OR THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, (A) THE NATURE, QUALITY OR PHYSICAL CONDITION OF THE PROPERTY, (B) THE CONSTRUCTION OF THE IMPROVEMENTS AND WHETHER THERE EXISTS ANY CONSTRUCTION DEFECTS THEREIN,
(C) THE WATER, SOIL AND GEOLOGY OF THE PROPERTY, (D) THE INCOME TO BE DERIVED FROM THE PROPERTY, (E) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THEREON, (F) THE COMPLIANCE OF OR BY THE PROPERTY OR THE OPERATION THEREOF WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY GOVERNMENTAL AUTHORITY OR BODY HAVING JURISDICTION THEREOVER, (G) THE HABITABILITY OR FITNESS OF THE PROPERTY FOR A PARTICULAR PURPOSE, (H) THE MARKETABILITY OF THE PROPERTY OR
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THE ABILITY TO LEASE OR SELL UNITS THEREIN, (I) THE STATUS OR CONDITION OF ENTITLEMENTS PERTAINING TO THE PROPERTY, AND (J) ANY MATTER REGARDING TERMITES OR WASTES, AS DEFINED BY THE U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R., OR ANY HAZARDOUS MATERIALS, AS HEREINAFTER DEFINED.
12.3 RELEASE. PURCHASER AND ISSUER EACH REPRESENTS TO SELLERS THAT PURCHASER AND ISSUER EACH HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY AND MEMBERSHIP INTERESTS AS PURCHASER AND ISSUER DEEM NECESSARY OR DESIRABLE TO SATISFY THEMSELVES AS TO ANY MATTER RELATING TO THE PROPERTY, THE MEMBERSHIP INTERESTS, AND THE SUBJECT MATTER OF THIS AGREEMENT. PURCHASER AND ISSUER ARE RELYING AND WILL RELY SOLELY UPON SELLERS’ AND OWNERS’ REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT OR EXPRESSLY SET FORTH IN ANY DOCUMENTS DELIVERED PURSUANT TO THE TERMS HEREOF BY SELLERS OR OWNERS TO PURCHASER AT CLOSING, AND PURCHASER AND ISSUER ARE NOT RELYING AND WILL NOT RELY UPON ANY INFORMATION PROVIDED, OR ANY REPRESENTATIONS MADE OR ALLEDGED TO HAVE BEEN MADE, BY OR ON BEHALF OF SELLERS, OWNERS, OR SELLERS’ OR OWNERS’ AGENTS, EMPLOYEES OR THIRD PARTIES REPRESENTING OR PURPORTING TO REPRESENT SELLERS OR OWNERS WITH RESPECT THERETO. UPON CLOSING, EXCEPT FOR “EXCLUDED CLAIMS” (HEREAFTER DEFINED), (A) PURCHASER AND ISSUER SHALL ASSUME THE RISK THAT ADVERSE MATTERS REGARDING THE PROPERTY OR MEMBERSHIP INTERESTS MAY NOT HAVE BEEN REVEALED BY PURCHASER’S AND ISSUER’S INVESTIGATIONS, AND (B) PURCHASER AND ISSUER, EACH FOR ITSELF AND ON BEHALF OF ITS TRANSFEREES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, SHALL IRREVOCABLY WAIVE, RELINQUISH, RELEASE AND FOREVER DISCHARGE SELLERS AND OWNERS (AS CONSTITUTED PRIOR TO CLOSING) FROM AND AGAINST ANY AND ALL “CLAIMS” (AS DEFINED HEREIN) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, BY REASON OF OR ARISING OUT OF THE PROPERTY, THE MEMBERSHIP INTERESTS, OR THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECT OR OTHER PHYSICAL CONDITION (INCLUDING, WITHOUT LIMITATION, FUNGI, MOLD OR MILDEW) WHETHER PURSUANT TO STATUTES IN EFFECT IN THE STATE OF FLORIDA OR ANY OTHER FEDERAL, STATE, OR LOCAL ENVIRONMENTAL OR HEALTH AND SAFETY LAW OR REGULATION, THE EXISTENCE OF ANY HAZARDOUS MATERIALS WHATSOEVER, ON, AT, TO, IN, ABOVE, ABOUT, UNDER, FROM OR IN THE VICINITY OF THE PROPERTY AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS WHATSOEVER REGARDING THE PROPERTY. THIS RELEASE INCLUDES WITHOUT LIMITATION CLAIMS OF WHICH PURCHASER AND ISSUER ARE PRESENTLY UNAWARE AND OF WHICH PURCHASER AND ISSUER DO NOT PRESENTLY SUSPECT TO EXIST WHICH, IF KNOWN BY PURCHASER OR ISSUER, WOULD MATERIALLY AFFECT PURCHASER’S AND ISSUER’S RELEASE OF SELLERS.
PURCHASER AND ISSUER EACH UNDERSTANDS AND ACKNOWLEDGES THAT GIVEN THE CLIMATE AND HUMID CONDITIONS IN THE STATE OF FLORIDA, FUNGI, MOLD AND MILDEW MAY EXIST OR DEVELOP WITHIN THE PROPERTY. PURCHASER AND ISSUER EACH HEREBY AGREES THAT, EXCEPT FOR EXCLUDED CLAIMS, UPON CLOSING PURCHASER, ISSUER AND OWNERS (AS CONSTITUTED UPON CONSUMMATION OF THE CLOSING) SHALL ASSUME AND RETAIN ALL RISK, KNOWN AND UNKNOWN, ASSOCIATED
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WITH THE EXISTENCE OF FUNGI, MOLD OR MILDEW ON, AT, IN, ABOUT OR THROUGHOUT THE PROPERTY.
IN THIS REGARD AND TO THE EXTENT PERMITTED BY LAW, PURCHASER AND ISSUER EACH HEREBY AGREES, REPRESENTS AND WARRANTS THAT PURCHASER AND ISSUER EACH REALIZES AND ACKNOWLEDGES THAT FACTUAL MATTERS NOW UNKNOWN TO PURCHASER AND/OR ISSUER MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO CLAIMS WHICH ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED, AND PURCHASER AND ISSUER EACH FURTHER AGREES, REPRESENTS AND WARRANTS THAT THE WAIVERS AND RELEASES CONTAINED HEREIN HAVE BEEN NEGOTIATED AND AGREED UPON BY PURCHASER AND ISSUER IN LIGHT OF THAT REALIZATION AND THAT PURCHASER AND ISSUER EACH NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT SELLERS FROM ANY SUCH UNKNOWN CLAIMS, EXCEPT FOR EXCLUDED CLAIMS.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, PURCHASER’S AND ISSUER’S RELEASE OF SELLERS AS SET FORTH IN THIS SECTION 12.3 SHALL NOT PERTAIN TO ANY CLAIM BY PURCHASER OR ISSUER AGAINST SELLERS (A) FOR BREACH BY SUCH SELLERS OF SELLERS’ AND OWNERS’ REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT OR EXPRESSLY SET FORTH IN ANY DOCUMENTS DELIVERED PURSUANT TO THE TERMS HEREOF BY SELLERS OR OWNERS TO PURCHASER AT CLOSING, (B) IN TORT FOR FRAUD (AS DEFINED HEREIN) BY SELLERS UNDER THIS AGREEMENT, AND (C) SELLERS’ INDEMNITIES EXPRESSLY SET FORTH HEREIN OR IN ANY DOCUMENT DELIVERED IN CONNECTION HEREWITH (THE “EXCLUDED CLAIMS”).
“Hazardous Materials” - shall mean (i) hazardous wastes, hazardous materials, hazardous substances, hazardous constituents, toxic substances or related materials, whether solids, liquids or gases, including, but not limited to, substances defined as “hazardous wastes,” “hazardous materials,” “hazardous substances,” “toxic substances,” “pollutants,” “contaminants,” “radioactive materials”, “toxic pollutants”, or other similar designations in, or otherwise subject to regulation under, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), 42 U.S.C. § 9601 et seq.; the Toxic Substance Control Act (“TSCA”), 15 U.S.C. § 2601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §5101 et seq.; the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. §6901, et seq.; the Clean Water Act (“CWA”), 33 U.S.C. § 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; the Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq.; and in any permits, licenses, approvals, plans, rules, regulations or ordinances adopted, or other criteria and guidelines promulgated pursuant to the preceding laws or other similar federal, state or local laws, regulations, rules or ordinance now or hereafter in effect relating to environmental matters; and (ii) any other substances, constituents or wastes subject to any applicable federal, state or local law, regulation or ordinance, including any environmental law, now or hereafter in effect, including but not limited to (A) petroleum, (B) refined petroleum products, (C) waste oil, (D) waste aviation or motor vehicle fuel and their byproducts, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon, (H) Polychlorinated Biphenyls (PCB’s), (I) ureaformaldehyde, (J) volatile organic compounds (VOC), (K) total petroleum hydrocarbons (TPH), (L) benzine derivative (BTEX), and (M) petroleum byproducts.
13. FLORIDA PROVISIONS.
13.1 Radon Gas Disclosure. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed
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to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit. To Sellers’ knowledge, there are no levels of radon found on the Property that exceed such federal and/or state guidelines.
13.2 Energy Efficiency Rating Disclosure. In accordance with §553.996, Florida Statutes, Sellers hereby notify Purchaser of Purchaser’s option to obtain an energy-efficiency rating on the buildings on the Property. Sellers make no representations or warranties as to any such energy-efficiency rating. Such information shall not constitute a basis for any Claims against Sellers with respect to the disclosures required under the Florida Building Energy-Efficiency Rating Act, nor shall Sellers be liable or responsible to Purchaser for its reliance on any energy-efficiency rating obtained by Purchaser on its behalf.
13.3 Florida Intangible Tax Savings. Purchaser and Sellers acknowledge that it is currently possible to limit the amount of documentary stamps and intangible taxes payable with respect to Purchaser’s financing by assignment, assumption, and amendment/restatement of the Owners’ existing note(s) and mortgage(s) on the Property. To the extent the Property is encumbered by existing indebtedness, Sellers will reasonably cooperate and will cause the Owners to cooperate, at no additional cost to Sellers, with Purchaser’s efforts, if any (as determined by Purchaser, in its sole discretion), to structure its acquisition financing as an assignment, assumption, and amendment/restatement of the Owners’ existing financing, and will use commercially reasonable efforts (at no expense to Sellers) to cause the Owners’ existing lender(s) to cooperate with such request. Purchaser shall be solely responsible for any costs or fees charged by the Owners’ existing lender, including additional reasonable attorneys’ fees of the Owners’ lender or of Sellers or the Owners, if any, associated with structuring Purchaser’s loan transaction in the manner described in this Section 13.3. The structuring of Purchaser’s acquisition financing as an assignment, assumption, and amendment/restatement of the Owners’ existing financing shall not be a condition to Purchaser’s obligation to close the transactions contemplated by this Agreement on the Closing Date, nor a default on the part of Sellers.
13.4 Florida Section 692.204 Affidavit. As a condition precedent to Closing and pursuant to Section 692.204, Florida Statutes, Purchaser shall provide an affidavit (the “Florida Section 692.204 Affidavit”) signed under penalty of perjury attesting that the Purchaser is not (i) the People’s Republic of China, the Chinese Communist Party, or any official or member of the People’s Republic of China or the Chinese Communist Party, (ii) any other political party or member of a political party or a subdivision of a political party in the People’s Republic of China, (iii) a partnership, an association, a corporation, an organization, or any other combination of persons organized under the laws of or having its principal place of business in the People’s Republic of China, or a subsidiary of such entity, (iv) any person who is domiciled in the People’s Republic of China and who is not a citizen or lawful permanent resident of the United States, or (v) any person, entity, or collection of persons or entities described in (i) through (iv) above having a controlling interest in a partnership, association, corporation, organization, trust, or any other legal entity or subsidiary formed for the purpose of owning real property in Florida, and is in compliance with the requirements of Section 692.204, Florida Statutes.
13.5 Survival. The provisions of this Section 13 shall survive Closing.
14. OPERATION OF THE PROPERTY.
14.1 By Sellers. From the Effective Date until the earlier of (a) the termination of this Agreement, and (b) Closing, Sellers shall cause the Owners:
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14.1.1 To continue to market the Property to prospective tenants and otherwise operate, manage, maintain and repair the Property in the ordinary course as it has prior to the Effective Date; provided, however, Owners shall have no obligation to make any capital improvements to the Property.
14.1.2 To maintain in full force and effect existing insurance coverages or replacement insurance with coverage that is not less favorable.
14.1.3 To deliver possession of the Property to Purchaser on the Closing Date and shall use commercially reasonable efforts to place all units which are vacated on or before ten (10) business days prior to Closing in rent-ready condition. Purchaser and Sellers shall (a conduct a joint walk-through of vacant units during the ten (10) business day period immediately prior to Closing in order to identify any units that have been vacant for five (5) or more business days prior to Closing that are not in rent-ready condition and (b) prepare a final list of any such units at least five (5) business days prior to Closing. To the extent that any such units exist, Purchaser shall receive a credit against the Purchase Price at Closing in an amount equal to $750 for each such unit as Purchaser’s sole and exclusive remedy. As used herein, “rent-ready condition” shall mean ready for occupancy in accordance with Sellers’ normal business practices and procedures as of the Effective Date.
14.1.4 Not to enter into any new leases, licenses or other occupancy agreements without the consent of Purchaser except that Seller may enter into new residential leases without the consent of Purchaser for apartment units which are now vacant or which may become vacant and may renew any of the Leases and Slip Leases which expire prior to the Closing Date, provided that (a) such new leases, licenses or other occupancy agreements are pursuant to written lease agreements substantially on the printed forms heretofore utilized by Owners, copies of which have been delivered by Sellers to Purchaser, (b) such new leases, licenses or other occupancy agreements or renewals of existing Leases and Slip Leases (collectively, “New Leases”) are for terms not less than six (6) months and not exceeding one (1) year, (c) the rentals under such New Leases are at rates not less than the rental rate for comparable rental units or premises, as applicable, now being charged under existing Leases and Slip Leases, and (d) such New Leases do not contain any provision for free rent or any discount which will have the effect of reducing rent over the term of the New Lease. Any New Lease permitted to be made pursuant to the preceding sentence shall be deemed included in the Leases or Slip Leases, as applicable.
14.1.5 To terminate any of the Leases or Slip Leases prior to Closing by reason of expiration of its term, any default thereunder, or a failure of a proposed tenant for a Lease or Slip Lease to follow through with the execution thereof as of the Closing.
14.1.6 To use commercially reasonable efforts to enforce the rights and remedies of the landlord under any Lease or Slip Lease, by summary proceedings or otherwise (including, without limitation, the right to remove any tenant), and to apply all or any portion of any deposits then held by Owners toward any loss or damage incurred by Owners by reason of any defaults by tenants.
14.1.7 Not to (a) enter into any new Contracts which are not terminable without premium or penalty upon thirty (30) days’ prior written notice, (b) amend or modify the Contracts in any manner, unless such Contract as amended may be terminated without premium or penalty upon thirty (30) days’ prior written notice, or (c) terminate any Contract except in the event of a default by a service provider or in the ordinary course of business or if the terminated Contract is replaced with a new Contract that is terminable without premium or penalty upon thirty (30) days’ prior written notice, or (d) knowingly fail to timely perform its material obligations under the Contracts, in each case, without Purchaser’s written
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consent (except in the case of an emergency that Sellers determine, in their sole but reasonable discretion, poses an immediate threat to human safety or of property destruction), which consent shall not be unreasonably withheld, conditioned or delayed.
14.1.8 Not to commence any new proceeding or proceedings for the reduction of the assessed valuation of the Property or any portion thereof (each, a “Tax Appeal”) that would affect the assessed value of the Property for the year in which the Closing occurs or years thereafter, or withdraw, compromise and/or settle the same or cause the same to be brought on for trial, or take, conduct, withdraw and/or settle appeals for such years without the prior written consent of Purchaser, such consent not to be unreasonably withheld. Sellers shall have the right to control any Tax Appeal for any year prior to Closing which is pending as of the Effective Date. Any refunds or credits due for any year or years prior to the tax year in which the Closing occurs shall remain the sole property of Sellers. Any tax savings or refund for the tax year in which the Closing occurs shall be prorated between Sellers and Purchaser after deduction of reasonable attorneys’ fees and disbursements incurred by Sellers in obtaining such tax savings or refund. The provisions of this Section 14.1.8 shall survive the Closing.
14.1.9 Except as expressly permitted in this Agreement, not to encumber, sell or transfer the Property or any interest therein or alter or amend the zoning classification of the Property without Purchaser’s prior written consent, which consent may be granted or withheld in Purchaser’s sole discretion,.
14.1.10 To comply with all material terms and conditions of the CC&Rs and the Marina Permits and shall not, without Purchaser’s prior written consent, which consent may be granted or withheld in Purchaser’s sole discretion, amend or modify the CC&Rs (except as may be required to comply with the Settlement (as hereinafter defined)) and/or the Marina Permits in any material respect, or terminate the CC&Rs, or terminate the Marina Permits or allow the Marina Permits to lapse if such termination or lapse of the Marina Permits would have a material adverse effect on the Marina Operations.
14.2 Whenever in Section 14.1 Sellers are required to obtain Purchaser’s consent with respect to any proposed action or transaction, Purchaser shall, within five (5) business days after receipt of Sellers’ request therefor, notify Sellers of its approval or disapproval of same and, if Purchaser fails to notify Sellers in writing of its disapproval within said five (5) business day period, Purchaser shall be deemed to have approved same.
14.3 By Purchaser. No later than ninety (90) days following Closing, Purchaser, at its sole cost and expense, shall remove the name “Invesca” from all signs and marketing materials, brochures, advertising and other printed or internet-based materials (including from any social media sites over which Purchaser has any control) with respect to the Property. The provisions of this Section 14.3 will survive Closing.
15. OWNER’S 2025 FINANCIAL STATEMENTS. The Parties acknowledge that Sellers have engaged Turner, Stone & Company, LLP (“CPA”), as an independent certified public accounting firm, to prepare audited statements of revenues and expenses of Owner for calendar year 2025 in accordance with SEC Rule 3-14 (“2025 Audited Financials”). CPA has advised that it will take approximately, but no less than fourteen (14) days following the Effective Date, to deliver the 2025 Audited Financials. In connection therewith, Sellers agree to promptly provide all financial information required for the CPA to prepare the 2025 Audited Financials, and Sellers shall use commercially reasonable and diligent efforts to cause CPA to deliver the 2025 Audited Financials to Issuer as soon as reasonably practical. The Parties further acknowledge that delivery of such audited statements is required in connection with Purchaser’s
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and Issuer’s compliance with applicable SEC and Nasdaq requirements. Sellers’ obligation under this Section shall survive the Closing.
16. MISCELLANEOUS.
16.1 Certain Definitions. For purposes of this Agreement:
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Claim” means any and all claims, assertions, demands, charges, disputes, complaints, actions, causes of action, suits, litigation, proceedings, investigations, commitments, liabilities, obligations, covenants, losses, damages, settlement payments, judgments, awards, fines, penalties, and costs and expenses of any kind (including without limitation reasonable attorneys’ and other professional fees and expenses, and all court costs through all appeals).
“Representative” means, with respect to any Person, any and all managers, directors, officers, employees, consultants, advisors, counsel, accountants, and other agents of such Person.
16.2 Entire Agreement. All understandings and agreements heretofore had between Sellers and Purchaser with respect to the Membership Interests and/or the Property are merged in this Agreement.
16.3 Assignment. No Party shall have the right to assign or delegate its rights or obligations under this Agreement without the prior written consent of each other Party, which consent may be granted or withheld in the sole and absolute discretion of each such other Party. Notwithstanding the foregoing, Sellers hereby consent to Purchaser’s assignment at or prior to Closing of its interest in this Agreement (or any portion thereof) to one (1) or more wholly-owned subsidiaries of Purchaser without further evidence of such subsidiaries’ financial capability to consummate Closing hereunder, provided that such subsidiaries shall assume, in writing (by execution of an assignment and assumption agreement reasonably satisfactory to Sellers), all of Purchaser’s obligations under this Agreement.
16.4 No Modification. This Agreement shall not be modified or amended except in a written document signed by each Party.
16.5 Time of the Essence. Time is of the essence of this Agreement.
16.6 Governing Law. This Agreement shall be governed and interpreted in accordance with the laws of the State of Florida, without regard to principles thereof relating to conflicts of laws.
16.7 Notices. All notices, requests, demands or other communications required or permitted under this Agreement shall be in writing and shall be deemed to be given when (a) personally delivered with signed delivery receipt obtained, (b) received, when sent by prepaid reputable courier (for example, FedEx, UPS or DHL) by overnight delivery service in each case addressed as follows (or as a Party may otherwise direct in writing after the Effective Date), or (c) transmitted, if sent by e-mail PDF
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transmission (without the sender having received any automated delivery failure notification), in each case to the following addresses
If to Sellers c/o Invesca
or Owners: 3210 Hunter Rd Weston, FL 33331 Attn: Bernard Hsiao
Email: xxxxx@invesca.com
With a copy to: Nelson Mullins Riley & Scarborough LLP
1905 NW Corporate Boulevard, Suite 310 Boca Raton, FL 33431
Attn: Gary Itskovich
Email:xxxxxxxxxx@nelsonmullins.com
If to Purchaser c/o STEWARDS, INC.
or Issuer: 4300 N University Drive Lauderhill, FL 33351 Attention: Shaun Quin
Email: xxxxxxx@favocapital.com
With a copy to: Cozen O’Connor
1650 Market Street, Suite 2800
Philadelphia, PA 19103 Attn: Howard Grossman
Email: xxxxxxx@cozen.com
Title Company/ Nelson Mullins Riley & Scarborough LLP Escrow Agent: 1905 NW Corporate Boulevard, Suite 310
Boca Raton, FL 33431 Attn: Gary Itskovich
Email: xxxxxxx@nelsonmullins.com
The Parties may change their respective addresses for receiving notices, requests, demands or other communication by notice sent in accordance with the terms of this Section 16.7.
16.8 Waiver of Trial by Jury. IN ANY LAWSUIT OR OTHER PROCEEDING INITIATED UNDER OR WITH RESPECT TO THIS AGREEMENT, PURCHASER AND SELLERS EACH WAIVE ANY RIGHT EITHER MAY HAVE TO TRIAL BY JURY.
16.9 Confidentiality. The Parties hereby covenant and agree not to disclose to any third party the terms of this Agreement (including, without limitation, the Purchase Price) and the content of any and all information in respect of the Parties, the Membership Interests and the Property (collectively, the “Confidential Information”) obtained by Purchaser or Sellers in connection with the transactions described in this Agreement without the express written consent of the other applicable Parties; provided, however, that each Party may disclose the Confidential Information (a) to its Affiliates, members, partners, employees, advisors, consultants, attorneys, accountants, partners and potential partners, investors and potential investors, and lenders or potential lenders (the “Transaction Parties”) without the prior written consent of the other applicable Parties, so long as any such Transaction Parties are advised by the disclosing
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Party of the requirements hereunder and required by such Party to keep all such information confidential in accordance with the terms hereof, (b) if disclosure is required by law or by regulatory or judicial process or pursuant to any regulations promulgated by any nationally recognized stock exchange or other public exchange for the sale and purchase of securities, provided that in such event, each Party agrees to notify the other Parties in writing of such required disclosure, shall exercise all commercially reasonable efforts to preserve the confidentiality of the Confidential Information, including, without limitation, reasonably cooperating with the other Parties to obtain an appropriate order or other reliable assurance that confidential treatment will be accorded such Confidential Information by such tribunal and shall disclose only that portion of the Confidential Information which it is legally required to disclose, (c) in connection with any litigation that may arise between or among the Parties in connection with the transactions contemplated by this Agreement, (d) known to such Party or any of the Transaction Parties (other than as a result of the breach of any applicable confidentiality restrictions) prior to obtaining same from the other Parties, (e) lawfully obtained by such Party or the other Transaction Parties from a third party who did not receive same, directly or indirectly, from the other Parties, or (f) that is or was independently developed by Persons who had no access to the Confidential Information. Further, Purchaser and Sellers agree not to issue any press release or other media publicity of any kind with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Parties, which consent shall not be unreasonably withheld, conditioned or delayed. In the event that the Closing does not occur in accordance with the terms of this Agreement, each of Sellers and Purchaser shall, upon the other Parties’ request, promptly destroy or return to the other Party all of the documents, materials and information regarding the Purchaser, Sellers, the Membership Interests and the Property, as applicable, and all copies thereof, obtained by such Party in connection with this Agreement that are subject to such confidence, with any such destruction confirmed by such Party and/or its Transaction Parties in writing supplied to the other Party upon request. The provisions of this Section 16.9 shall survive the Closing or the earlier termination of this Agreement. This Section 16.9 supersedes any prior confidentiality agreement entered into by and between some or all of the Parties hereto.
16.10 Exclusivity. Sellers shall not, and shall not cause Owners to, directly or indirectly through any officer, director, employee, stockholder, agent, partner, member, manager, Affiliate, or otherwise (a) enter into any written agreement, agreement in principle or other commitment (whether or not legally binding) relating to the purchase of the Membership Interests or the Property or any portion thereof, a change in control of the Owners or any of the other direct or indirect owners of the Property to any persons or entities that are not Affiliates of Sellers or the existing direct or indirect members of Sellers, or the financing or refinancing of the Property or any portion thereof (a “Competing Transaction”), or (b) solicit or initiate the submission of any proposal or offer from any person or entity (including any of its officers, directors, partners, members, managers, employees, or agents) relating to any Competing Transaction. Notwithstanding the foregoing, the pursuit, negotiation, but not the final documentation, of the LoanCore Loan shall not be deemed a Competing Transaction and may be pursued from and after the Effective Date.
16.11 No Memorandum of Agreement. This Agreement or any notice or memorandum hereof shall not be recorded in any public record except as may be required by applicable law as a condition precedent to Purchaser filing an action at law or in equity against Sellers. A violation of this prohibition shall constitute a material breach by Purchaser, entitling Sellers to terminate this Agreement.
16.12 Weekends and Legal Holidays. Whenever the time for performance of a covenant or condition required to be performed pursuant to the terms of this Agreement falls upon a Saturday, Sunday or Federal or State of Florida official holiday, such time for performance shall be extended to the next
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business day. When used herein, the Term “business day” shall mean any day other than a Saturday, Sunday
or Federal or State of Florida holiday. Otherwise all references herein to “days” shall mean calendar days.
16.13 Counterparts; Electronic Signatures. This Agreement may be signed in any number of counterparts each of which shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement electronically by DocuSign, AdobeSign, PDF or similar technology, shall be effective as delivery of an original executed counterpart of this Agreement. Notwithstanding the foregoing, each Party agrees to promptly deliver to the other Parties an executed original of this Agreement with its actual signature, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each Party to this Agreement shall be bound by its electronic signature and shall accept the electronically transmitted signature of the other Parties to this Agreement.
16.14 Legal Representation. Each Party hereto has been represented by legal counsel in connection with the negotiation of the transactions herein contemplated and the drafting and negotiation of this Agreement. Each Party hereto and its counsel has had an opportunity to review and suggest revisions to the language of this Agreement. Accordingly, no provision of this Agreement shall be construed for or against or interpreted to the benefit or disadvantage of any Party by reason of any Party having or being deemed to have structured or drafted such provision.
16.15 Attorneys’ Fees. If any action is brought by any Party against one or more of the other Parties in connection with or arising out of this Agreement or any of the documents and instruments delivered in connection herewith or in connection with the transactions contemplated hereby, the substantially prevailing Party shall be entitled to recover from such other Parties reasonable attorneys’ fees and expenses incurred in connection with the prosecution or defense of such action.
16.16 Tax Matters. (a) The Parties acknowledge and agree that, for federal and all applicable state income tax purposes, Purchaser’s purchase of the Envy Membership Interest and the Myelin Membership Interest are intended to be treated as the direct sale and purchase of the Parcels and associated assets as provided herein. The Parties and their respective Affiliates shall prepare all Tax Returns and books and records in a manner consistent with such intended income tax treatment, except as otherwise required by a “determination” under Code Section 1313(a) (or any comparable provision of state or local law). (b) Purchaser shall timely cause to be prepared and filed (including making any payments due) any and all Tax Returns (under a new Federal Employer Identification Number to be obtained by Purchaser for each Owner) required to be filed after the Closing Date with respect to each Owner; provided, however, prior to filing any Tax Return that Purchaser is required to file pursuant to the foregoing relating to a taxable period preceding the Closing Date, Purchaser shall provide Sellers with a copy of the proposed Tax Return and the opportunity to reasonably comment on said return prior to the due date for filing thereof. Purchaser shall include in the final version of each such Tax Return any reasonable comments delivered by Sellers in writing to Purchaser within twenty (20) days after receipt of the draft Tax Return furnished by Purchaser. Sellers and Purchaser hereby agree to cooperate fully in a prompt and timely manner at no cost to the other Party, as and to the extent reasonably requested by the other Party in writing, in connection with the filing of Tax Return and any audit, litigation or other proceeding with respect to Taxes of the Owners. Sellers shall have the right to control any Tax audit or proceeding with respect to which Sellers have an obligation of indemnification under this Agreement. Such cooperation shall include, but not be limited to, the retention and (upon the other Party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding. The provisions of this Section 15.16 shall survive the Closing.
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16.17 Insider Trading Compliance. To the extent that applicable federal or state securities laws governing insider trading are triggered in connection with Sellers’ receipt, holding, or disposition of the Escrowed Shares or any other Common Shares issued pursuant to this Agreement, Sellers shall comply in all material respects with such laws and regulations, including, without limitation, Section 10(b) of the Exchange Act, Rule 10b-5 promulgated thereunder, and any applicable trading restrictions arising from Sellers’ possession of material non-public information (“MNPI”) concerning Purchaser. Without limiting the foregoing, if Sellers are in possession of MNPI at any time during the Escrow Period, Sellers shall refrain from buying, selling, or otherwise transacting in the Escrowed Shares until such information has been publicly disclosed or is no longer material, unless such transaction is effected pursuant to a pre-established written trading plan that complies with Rule 10b5-1 under the Exchange Act and was adopted at a time when Sellers were not aware of any MNPI. Purchaser shall promptly notify Sellers in writing upon the imposition of any trading blackout period applicable to the Escrowed Shares and shall use reasonable efforts to minimize the duration of any such blackout period. The provisions of this Section shall survive the Closing.
16.18 Pending Arbitration. Purchaser acknowledges that it has been informed of, and is aware of, the Settlement Agreement dated September 9, 2026 (“Settlement Agreement”) under arbitration proceeding under JAMS, reference number 5460001419 (“Arbitration”), involving the KOI Residences and the Marina (as such term is defined in the CC&Rs). In connection with the Settlement Agreement, Purchaser further acknowledges and agrees that Sellers shall have the right, at any time prior to Closing, to execute, deliver and record such amendments to the CC&Rs and such deeds, easements or other instruments (including, but not limited to, the Dog Park Deed, the Sliver Parcel Deed and the Skywalk Easement) with respect to the Property (including, but not limited to, certain Common Areas (as defined in the CC&Rs)), as Sellers are required to implement or comply with the terms and conditions of the Settlement Agreement (collectively, “Settlement Documents”). Notwithstanding the foregoing or anything to contrary herein, the terms of the Settlement and the form and substance of the Settlement Documents shall be subject to Purchaser’s prior approval, not to be unreasonably withheld, conditioned or delayed. Purchaser further agrees that any Settlement Documents or other matter arising from or required by the Settlement Agreement, in each case, to the extent approved by Purchaser in accordance with this Section, shall be deemed a Permitted Exception and shall not constitute an Updated Title Defect or otherwise give rise to any right of objection, termination, delay, offset, abatement, or Claim by Purchaser under this Agreement. Following Closing, Purchaser shall execute and deliver such further documents or instruments as may be reasonably necessary to implement or comply with the Settlement Agreement, including any documents required to be executed by the owner of the Property, such documents and instruments shall be subject to Purchaser’s prior approval, not to be unreasonably withheld, conditioned or delayed. Purchaser shall not be required to incur any material expense or assume any personal liability in connection with such cooperation. The provisions of this Section shall survive the Closing and shall remain binding upon Purchaser and its successors and assigns.
16.19 Books and Records.
16.19.1 For a period of three (3) years after the Closing, Purchaser shall retain the books and records of each Owner relating to periods prior to the Closing, as delivered to Purchaser hereunder, and upon reasonable written notice, afford the Representatives of Sellers reasonable access to such books and records during normal business hours (including the right to make photocopies at Sellers’ expense).
16.19.2 Purchaser shall not be obligated to provide Sellers with access to any books or records hereunder where such access would violate any applicable law.
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16.20 Attorney-Client Privilege. Each of the Parties acknowledges and agrees, on its own behalf and on behalf of its Affiliates and Representatives, that:
16.20.1 Nelson Mullins Riley & Scarborough, LLP (“Company Counsel”) has acted as counsel to Owners in connection with the negotiation, preparation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. Purchaser and Issuer agree, and shall cause each Owner to agree, that, following consummation of the transactions contemplated hereby, such representation and any prior representation of either Owner by Company Counsel shall not preclude Company Counsel from serving as counsel to the Owners (as constituted prior to Closing) or any Affiliate or Representative of either Owner or its Affiliates, in connection with any Claim arising out of or relating to this Agreement or the transactions contemplated hereby.
16.20.2 Purchaser and Issuer shall not, and shall cause each Owner not to, seek or have Company Counsel disqualified from any such representation based on any prior representation of either Owner by Company Counsel. Each of the Parties hereby consents thereto and waives any conflict of interest arising from such prior representation, and each of such Parties shall cause any of its Affiliates to consent to waive any conflict of interest arising from such representation. Each of the Parties acknowledges that such consent and waiver is voluntary, that it has been carefully considered, and that the Parties have consulted with counsel or have been advised they should do so in connection herewith. The covenants, consent and waiver contained in this Section 16.20 shall not be deemed exclusive of any other rights to which Company Counsel is entitled whether pursuant to law, contract, or otherwise.
16.20.3 All communications prior to Closing between or among the Owners (or either Owner) and Company Counsel relating to the negotiation, preparation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (collectively, “Attorney-Client Communications”) shall be deemed to be attorney-client privileged, and the expectation of client confidence relating thereto shall survive Closing, and from and after Closing shall belong solely to Sellers and shall not pass to or be claimed by Purchaser, Issuer, or either Owner. Accordingly, Purchaser, Issuer, and each Owner shall not have access to any Attorney-Client Communications or to the files of Company Counsel relating to such engagement from and after Closing. Without limiting the generality of the foregoing, from and after the Closing, (a) Sellers (and not Purchaser, Issuer, or either Owner) shall be the sole holder of the attorney-client privilege with respect to such engagement, and none of Purchaser, Issuer, or either Owner shall be a holder thereof; (b) to the extent that files of Company Counsel in respect of such engagement constitute property of the client, only Sellers (and not Purchaser, Issuer, or either Owner) shall hold such property rights; and (c) Company Counsel shall have no duty whatsoever to reveal or disclose any such Attorney-Client Communications or files to Purchaser, Issuer, or either Owner by reason of any attorney-client relationship between or among Company Counsel and either Owner or otherwise. Notwithstanding the foregoing, in the event that after Closing a dispute arises between Purchaser and Issuer or their Affiliates (including the Owners), on the one hand, and a third party other than any of Sellers or their respective Affiliates, on the other hand, Purchaser, Issuer, and their Affiliates (including Owners) may assert the attorney-client privilege to prevent disclosure of confidential communications to such third party; provided, however, none of Purchaser, Issuer, or their Affiliates (including Owners) may waive such privilege without the prior written consent of Sellers. In the event that Purchaser, Issuer, or any of their Affiliates (including Owners) are legally required by order of a governmental authority or otherwise legally required to access or obtain a copy of all or a portion of the Attorney-Client Communications, to the extent (i) permitted by applicable law, and (ii) advisable in the opinion of Purchaser’s counsel, Purchaser promptly (and, in any event, within three (3) business days) shall notify Sellers in writing so that Sellers can seek a protective order. In furtherance of the foregoing, each of the Parties agrees that (A) no waiver is intended by failing to remove all Attorney-Client
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Communications from either Owner’s files and computer systems, and (B) after Closing, the Parties will use commercially reasonable efforts to take the steps necessary to ensure the Attorney-Client Communications are held and controlled by Sellers. Purchaser and Issuer agree that, after Closing, none of Purchaser, Issuer, Owners, or their Affiliates will access or review the Attorney-Client Communications in connection with Claim against or involving the Sellers or their Affiliates, or use or assert the Attorney-Client Communications against the Sellers or their Affiliates in any Claim against or involving the Sellers or their Affiliates.
16.20.4 This Section 16.20 is intended for the benefit of, and shall be enforceable by, Company Counsel. This Section 16.20 shall be irrevocable, and no term of this section may be revoked, amended, restated, or waived without the prior written consent of Company Counsel.
17. ESCROW PROVISIONS.
17.1 Any notice to Escrow Agent shall be sufficient only if received by Escrow Agent within the applicable time period set forth herein. All mailings and notices from Escrow Agent to Sellers and/or Purchaser, or from Sellers and/or Purchaser to Escrow Agent, provided for in this Section 17 shall be addressed to the Party to receive such notice at its notice address set forth in Section 16.7 above (with copies to be similarly sent to the additional Persons therein indicated).
17.2 Escrow Agent is acting hereunder without charge as an accommodation to Purchaser and Sellers, it being understood and agreed that Escrow Agent shall not be liable for any error in judgment or any act done or omitted by it in good faith or pursuant to court order, or for any mistake of fact or law. Escrow Agent shall not incur any liability in acting upon any document or instrument believed thereby to be genuine. Escrow Agent is hereby released and exculpated from all liability hereunder, except only for willful misconduct or gross negligence. Escrow Agent may assume that any person purporting to give it any notice on behalf of any Party has been authorized to do so. Escrow Agent shall not be liable for, and Purchaser and Sellers hereby jointly and severally agree to indemnify Escrow Agent against, any actual loss, liability or expense, including reasonable out-of-pocket attorneys’ fees, arising out of any dispute under this Agreement, including the cost and expense of defending itself against any Claim arising hereunder. Purchaser acknowledges that the Escrow Agent is also Sellers’ counsel in this transaction, and Purchaser hereby consents to the Escrow Agent’s representation of Sellers in connection with this Agreement and in connection with any litigation which may arise out of this Agreement. The provisions of this Section 17 shall survive the termination of this Agreement. If required by Escrow Agent, the Parties agree to enter into a separate escrow agreement in the standard form required by Escrow Agent.
[Remainder of Page Intentionally Left Blank.]
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[SIGNATURE PAGE TO MEMBERSHIP INTERESTS PURCHASE AND SALE AGREEMENT]
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the date first above written.
ENVY SELLER:
ENVY DEVELOPMENT PB, LLC,
a Florida limited liability company
By: /s/ Bernard Hsiao
Name: Bernard Hsiao
Its: Manager
MYELIN GROUP OWNERS:
HSU GAMMA INVESTMENTS LP,
a Delaware limited partnership
By: /s/ Michael Hsiao
Name: Michael Hsiao
Its: Authorized Person
By: /s/ Michael Hsiao
Michael Hsiao, individually
ESTATE OF CHRISTOPHER LONGSWORTH
/s/ Michael Hsiao
Name: Michael Hsiao
Its: Curator of the Estate
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ENVY PROPCO:
ENVY DEVELOPMENT DE, LLC,
a Delaware limited liability company
By: /s/ Bernard Hsiao
Name: Barnard Hsiao
Its: Manager
MYELIN SELLER:
THE MYELIN GROUP, LLC,
a Florida limited liability company
By: /s/ Michael Hsiao
Name: Michael Hsiao
Its: Manager
MYELIN PROPCO:
ENVY RECREATIONAL, LLC,
a Delaware limited liability company
By: /s/ Michael Hsiao
Name.Michael Hsiao
Its: Authorized Person
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PURCHASER:
SRC ENVY HOLDCO LLC, a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Its: CEO
ISSUER:
STEWARDS, INC.,
a Nevada corporation (OTC: SWRD)
By: /s/ Shaun Quin
Name: Shaun Quin
Its: CEO
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of September 23, 2026 (the “Effective Date”), by and among (i) STEWARDS, INC., a Nevada corporation (the “Issuer”), (ii) the undersigned parties listed as “Sellers” on the signature page hereto (each, a “Seller” and collectively, the “Sellers”), (iii) STEWARDS INTERNATIONAL FUNDS PCC ON BEHALF OF THE STEWARDS PRIVATE CREDIT FUND, a Mauritius Protected Cell Company (the “Guarantor”).
RECITALS
WHEREAS, on or about the date hereof, Issuer, SRC ENVY HOLDCO LLC, a Delaware limited liability company, ENVY DEVELOPMENT PB, LLC, a Florida limited liability company, HSU GAMMA INVESTMENTS LP, a Delaware limited partnership, MICHAEL HSIAO, an individual, ESTATE OF CHRISTOPHER LONGSWORTH, and THE MYELIN GROUP, LLC, a Florida limited liability company, among others, entered into that certain Membership Interests Purchase and Sale Agreement dated as of September 21, 2026 (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), pursuant to which, among other matters, Issuer agreed to issue to the Sellers its Common Shares (as defined below) as partial consideration for the purchase and sale of the Membership Interests (as defined in the Purchase Agreement);
WHEREAS, the Escrowed Shares (as defined below) issued or to be issued to the Sellers pursuant to the Purchase Agreement will constitute “restricted securities” within the meaning of Rule 144 under the Securities Act and, because the Issuer was previously a shell company as defined in Rule 12b-2 under the Exchange Act, resales of such shares pursuant to Rule 144 will not be available to any holder until the conditions set forth in Rule 144(i)(2) have been satisfied, including, without limitation, that at least one (1) year has elapsed since Issuer filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer a shell company (which Issuer represents that it did in its Registration Statement on Form S-1 filed in November 2025), and that all other conditions of Rule 144(i)(2) are met;
WHEREAS, in light of the foregoing limitations on Rule 144 availability, registration is expected to be the primary means by which Sellers may achieve liquidity with respect to the Registrable Securities;
WHEREAS, the parties desire to enter into this Agreement to provide Sellers with certain rights relating to the registration for resale of the Registrable Securities.
NOW, THEREFORE, in consideration of the mutual covenants and agreements 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:
1. DEFINITIONS. Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Purchase Agreement. The following capitalized terms used herein have the following meanings:
“Adverse Disclosure” means any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer or principal financial officer of Issuer, after consultation with counsel to Issuer, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of material fact or omit to state a material fact necessary to make the statements contained therein not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) as to which Issuer has a bona fide business purpose for not making such information public.
“Agreement” means this Registration Rights Agreement, as amended, restated, supplemented or otherwise modified from time to time.
“Blackout Period” is defined in Section 2.5(a).
“Board” means the board of directors of Issuer.
“Commission” means the United States Securities and Exchange Commission or any successor
thereto.
“Common Shares” means shares of common stock, par value $0.0001 per share, of Issuer, together with any equity securities paid as dividends or distributions after the Closing (as defined in the Purchase Agreement) with respect to such shares or into which such shares are exchanged or converted after the Closing.
“Demand Registration” is defined in Section 2.2.
“Demanding Holders” is defined in Section 2.2.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
“Guarantor” is defined in the preamble to this Agreement.
“Holder” means any Seller holding Registrable Securities, and any permitted transferee of Registrable Securities to whom rights under this Agreement have been assigned in accordance with Section 7.2.
“Indemnified Party” is defined in Section 4.3.
“Indemnifying Party” is defined in Section 4.3.
“Issuer” is defined in the preamble to this Agreement, and shall include Issuer’s successors by merger, acquisition, reorganization or otherwise.
“Losses” is defined in Section 4.1.
“Maximum Number of Securities” is defined in Section 2.2.2.
“Payment Date” is defined in Section 6.2.
“Piggyback Registration” is defined in Section 2.3.1.
“Pro Rata” is defined in Section 2.2.2.
“Prospectus” means the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments, and shall include all material incorporated by reference in such prospectus.
“Purchase Agreement” is defined in the recitals to this Agreement.
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“Registrable Securities” means (i) all Escrowed Shares issued or issuable to Sellers pursuant to the Purchase Agreement, together with any shares of capital stock or other securities of Issuer issued as a dividend, split or other distribution with respect to, or in exchange for or in replacement of, the foregoing securities, or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation or other similar event with respect to the Common Shares. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement;
(b) such securities have been sold through a broker, dealer or underwriter in a public offering pursuant to applicable securities laws; (c) such securities have been sold without registration pursuant to Rule 144 or another exemption from registration under the Securities Act; (d) all such securities are eligible for resale under Rule 144 or another exemption during a 90-day period without volume or manner-of-sale restrictions (provided, for the avoidance of doubt, that eligibility under Rule 144 for former-shell-company shares requires prior satisfaction of all conditions in Rule 144(i)(2)); or (e) such securities shall have ceased to be outstanding.
“Registration” means a registration effected by preparing and filing a Registration Statement in compliance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder, and such Registration Statement becoming effective.
“Registration Statement” means a registration statement filed by Issuer with the Commission in compliance with the Securities Act and the rules and regulations promulgated thereunder for a public offering and sale of equity securities (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity).
“Resale Registration Statement” means a Registration Statement filed on Form S-1 (or, if available to Issuer, on Form S-3 or any successor short-form), registering the resale of Registrable Securities by or on behalf of the Holders on a continuous or delayed basis pursuant to Rule 415 under the Securities Act (or any successor rule).
“Rollover Shares” means all Common Shares issued or issuable to Sellers pursuant to Section 2.2.2(a) of the Purchase Agreement, including the Escrowed Shares (as defined in the Purchase Agreement).
“Rule 144” means Rule 144 promulgated under the Securities Act, as amended from time to time, or any successor rule thereto.
“Rule 144(i)(2) Conditions” means the conditions set forth in Rule 144(i)(2) that must be satisfied before Rule 144 is available to any holder of shares of a former shell company for resale purposes, including, without limitation: (i) Issuer has ceased to be a shell company; (ii) Issuer is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (iii) Issuer has filed all Exchange Act reports required during the preceding twelve (12) months (or such shorter period as Issuer was required to file); and (iv) at least one (1) year has elapsed since Issuer filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer a shell company.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
“Seller Indemnified Party” is defined in Section 4.1.
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“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Offering” means a Registration in which securities of Issuer are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
2. REGISTRATION RIGHTS.
2.1 Mandatory Resale Registration.
2.1.1 Filing Obligation. Issuer shall use its commercially reasonable efforts to prepare and file with the Commission a Resale Registration Statement registering all Escrowed Shares for resale by or on behalf of the Holders as promptly as practicable following the Effective Date, but in no event later than thirty (30) days after the Effective Date (the “Filing Deadline”). Issuer shall use its commercially reasonable efforts to cause such Resale Registration Statement to become effective as soon as practicable following the Filing Deadline but in no event later than sixty (60) days after the Effective Date (or ninety (90) days after the closing of Effective Date if the Commission reviews and comments upon the Resale Registration Statement) (the “Effectiveness Deadline”). Issuer’s failure to file the Resale Registration Statement by the Filing Deadline, or to have such Resale Registration Statement declared effective by the Effectiveness Deadline, shall constitute a material breach of this Agreement.
2.1.2 Form. The Resale Registration Statement shall be filed on Form S-1 (or such other appropriate form as is available to Issuer under the Securities Act for the registration of the resale of the Registrable Securities at such time). If and when Issuer becomes eligible to use Form S-3 (or any successor short-form registration statement) for the registration of resales of the Registrable Securities, Issuer shall, upon the written request of the Holders of a majority-in-interest of the then-outstanding Registrable Securities, use its commercially reasonable efforts to convert the then-effective Resale Registration Statement to a Form S-3, or to file a new Resale Registration Statement on Form S-3, as promptly as practicable following such request.
2.1.3 Shell Company Acknowledgment. The parties acknowledge that, because Issuer was previously a shell company as defined in Rule 12b-2 under the Exchange Act, resales of the Registrable Securities pursuant to Rule 144 will not be available until the Rule 144(i)(2) Conditions are satisfied. In recognition of such limitation, Issuer’s obligation to file a Resale Registration Statement on Form S-1 pursuant to Section 2.1.1 shall apply unless and until another form is then available to Issuer for the registration of resales of the Registrable Securities.
2.1.4 Lock-Up Carve-Out. Issuer shall use commercially reasonable and diligent efforts to cause any underwriter or any uplisting transaction to exclude all Registrable Securities from any lock-up agreement required of five percent (5%) or greater shareholders, directors, or officers. Issuer covenants that it shall not enter into any underwriting agreement or lock-up arrangement that would restrict the ability of any Holder to sell Registrable Securities pursuant to an effective Registration Statement hereunder for a period longer than would otherwise apply in the absence of such lock-up, without the prior written consent of Holders holding a majority of the then-outstanding Registrable Securities.
2.2 Demand Registration. Subject to Section 2.5, at any time and from time to time after the Closing, Holders holding at least a majority-in-interest of the Registrable Securities then issued and outstanding may make a written demand for a new or additional Registration Statement under the Securities Act registering all or part of their Registrable Securities, which written demand shall describe the amount and type of securities to be included in such Registration and the intended method(s) of distribution thereof (a “Demand Registration”). Upon any such request, Issuer shall notify all other Holders of the demand, and each Holder
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who wishes to include all or a portion of its Registrable Securities in the Demand Registration (each, a “Demanding Holder”) shall so notify Issuer within ten (10) days after receipt by such Holder of Issuer’s notice. Upon any such request, Issuer shall use its commercially reasonable efforts to file a Registration Statement registering all Registrable Securities requested by the Demanding Holders no later than sixty (60) days following Issuer’s receipt of the Demand Registration request, and to cause such Registration Statement to become effective as soon as practicable thereafter. Issuer shall not be obligated to effect more than two (2) Demand Registrations in any twelve (12) month period, and shall not be obligated to effect any Demand Registration (i) within sixty (60) days after the effective date of a Registration Statement previously filed pursuant to this Agreement, or (ii) during any Blackout Period.
2.2.1 Underwritten Demand. Subject to Section 2.5, if a majority-in-interest of the Demanding Holders so elect and advise Issuer as part of their written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an Underwritten Offering. In such event, the right of any Demanding Holder to include its Registrable Securities in such Registration shall be conditioned upon such Demanding Holder’s participation in such Underwritten Offering, and all Demanding Holders proposing to distribute their Registrable Securities through such Underwritten Offering shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected by a majority-in-interest of the Demanding Holders and reasonably acceptable to Issuer.
2.2.2 Reduction of Offering. If the managing Underwriter or Underwriters for a Demand Registration that is to be an Underwritten Offering, in good faith, advises Issuer and the Demanding Holders in writing that the dollar amount or number of Registrable Securities which the Demanding Holders desire to sell, together with all other shares or securities which Issuer desires to sell and any securities as to which Registration has been requested pursuant to other written contractual piggyback registration rights, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, timing, distribution method or probability of success of such offering (the “Maximum Number of Securities”), then Issuer shall include in such Registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (Pro Rata among the applicable Holders, based on the number of securities that each Holder has requested be included, as long as they do not request to include more securities than they own (such proportion being “Pro Rata”)), up to the Maximum Number of Securities; (ii) second, to the extent the Maximum Number of Securities has not been reached, Registrable Securities of Holders as to which Registration has been requested pursuant to Section 2.3, Pro Rata among the holders thereof, up to the Maximum Number of Securities; (iii) third, to the extent the Maximum Number of Securities has not been reached, shares or securities that Issuer desires to sell, up to the Maximum Number of Securities; and (iv) fourth, to the extent the Maximum Number of Securities has not been reached, shares or securities for the account of other Persons that Issuer is obligated to register pursuant to other written contractual arrangements, up to the Maximum Number of Securities.
2.2.3 Withdrawal. A Demanding Holder may withdraw all or any portion of its Registrable Securities included in a Demand Registration at any time prior to the effectiveness of the applicable Registration Statement. If a majority-in-interest of the Demanding Holders disapprove of the terms of any Underwritten Offering or are not entitled to include all of their Registrable Securities in any offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such offering by giving written notice to Issuer and the applicable Underwriters prior to the effectiveness of the Registration Statement. A withdrawal under circumstances described in the preceding sentence shall not count against Issuer’s obligation to effect Demand Registrations under this Agreement.
2.3 Piggyback Registration.
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2.3.1 Piggyback Rights. If at any time after the Closing, Issuer proposes to file a Registration Statement under the Securities Act with respect to the Registration of equity securities or securities convertible into, or exercisable or exchangeable for, equity securities, by Issuer for its own account or for any other security holders of Issuer (other than a Registration Statement filed in connection with any employee benefit plan, exchange offer, or dividend reinvestment plan), then Issuer shall (i) give written notice of such proposed filing to all Holders of Registrable Securities not less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such Registration, the intended method(s) of distribution, and the proposed managing Underwriter or Underwriters, if any, and (ii) offer to Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Holders may request in writing within five (5) days following receipt of such notice (a “Piggyback Registration”). Subject to applicable securities laws, Issuer shall use its commercially reasonable efforts to cause such Registrable Securities to be included in such Registration and, in the case of an Underwritten Offering, to permit the Registrable Securities requested to be included in a Piggyback Registration on the same terms and conditions as any similar securities of Issuer and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All Holders proposing to distribute Registrable Securities through a Piggyback Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with such Underwriter or Underwriters.
2.3.2 Reduction of Offering. If the managing Underwriter or Underwriters for a Piggyback Registration that is to be an Underwritten Offering, in good faith, advises Issuer and the applicable Holders in writing that the dollar amount or number of shares or other securities to be included in such Registration exceeds the Maximum Number of Securities, then Issuer shall include in such Registration: (i) if the Registration is for Issuer’s account: first, the securities that Issuer desires to sell up to the Maximum Number of Securities; second, to the extent the Maximum Number of Securities has not been reached, Registrable Securities of Holders requested to be included, Pro Rata, up to the Maximum Number of Securities; and third, to the extent not reached, other securities for the account of other Persons with contractual registration rights, up to the Maximum Number of Securities; and (ii) if the Registration is a Demand Registration: first, the securities for the account of the Demanding Holders Pro Rata, up to the Maximum Number of Securities; second, to the extent not reached, Registrable Securities of other Holders requested to be included pursuant to Section 2.3, Pro Rata, up to the Maximum Number of Securities; third, to the extent not reached, shares or securities that Issuer desires to sell, up to the Maximum Number of Securities; and fourth, to the extent not reached, shares or securities for the account of other Persons pursuant to contractual registration rights.
2.3.3 Withdrawal. Any Holder of Registrable Securities may elect to withdraw its request for inclusion of Registrable Securities in any Piggyback Registration by giving written notice to Issuer of such request to withdraw prior to the effectiveness of the applicable Registration Statement. Issuer may withdraw a Registration Statement underlying a Piggyback Registration at any time prior to its effectiveness without liability to the Holders, provided that Issuer shall pay all Registration Expenses incurred in connection with such Piggyback Registration as provided in Section 3.3.
2.4 Reserved.
2.5 Blackout and Restrictions. Notwithstanding anything to the contrary in this Agreement:
(a) Issuer may suspend the use of any Prospectus (including any Resale Registration Statement) for a period (a “Blackout Period”) not to exceed thirty (30) consecutive days (and not more than sixty (60) total days in any twelve (12) month period) if the Board, upon the advice of outside counsel, determines in good faith that disclosure of Adverse Disclosure would be required in such Prospectus and that it is in Issuer’s best interest not to make such disclosure at such time. Issuer shall promptly notify the Holders in writing of the commencement and termination of
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any Blackout Period and shall use its commercially reasonable efforts to end each Blackout Period as promptly as practicable.
(b) During any Blackout Period, each Holder shall immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement or Prospectus until the Blackout Period ends and the Holder receives written notice from Issuer that the Prospectus may be resumed.
(c) Any Blackout Period shall toll any obligation of Issuer that is measured by elapsed time after the Closing Date or after effectiveness of a Registration Statement, but only for the duration of the Blackout Period.
3. REGISTRATION PROCEDURES.
3.1 Filings; Information. Whenever Issuer is required to effect the Registration of any Registrable Securities pursuant to Section 2, Issuer shall use its commercially reasonable efforts to effect the Registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection therewith:
3.1.1 Filing. Issuer shall use its commercially reasonable efforts to prepare and file with the Commission a Registration Statement on any form for which Issuer then qualifies or which counsel for Issuer deems appropriate and which form is available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use its commercially reasonable efforts to cause such Registration Statement to become effective and to keep it effective for the period required by Section 3.1.3.
3.1.2 Copies. Issuer shall, prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Holders of Registrable Securities included in such Registration, and the Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement thereto, the Prospectus included therein, and such other documents as the Holders or their legal counsel may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holders.
3.1.3 Effectiveness Maintenance. Issuer shall use its commercially reasonable efforts to prepare and file with the Commission such amendments, including post-effective amendments, and supplements to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act, until all Registrable Securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement or such securities have been withdrawn, or until such time as the Registrable Securities cease to be Registrable Securities as defined in this Agreement.
3.1.4 Reporting Obligations. For so long as any Holder shall own Registrable Securities, Issuer, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by Issuer pursuant to Sections 13(a) or 15(d) of the Exchange Act. In furtherance of the foregoing, Issuer shall use commercially reasonable efforts to (i) maintain its status as an entity that is no longer a shell company within the meaning of Rule 12b-2 under the Exchange Act, (ii) satisfy all applicable Exchange Act reporting and “seasoning” requirements under Rule 144(i)(2) as promptly as practicable following the Closing, and
(iii) provide Holders, upon request, with (A) a written statement by Issuer that it has complied with the reporting requirements of the Exchange Act, (B) a copy of or electronic access to Issuer’s most recent
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Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail Holders of any rule or regulation of the Commission that permits the selling of Registrable Securities without registration.
3.1.5 Legend Removal. In connection with any sale or transfer of Registrable Securities pursuant to an effective Registration Statement or pursuant to an applicable exemption from registration, Issuer shall, subject to receipt of customary documentation reasonably required from the applicable Holder in connection therewith, (i) promptly instruct its transfer agent to remove any restrictive legends applicable to the Registrable Securities being sold or transferred, and (ii) cause its legal counsel to deliver the necessary legal opinions, if any, to the transfer agent in connection with such instruction. Issuer shall cooperate reasonably with, and take such customary actions as may reasonably be requested by, the Holders in connection with such sales or transfers.
3.1.6 Notification. After the filing of a Registration Statement, Issuer shall promptly (and in no event more than five (5) business days after such filing) notify the Holders of such filing, and shall further notify the Holders promptly and confirm such advice in writing in all events within five (5) business days after the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order; and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any related Prospectus or for additional information, or of the occurrence of an event requiring the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered to purchasers of the securities covered by such Registration Statement, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and Issuer shall promptly make available to the Holders any such supplement or amendment. Before filing with the Commission a Registration Statement or Prospectus or any amendment or supplement thereto, Issuer shall furnish to the Holders and their legal counsel copies of all such documents proposed to be filed sufficiently in advance to provide the Holders and their legal counsel a reasonable opportunity (but in any event at least five (5) business days) to review such documents and comment thereon.
3.1.7 Blue Sky Compliance. Issuer shall use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement may reasonably request, and (ii) take such action as may be necessary to cause such Registrable Securities to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of Issuer; provided, however, that Issuer shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action that would subject it to general service of process or taxation in any jurisdiction where it is not then otherwise subject.
3.1.8 Underwriting Agreements. To the extent required by any applicable underwriting agreement, Issuer shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. No Holder included in such Registration Statement shall be required to make any representations or warranties in the underwriting agreement except, if applicable, with respect to such Holder’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such Holder’s material agreements and organizational documents, and with respect to written information relating to such Holder that such Holder has furnished in writing expressly for inclusion in such Registration Statement.
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3.1.9 Cooperation. The principal executive officer, principal financial officer, principal accounting officer and all other officers and members of management of Issuer shall cooperate reasonably in any offering of Registrable Securities hereunder, which cooperation shall include the preparation of the applicable Registration Statement and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors.
3.1.10 Records. Issuer shall make available for inspection by the Holders of Registrable Securities included in such Registration Statement, any Underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other professional retained by any such Holder or Underwriter, all financial and other records, pertinent corporate documents and properties of Issuer as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause Issuer’s officers, directors and employees to supply all information reasonably requested by any of them in connection with such Registration Statement; provided that Issuer may require execution of a reasonable confidentiality agreement prior to sharing any such information.
3.1.11 Opinions and Comfort Letters. Issuer shall obtain from its counsel and accountants customary legal opinions and comfort letters to the extent reasonably required by any applicable underwriting agreement.
3.1.12 Earnings Statement. Issuer shall comply with all applicable rules and regulations of the Commission and the Securities Act and make available to its stockholders, as soon as reasonably practicable, an earnings statement covering a period of twelve (12) months beginning with the first day of the Issuer’s first full calendar quarter after the effective date of a Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter by the Commission).
3.1.13 Listing. Issuer shall use its commercially reasonable efforts to cause all Registrable Securities that are Common Shares included in any Registration to be listed on such exchanges or otherwise designated for trading in the same manner as other Common Shares are then listed or designated, or, if no Common Shares are then listed or designated, in a manner satisfactory to the Holders of a majority-in-interest of the Registrable Securities included in such Registration.
3.1.14 Road Show. If a Registration involves the Registration of Registrable Securities with an aggregate proposed public offering price in excess of $25,000,000, Issuer shall use its commercially reasonable efforts to make available senior executives of Issuer to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in any Underwritten Offering.
3.2 Obligation to Suspend Distribution. Upon receipt of any notice from Issuer of the commencement of a Blackout Period pursuant to Section 2.5, each Holder of Registrable Securities included in any Registration shall immediately discontinue disposition of such Registrable Securities pursuant to the applicable Registration Statement until such Holder receives written notice from Issuer that the Blackout Period has ended and the use of the Prospectus may be resumed.
3.3 Registration Expenses. Issuer shall bear all reasonable costs and expenses incurred in connection with any Registration pursuant to Section 2, whether or not the applicable Registration Statement becomes effective, including: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) Issuer’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.13; (vi) Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for Issuer and fees
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and expenses for independent certified public accountants retained by Issuer (including the expenses or costs associated with the delivery of any opinions or comfort letters pursuant to Section 3.1.11); (viii) the reasonable fees and expenses of any special experts retained by Issuer in connection with such Registration; and (ix) the reasonable fees and expenses of one legal counsel selected by the Holders of a majority-in-interest of the Registrable Securities included in such Registration. Issuer shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the Holders thereof, which shall be borne by such Holders.
3.4 Information. The Holders of Registrable Securities included in any Registration Statement shall provide such information as may reasonably be requested by Issuer, or the managing Underwriter, if any, in connection with the preparation of such Registration Statement, including amendments and supplements thereto, in order to effect the Registration of any Registrable Securities under the Securities Act pursuant to Section 2 and in connection with Issuer’s obligation to comply with federal and applicable state securities laws. Holders selling Registrable Securities in any offering must provide all questionnaires, powers of attorney, custody agreements, stock powers, and other documentation reasonably requested by Issuer or the managing Underwriter.
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by Issuer. Issuer shall indemnify and hold harmless each Holder and each Holder’s officers, employees, affiliates, directors, partners, members, attorneys and agents, and each Person, if any, who controls a Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, a “Seller Indemnified Party”), from and against any expenses, losses, judgments, claims, actions, damages or liabilities (collectively, “Losses”), whether joint or several, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary Prospectus, final Prospectus or summary Prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by Issuer of the Securities Act or any rule or regulation promulgated thereunder applicable to Issuer and relating to action or inaction required of Issuer in connection with any such Registration; provided, however, that (i) the indemnification contained in this Section 4.1 shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of Issuer (such consent not to be unreasonably withheld, delayed or conditioned), and (ii) Issuer will not be liable in any such case to the extent that any such Loss arises out of or is based upon any untrue or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary Prospectus, final Prospectus or summary Prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to Issuer in writing by such selling Holder expressly for use therein. Issuer shall also indemnify any Underwriter of the Registrable Securities, their officers, affiliates, directors, partners, members and agents and each Person who controls such Underwriter on substantially the same basis as that of the indemnification provided above in this Section 4.1.
4.2 Indemnification by Holders of Registrable Securities. Each Holder selling Registrable Securities will, in the event that any Registration is being effected under the Securities Act pursuant to this Agreement and includes any Registrable Securities held by such Holder, indemnify and hold harmless Issuer, each of its directors and officers, and each Underwriter (if any), and each other selling Holder and each other Person, if any, who controls another selling Holder or such Underwriter within the meaning of the Securities Act, against any Losses arising out of or based upon any untrue statement or allegedly untrue statement of a material fact contained in any Registration Statement, Prospectus, or any amendment or supplement thereto, or arising out of or based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if the statement or omission
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was made in reliance upon and in conformity with information furnished in writing to Issuer by such selling Holder expressly for use therein; provided, however, that the indemnification contained in this Section 4.2 shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the indemnifying Holder (such consent not to be unreasonably withheld, delayed or conditioned), and each selling Holder’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling Holder in the applicable offering.
4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any Person of any notice of any Loss in respect of which indemnity may be sought pursuant to Section 4.1 or 4.2, such Person (the “Indemnified Party”) shall, if a claim in respect thereof is to be made against any other Person for indemnification hereunder, notify such other Person (the “Indemnifying Party”) in writing of the Loss; provided, however, that failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party if the Indemnifying Party provides notice of such election to the Indemnified Party within thirty (30) days of the Indemnifying Party’s receipt of notice of such claim. After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel) to represent the Indemnified Party and its controlling Persons who may be subject to liability arising out of any claim for which indemnity may be sought hereunder, with the fees and expenses of such counsel to be paid by the Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party (which shall not be unreasonably delayed or withheld), consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.
4.4 Contribution.
4.4.1 If the indemnification provided for in Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any Loss referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the Indemnifying Parties and the Indemnified Parties in connection with the actions or omissions which resulted in such Loss, as well as any other relevant equitable considerations. The relative fault of any Indemnifying Party and any Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnifying Party or such Indemnified Party and such party’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
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4.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in Section 4.4.1.
4.4.3 The amount paid or payable by an Indemnified Party as a result of any Loss referred to above shall be deemed to include any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, no Holder of Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such Holder from the sale of Registrable Securities giving rise to such contribution obligation. Each Holder’s contribution obligation shall be several and not joint. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.
5. RULE 144; FORMER SHELL COMPANY.
5.1 Rule 144 Reporting. Issuer covenants that it shall file any reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as Holders may reasonably request, all to the extent required from time to time to enable Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144, as such Rule 144 may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission; provided, however, that the parties acknowledge that Rule 144 is currently unavailable for resales of the Registrable Securities by any holder, including non-affiliates, as a consequence of Issuer’s former shell company status, and shall not become available to any holder for such purpose until the Rule 144(i)(2) Conditions have been satisfied.
5.2 Former Shell Company Obligations. Issuer shall use its commercially reasonable efforts to satisfy all Rule 144(i)(2) Conditions as promptly as practicable following the Closing, including by: (i) refraining from taking any action that would result in Issuer being or becoming a shell company; (ii) maintaining its status as an operating company with substantial revenues and assets; (iii) filing all Exchange Act reports in a timely manner; and (iv) in the event Issuer has not already done so, filing with the Commission any Form 10 information required to start the one-year seasoning clock under Rule 144(i)(2). Issuer represents that it filed information equivalent to Form 10 information in its Registration Statement on Form S-1 filed with the Commission in November 2025, and that, subject to satisfaction of all other Rule 144(i)(2) Conditions, Rule 144 may become available to affiliates of Issuer for resales of Registrable Securities on or after November 2026.
6. RESERVED.
7. MISCELLANEOUS.
7.1 Other Registration Rights. Issuer represents and warrants that, as of the date of this Agreement, no Person other than the Holders has any right to require Issuer to register any of Issuer’s capital stock for sale or to include Issuer’s capital stock in any Registration filed by Issuer, except as otherwise disclosed in Issuer’s public filings with the Commission. Issuer shall not, after the date of this Agreement, enter into any agreement with any holder or prospective holder of any securities of Issuer which would allow such holder or prospective holder to include such securities in any Registration filed pursuant to this Agreement, unless (i) such new agreement is approved in writing by the Holders of a majority-in-interest of the then-outstanding Registrable Securities or (ii) the terms of such new agreement do not provide rights more favorable than those provided to the Holders hereunder.
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7.2 Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties and obligations of Issuer hereunder may not be assigned or delegated by Issuer in whole or in part without the written consent of Holders of a majority-in-interest of the Registrable Securities held by all Holders. This Agreement and the rights, duties and obligations of the Holders hereunder may be freely assigned or delegated by any Holder in conjunction with and to the extent of any transfer of Registrable Securities by such Holder that is permitted under the Purchase Agreement; provided that no assignment by any Holder of its rights, duties and obligations hereunder shall be binding upon or obligate Issuer unless and until Issuer shall have received (i) written notice of such assignment and (ii) the written agreement of the assignee, in a form reasonably satisfactory to Issuer, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder). This Agreement is not intended to confer any rights or benefits on any Persons that are not party hereto other than the Seller Indemnified Parties and persons entitled to contribution rights as expressly set forth in Section 4 and permitted assigns under this Section 7.2.
7.3 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by electronic mail, with affirmative confirmation of receipt, (iii) one (1) business day after being sent by reputable, nationally recognized overnight courier service, or (iv) three (3) business days after being mailed, if sent by registered or certified mail, prepaid and return receipt requested, in each case to the applicable party at the following addresses (or at such other address for a party as shall be specified by like notice):
If to Issuer:
STEWARDS, INC.
4300 N University Drive Lauderhill, FL 33351 Attention: Shaun Quin
Email: xxxxx@favocapital.com
With a copy (which will not constitute notice) to:
Cozen O’Connor
1650 Market Street, Suite 2800
Philadelphia, PA 19103 Attention: Howard Grossman Email: xxxxx@cozen.com
If to Guarantor:
Stewards International Funds PCC on Behalf of The Stewards Private Credit Fund 4300 N University Drive
Lauderhill, FL 33351 Attention: Shaun Quin
Email: xxxx@favocapital.com If to Sellers:
c/o Invesca 3210 Hunter Rd
Weston, FL 33331 Attention: Bernard Hsiao
Email: xxxxx@invesca.com
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With a copy (which will not constitute notice) to:
Nelson Mullins Riley & Scarborough LLP 1905 NW Corporate Boulevard, Suite 310 Boca Raton, FL 33431
Attention: Gary Itskovich
Email: xxxxx@nelsonmullins.com
7.4 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable.
7.5 Entire Agreement. This Agreement (together with the Purchase Agreement to the extent incorporated herein, and including all agreements entered into pursuant hereto or thereto or referenced herein or therein, and all certificates and instruments delivered pursuant hereto and thereto) constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written, relating to the subject matter hereof; provided, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the parties under the Purchase Agreement.
7.6 Interpretation. Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement. In this Agreement, unless the context otherwise requires: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) “including” means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”;
(iii) the words “herein,” “hereto,” and “hereby” and other words of similar import shall be deemed in each case to refer to this Agreement as a whole and not to any particular section or other subdivision of this Agreement; and (iv) the term “or” means “and/or.” The parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
7.7 Amendments; Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written agreement or consent of Issuer and the Holders of a majority-in-interest of the then-outstanding Registrable Securities; provided, that any amendment or waiver which affects a Holder in a manner materially and adversely disproportionate to other Holders will also require the consent of such Holder. No failure or delay by a party in exercising any right hereunder shall operate as a waiver thereof. Notwithstanding the foregoing, any amendment or waiver of any provision of Section 6 of this Agreement shall require the prior written consent of Issuer, Guarantor, and each Seller individually
7.8 Remedies Cumulative. In the event a party fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the other parties may proceed to protect and enforce their rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power
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granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.
7.9 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without regard to principles thereof relating to conflicts of laws. Each of the parties hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of the State of Florida and the federal courts of the United States of America located in the State of Florida for the resolution of any dispute, controversy or claim arising out of or in connection with this Agreement. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
7.10 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. Copies of executed counterparts of this Agreement transmitted by electronic transmission (including by email or in .pdf format) or facsimile as well as electronically or digitally executed counterparts (such as DocuSign) shall have the same legal effect as original signatures and shall be considered original executed counterparts of this Agreement.
7.11 Termination. This Agreement shall become effective upon the Closing (as defined in the Purchase Agreement). In the event that the Purchase Agreement is validly terminated in accordance with its terms prior to the Closing, this Agreement shall automatically terminate and become null and void and be of no further force or effect, and the parties shall have no obligations hereunder. Following the Closing, this Agreement shall terminate automatically upon the date on which there are no Registrable Securities outstanding.
7.12 Further Assurances. Each party shall execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions of this Agreement and give effect to the transactions contemplated hereby.
[Remainder of page intentionally left blank; signature pages follow]
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[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered as of the date first written above.
ISSUER:
STEWARDS, INC., a Nevada corporation (OTC: SWRD)
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
GUARANTOR:
STEWARDS INTERNATIONAL FUNDS PCC ON BEHALF OF THE STEWARDS PRIVATE CREDIT
FUND, a Mauritius Protected Cell Company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
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SELLERS:
ENVY DEVELOPMENT PB, LLC
By: /s/ Bernard Hsiao
Name: Bernard Hsiao
Title: Manager
THE MYELIN GROUP, LLC
By: /s/ Michael Hsiao
Name: Michael Hsiao
Title: Manager
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Exhibit A
Escrowed Shares Allocation:
| Seller | Escrowed Shares Allocation |
| Envy Development PB, LLC | 96.67% |
| The Myelin Group, LLC | 3.33% |
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THIS INSTRUMENT EVIDENCES A RENEWAL, AMENDMENT AND RESTATEMENT OF AN EXISTING OBLIGATION WITH NO NEW OBLIGOR. FLORIDA DOCUMENTARY STAMP TAX ON THE INDEBTENESS EVIDENCED BY THE PRIOR NOTE OBLIGATIONS RENEWED BY THIS INSTRUMENT WERE PAID AND AFFIXED TO (I) THAT CERTAIN AMENDED AND RESTATED REAL ESTATE MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT RECORDED ON AUGUST 16, 2024 AS INSTRUMENT NUMBER 119780564 IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA (THE “PUBLIC RECORDS”), (II) THAT CERTAIN NOTICE OF FUTURE ADVANCE AND AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING RECORDED ON MARCH 29, 2022 AS INSTRUMENT #118039413 IN THE PUBLIC RECORDS, AND (III) THAT CERTAIN MORTGAGE AND SECURITY AGREEMENT RECORDED ON NOVEMBER 12, 2020 AS INSTRUMENT NUMBER 116856370 IN THE PUBLIC RECORDS. ADDITIONAL FLORIDA DOCUMENTARY STAMP TAX IN THE AMOUNT OF $10,999.10 BASED UPON THE FUTURE ADVANCE DESCRIBED HEREIN IN THE AMOUNT OF $3,142,564.07 ARE BEING PAID AND AFFIXED TO THE MORTGAGE INSTRUMENT SECURING THIS NOTE UPON RECORDATION THEREOF, PURSUANT TO SECTION 201.09, FLORIDA STATUTES AND RULE 12B-4.052(10)(B) OF THE FLORIDA ADMINISTRATIVE CODE.
AMENDED AND RESTATED RENEWAL PROMISSORY NOTE
$47,700,000.00
New York, New York
September 23, 2026
FOR VALUE RECEIVED, ENVY DEVELOPMENT DE, LLC, a Delaware limited
liability company, as maker, having its principal place of business at 4300 North University Drive, Suite D105, Lauderhill, Florida 33351 (“Maker”), hereby unconditionally promises to pay to the order of LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company, as lender, having an address at c/o LoanCore Capital, 55 Railroad Avenue, Suite 100, Greenwich, Connecticut 06830 (together with its successors and/or assigns, “Lender”), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of FORTY-SEVEN MILLION SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS ($47,700,000.00), or so much thereof as is advanced pursuant to that certain Loan Agreement dated the date hereof between Maker, Envy Recreational LLC, a Delaware limited liability company, and Lender (as the same may be amended, modified, supplemented, replaced or otherwise modified from time to time, the “Loan Agreement”), in lawful money of the United States of America, with interest thereon to be computed from the date of this Amended and Restated Promissory Note (this “Note”) at the Interest Rate (as defined in the Loan Agreement), and to be paid in accordance with the terms of this Note and the Loan Agreement. All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement.
This Note amends and restates (and renews and replaces in its entirety) the provisions of that certain Amended and Restated Promissory Note dated August 29, 2024, in the original principal amount of $55,219,985.00, executed by Maker in favor of FC Envy, LLC, attached hereto as Exhibit A (as amended and assigned, the “Existing Note”) together with all allonges thereto, on which Existing Note the outstanding principal balance as of the date hereof is $44,557,435.93, without constituting a novation, satisfaction, cancellation or extinguishment of the Existing Note, but that henceforth the indebtedness represented thereby and the obligations thereof shall be paid in accordance with the terms and conditions of this Note, and not in accordance with the terms and conditions of the Existing Note. This Note evidences such indebtedness, together with an additional indebtedness in the maximum principal sum of $3,142,564.07, for a total aggregate indebtedness in the maximum principal amount of $47,700,000.00.
ARTICLE 1: PAYMENT TERMS
Maker agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note and all other amounts due under this Note, the Loan Agreement and the other Loan Documents from time to time outstanding, at the rates and at the times specified in the Loan Agreement, and the outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon and all other amounts due under this Note, the Loan Agreement and the other Loan Documents shall be due and payable on the Maturity Date.
ARTICLE 2: DEFAULT AND ACCELERATION
Upon the occurrence and during the continuance of an Event of Default (other than an Event of Default described in paragraph (f) or (g) of Section 8.1 of the Loan Agreement) and at any time and from time to time thereafter, in addition to any other rights or remedies available to it pursuant to the Loan Documents or at law or in equity, Lender may take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Maker and in and to the Property; including declaring the Debt to be immediately due and payable (including unpaid interest, Default Rate interest, Late Payment Charges, Spread Maintenance Premium, Exit Fees and any other amounts owing by Maker), without notice or demand; and upon the occurrence and during the continuance of any Event of Default described in paragraph (f) or (g) of Section 8.1 of the Loan Agreement, the Debt (including unpaid interest, Default Rate interest, Late Payment Charges, Spread Maintenance Premium, Exit Fees and any other amounts owing by Maker) shall immediately and automatically become due and payable, without notice or demand, and Maker hereby expressly waives any such notice or demand, anything contained in any Loan Document to the contrary notwithstanding.
ARTICLE 3: LOAN DOCUMENTS
This Note is secured by the Mortgages and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Mortgages and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.
ARTICLE 4: SAVINGS CLAUSE
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Notwithstanding anything to the contrary contained herein, (a) all agreements and communications between Maker and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed to constitute interest, the interest contracted for, charged or received by Lender shall never exceed the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by this Note and as provided for herein or the other Loan Documents, under the laws of such State or States whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan (the “Maximum Legal Rate”), (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Maker to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward the payment of the principal of any and all then outstanding indebtedness of Maker to Lender, or if there is no such indebtedness, shall immediately be returned to Maker.
ARTICLE 5: NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Maker or Lender, but only by an agreement in writing signed by the party(ies) against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
ARTICLE 6: WAIVERS
To the extent permitted by applicable law, Maker and all others who may become liable for the payment of all or any part of the Debt do hereby jointly and severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Loan Agreement or the other Loan Documents made by agreement between Lender and any other Person shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Maker or any other Person who may become liable for the payment of all or any part of the Debt under this Note, the Loan Agreement or the other Loan Documents. No notice to or demand on Maker shall be deemed to be a waiver of the obligation of Maker or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Loan Agreement or the other Loan Documents. If Maker is a partnership or limited liability company, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the individuals or entities comprising the partnership or limited liability company, and the term “Maker,” as used herein, shall include any alternate or successor partnership or limited liability company, but any predecessor partnership or limited liability company and its partners or members shall not thereby be released from any liability. If Maker is a corporation, the agreements contained herein shall remain in full force and be applicable, notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, the corporation, and the term “Maker,” as used herein, shall include any alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. Nothing in the foregoing two
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sentences shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership, limited liability company or corporation which may be set forth in the Loan Agreement, the Mortgages or any other Loan Document.
ARTICLE 7: INTENTIONALLY OMITTED ARTICLE 8: TRANSFER
Upon the transfer of this Note by Lender, Maker hereby waiving notice of any such transfer, except as expressly required under the Loan Agreement, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred.
ARTICLE 9: EXCULPATION
The provisions of Section 10.1 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.
ARTICLE 10: GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS
(a) THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK AND THE PROCEEDS OF THIS NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT PERMITTED BY LAW, MAKER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE, AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR MAKER ARISING OUT OF OR RELATING TO THIS NOTE MAY AT LENDER’S
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OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND MAKER 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, AND MAKER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. MAKER DOES HEREBY DESIGNATE AND APPOINT:
COZEN O’CONNOR
ATTENTION: WILLIAM F. DAVIS, ESQ. 3 WTC
175 GREENWICH STREET, 55TH FLOOR NEW YORK, NEW YORK 10007
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND MAKER AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO MAKER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON MAKER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. MAKER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST MAKER IN ANY OTHER JURISDICTION.
ARTICLE 11: WAIVER OF JURY TRIAL
MAKER (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 NOTE, THE MORTGAGES OR THE OTHER 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 MAKER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
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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 MAKER.
ARTICLE 12: SUCCESSORS AND ASSIGNS
This Note shall be binding upon, and shall inure to the benefit of, Maker and Lender and their respective successors and permitted assigns. Lender shall have the right to assign or transfer its rights under this Note in connection with any assignment of the Loan and the Loan Documents in each case subject to the provisions of the Loan Agreement. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Note. Maker shall not have the right to assign or transfer its rights or obligations under this Note without the prior written consent of Lender, as provided in the Loan Agreement, and any attempted assignment without such consent shall be null and void.
ARTICLE 13: NOTICES
All notices or other written communications hereunder shall be delivered in accordance with Section 6.1 of the Loan Agreement.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, Maker has duly executed this Note as of the day and year first above written.
MAKER:
ENVY DEVELOPMENT DE, LLC,
a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
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PROMISSORY NOTE
$2,000,000.00
Lauderhill, Florida
Effective Date: September 17, 2026
FOR VALUE RECEIVED, the undersigned, Stewards, Inc., a Nevada corporation (the “Maker” or “Borrower”), promises to pay to the order of Envy Development PB, LLC, a Florida limited liability company (the “Lender” or “Envy”), the principal sum of Two Million Dollars and No/100 ($2,000,000.00), together with interest on the unpaid principal balance as provided herein, in accordance with the following provisions.
This Note evidences a loan in the principal amount of Two Million Dollars ($2,000,000.00) (the “Loan”) advanced by Lender to Maker. Interest accrues on the outstanding principal at the per diem rate set forth in Section 1. The entire outstanding principal balance, together with all accrued and unpaid interest, is due and payable in full on the Maturity Date.
1. Definitions
As used in this Note, the following terms shall have the following meanings:
§ “Business Day”: Any day other than a Saturday, Sunday, or any other day on which national banks in Broward County, Florida, are not open for business.
§ “Default Rate”: The maximum rate permitted by Florida law (Chapter 687, Florida Statutes).
§ “Event of Default”: As defined in Section 6 below.
§ “Interest Rate”: One Thousand Three Hundred Thirty-Three and 33/100 Dollars ($1,333.33) per day, accruing on the outstanding principal balance from the Effective Date until the principal is repaid in full.
§ “Loan Documents”: This Note and any other documents executed in connection herewith.
§ “Maturity Date”: October 5, 2026.
§ “Maximum Rate”: The maximum non-usurious interest rate permitted under Chapter 687, Florida Statutes.
2. Loan Funding
Lender has advanced, or concurrently with the execution of this Note is advancing, the principal sum of
$2,000,000.00 to Maker (the “Loan”). This Note evidences Maker’s obligation to repay the Loan, together with all accrued and unpaid interest, in accordance with its terms.
3. Payment Terms
(a) Interest Payments: Interest shall accrue on the outstanding principal at the Interest Rate of $1,333.33 per day. No periodic interest payments shall be required prior to the Maturity Date. All accrued and unpaid interest shall be due and payable on the Maturity Date.
(b) Principal and Final Payment: The entire outstanding principal balance of $2,000,000.00, together with all accrued and unpaid interest, shall be due and payable in full on the Maturity Date.
(c) Application of Payments: All payments shall be applied first to late fees or other charges, then to accrued interest, and then to principal.
(d) Prepayment: Maker may prepay the principal in whole or in part at any time without premium or penalty. Prepayments shall be applied to the outstanding principal.
(e) Late Charges: If any payment is not made within ten (10) days of its due date, Maker shall pay a late charge of five percent (5%) of the overdue amount.
4. Governing Law and Jurisdiction
This Note shall be governed by and construed in accordance with the laws of the State of Florida, without regard to conflict of laws principles. Maker irrevocably consents to the exclusive jurisdiction and venue of the state and federal courts located in Broward County, Florida, for any action arising out of or relating to this Note. Maker waives any objection to such venue or jurisdiction, including forum non conveniens.
5. Usury Savings Clause
Notwithstanding any provision herein, Lender shall not be entitled to receive, collect, or apply as interest any amount in excess of the Maximum Rate. If Lender receives interest in excess of the Maximum Rate, such excess shall be applied to reduce the principal balance, or if the principal is paid in full, refunded to Maker. In determining compliance with the Maximum Rate, the parties shall, to the extent permitted by law: (i) characterize non-principal payments (except those expressly designated as interest) as expenses, fees, or premiums; (ii) exclude voluntary prepayments and their effects; and (iii) amortize interest over the entire term of the Note.
6. Events of Default
An Event of Default shall occur upon any of the following:
(a) Maker fails to make any payment of principal, interest, or other amounts when due, and such failure continues for ten (10) days after written notice from Lender.
(b) Maker breaches any covenant or representation in this Note and such breach remains uncured for thirty
(30) days after written notice from Lender.
(c) Maker becomes insolvent, files for bankruptcy, or has a bankruptcy petition filed against it that is not dismissed within sixty (60) days.
(d) Any material adverse change occurs in the financial condition or operations of Maker that, in Lender’s reasonable discretion, impairs its ability to perform under this Note.
7. Remedies
Upon an Event of Default, Lender may, at its sole discretion:
(a) Accelerate and declare immediately due and payable the entire outstanding principal, accrued interest, and all other amounts due under this Note.
(b) Increase the interest rate on the unpaid principal to the Default Rate, effective from the date of default until paid in full, subject to the Maximum Rate.
(c) Pursue all rights and remedies available at law or in equity, including recovery of all costs of
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enforcement, including reasonable attorneys’ fees, paralegal fees, and court costs (excluding in-house counsel costs). Lender’s remedies are cumulative.
8. Waivers
Maker waives:
(a) presentment, demand, protest, notice of demand, notice of intent to accelerate, notice of acceleration, notice of nonpayment, notice of dishonor, and all other notices except as expressly required herein;
(b) any defense based on any delay, extension, renewal, modification, waiver, release, or indulgence by Lender; and
(c) to the fullest extent permitted by Florida law, any right to a trial by jury in any action arising out of or relating to this Note. This jury trial waiver is a material inducement for Lender to advance the funds.9. Notices
All notices shall be in writing and delivered personally, by certified mail (return receipt requested), or by a nationally recognized overnight courier to the addresses below, or as otherwise designated in writing:
§ To Maker: Stewards, Inc., 4300 N. University Drive, Suite D-105, Lauderhill, Florida 33351, Attn: Shaun Quin, President.
§ To Lender: Envy Development PB, LLC, c/o Bernard Hsiao and Michael Hsiao, bh@invesca.com and mh@invesca.com (or such other address as Lender may designate). Notices are deemed given upon receipt or, if mailed, three (3) Business Days after mailing.
9. Miscellaneous
(a) Time of Essence: Time is of the essence for all obligations under this Note.
(b) Severability: If any provision is found invalid or unenforceable, the remaining provisions shall remain in full force and effect.
(c) Amendments: No amendment or waiver of any provision shall be effective unless in writing and signed by Lender.
(d) Binding Effect: This Note is binding on Maker and its successors and assigns and inures to the benefit of Lender and its successors and assigns.
(e) No Guaranty: No personal guarantors are required under this Note.
IN WITNESS WHEREOF, Maker has executed this Note as of the Effective Date. Maker:
Stewards, Inc.,
a Nevada corporation
By: /s/ Shaun Quin
Name: Shaun Quin
Title: President
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Lender Acknowledgment (for execution by Envy Development PB, LLC):
Envy Development PB, LLC,
a Florida limited liability company
By: /s/ Bernard Hsiao
Name: Bernard Hsiao
Title: Authorized Representative
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LOAN AGREEMENT
Dated as of September 23, 2026
By and Among
Borrowers (as defined herein)
and
LOANCORE CAPITAL CREDIT REIT LLC,
as Lender
TABLE OF CONTENTS
Page
1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1
1.1 Specific Definitions 1
1.2 Index of Other Definitions 25
1.3 Principles of Construction 28
2. GENERAL LOAN TERMS 28
2.1 The Loan 28
2.2 Interest; Monthly Payments. 29
2.2.1 Generally 29
2.2.2 Default Rate 29
2.2.3 Effect of a Benchmark Transition Event 29
2.2.4 Taxes. 31
2.2.5 Change in Law; Additional Costs 32
2.2.6 Breakage Indemnity 33
2.2.7 New Payment Date 34
2.3 Loan Repayment. 34
2.3.1 Repayment 34
2.3.2 Mandatory Prepayments 34
2.3.3 Optional Prepayments 35
2.3.4 Prepayments; Generally 35
2.4 Release of Properties on Payment in Full 35
2.5 Payments and Computations. 36
2.5.1 Making of Payments 36
2.5.2 Computations 36
2.5.3 Late Payment Charge 36
2.6 Interest Rate Protection Agreements. 36
2.6.1 Interest Rate Protection Agreement 36
2.6.2 Execution of Documents 38
2.6.3 No Obligation of Lender 38
2.6.4 Receipts from Interest Rate Protection Agreements 38
2.6.5 Failure to Provide Interest Rate Protection Agreement 38
2.6.6 Benchmark Replacement; Substitute IRPA. 38
2.7 Fees; Spread Maintenance Premium. 40
2.7.1 Administrative Fee 40
2.7.2 Origination Fee 40
2.7.3 Exit Fee 40
2.7.4 Spread Maintenance Premium 40
2.8 Extension Options 40
3. CASH MANAGEMENT AND RESERVES 41
3.1 Cash Management Arrangements 41
3.2 Required Repairs. 42
3.2.1 Completion of Required Repairs 42
3.2.2 Required Repairs Reserve 43
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3.3 Real Estate Taxes 43
3.4 Insurance 44
3.5 Capital Expense Reserve 44
3.6 Rollover Reserve 45
3.7 Security Upgrade Reserve 45
3.8 Casualty/Condemnation Subaccount 46
3.9 Security Deposits 46
3.10 Cash Collateral Subaccount 46
3.11 Shortfall Reserve. 47
3.12 Intentionally Omitted 48
3.13 Intentionally Omitted. 48
3.14 Grant of Security Interest; Application of Funds 48
3.15 Property Cash Flow Allocation. 49
4. REPRESENTATIONS AND WARRANTIES 50
4.1 Organization; Special Purpose. 50
4.2 Proceedings; Enforceability 50
4.3 No Conflicts 50
4.4 Litigation 51
4.5 Agreements 51
4.6 Title 51
4.7 No Bankruptcy Filing 52
4.8 Full and Accurate Disclosure 52
4.9 Tax Filings 53
4.10 ERISA; No Plan Assets 53
4.11 Compliance 54
4.12 Major Contracts 54
4.13 Federal Reserve Regulations; Investment Company Act; Bank
Holding Company 55
4.14 Easements; Utilities and Public Access 55
4.15 Physical Condition/FEMA 55
4.16 Leases 55
4.17 Fraudulent Transfer 56
4.18 Ownership of Borrower 57
4.19 Purchase Options 57
4.20 Management Agreement 57
4.21 Hazardous Substances 57
4.22 Name; Principal Place of Business 58
4.23 Other Debt 58
4.24 Assignment of Leases and Rents 58
4.25 Insurance 58
4.26 FIRPTA 58
4.27 Fiscal Year 58
4.28 Intellectual Property/Websites 58
4.29 Operations Agreements 58
4.30 Illegal Activity 58
4.31 Intentionally Omitted. 59
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4.32 Intentionally Omitted 59
4.33 Intentionally Omitted 59
4.34 Pledged Collateral 59
4.35 No Contractual Obligations 60
5. COVENANTS 60
5.1 Existence 60
5.2 Property Taxes and Other Charges 60
5.3 Access to Properties 61
5.4 Repairs; Maintenance and Compliance; Alterations. 61
5.4.1 Repairs; Maintenance and Compliance 61
5.4.2 Alterations 62
5.5 Performance of Other Agreements 63
5.6 Cooperate in Legal Proceedings 63
5.7 Further Assurances 63
5.8 Environmental Matters. 63
5.8.1 Hazardous Substances 63
5.8.2 Environmental Monitoring. 64
5.8.3 O & M Program 65
5.9 Title to the Properties 66
5.10 Leases. 66
5.10.1 Generally 66
5.10.2 Material Leases 66
5.10.3 Minor Leases 66
5.10.4 Temporary Apartment Rentals 67
5.10.5 Additional Covenants with Respect to Leases 67
5.11 Estoppel Statement 67
5.12 Property Management. 68
5.12.1 Management Agreement 68
5.12.2 Termination of Manager 68
5.12.3 Replacement of Manager with Crown Residential 69
5.13 Special Purpose Bankruptcy Remote Entity 69
5.14 Assumption in Non-Consolidation Opinion 69
5.15 Change in Business or Operation of Properties 69
5.16 Debt Cancellation 70
5.17 Affiliate Transactions 70
5.18 Zoning 70
5.19 No Joint Assessment 70
5.20 Principal Place of Business 70
5.21 Change of Name, Identity or Structure 70
5.22 Indebtedness 71
5.23 Licenses; Intellectual Property; Website. 71
5.23.1 Licenses 71
5.23.2 Intellectual Property 71
5.23.3 Website 71
5.24 Compliance with Restrictive Covenants 71
5.25 ERISA. 71
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5.26 Prohibited Transfers 72
5.27 Liens 72
5.28 Dissolution 73
5.29 Expenses. 73
5.30 Indemnity 74
5.31 Patriot Act Compliance 76
5.32 Approval of Major Contracts 76
5.33 Litigation 77
5.34 Limitation on Securities Issuances 77
6. NOTICES AND REPORTING 77
6.1 Notices 77
6.2 Borrower Notices and Deliveries 78
6.3 Financial Reporting. 79
6.3.1 Bookkeeping 79
6.3.2 Annual Reports 79
6.3.3 Monthly/Quarterly Reports 80
6.3.4 Compliance Certificates 80
6.3.5 Other Reports 81
6.3.6 Annual Budget. 81
6.3.7 Additional Operating Expenses. 82
6.3.8 Intentionally Omitted 82
6.3.9 Breach 82
7. INSURANCE; CASUALTY; AND CONDEMNATION 82
7.1 Insurance. 83
7.1.1 Coverage 83
7.1.2 Policies 85
7.2 Casualty. 86
7.2.1 Notice; Restoration 87
7.2.2 Settlement of Proceeds 87
7.3 Condemnation. 87
7.3.1 Notice; Restoration 87
7.3.2 Collection of Award 88
7.4 Application of Proceeds or Award. 88
7.4.1 Application to Restoration 88
7.4.2 Application to Debt. 89
7.4.3 Procedure for Application to Restoration 90
7.5 Application of Business Interruption Insurance and/or Rent Loss Policies 90
8. DEFAULTS 91
8.1 Events of Default 91
8.2 Remedies. 92
8.2.1 Acceleration 92
8.2.2 Remedies Cumulative 93
8.2.3 Severance 93
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8.2.4 Delay 94
8.2.5 Lender’s Right to Perform 94
9. SECONDARY MARKET PROVISIONS 94
9.1 Sale of Note and Secondary Market Transaction. 94
9.1.1 General; Borrower Cooperation 95
9.1.2 Use of Information 96
9.1.3 Borrowers Obligations Regarding Disclosure Documents 96
9.1.4 Borrower Indemnity Regarding Filings 97
9.1.5 Indemnification Procedure 97
9.1.6 Contribution 97
9.1.7 Survival 98
9.2 Severance of Loan 98
10. MISCELLANEOUS 98
10.1 Exculpation 98
10.2 Brokers and Financial Advisors. 102
10.3 Retention of Servicer. 102
10.4 Survival; Successors and Assigns 103
10.5 Lender’s Discretion; Rating Agency Review Waiver. 103
10.6 Governing Law. 104
10.7 Modification, Waiver in Writing 105
10.8 Trial by Jury 106
10.9 Headings/Schedules 106
10.10 Severability 106
10.11 Preferences 106
10.12 Waiver of Notice 106
10.13 Remedies of Borrower 107
10.14 Prior Agreements 107
10.15 Offsets, Counterclaims and Defenses 107
10.16 Publicity 107
10.17 No Usury 107
10.18 Conflict; Construction of Documents; Reliance 108
10.19 No Joint Venture or Partnership; No Third Party Beneficiaries. 108
10.20 Spread Maintenance Premium 109
10.21 Assignments and Participations 109
10.22 Intentionally Omitted 110
10.23 Waiver of Marshalling of Assets 110
10.24 Joint and Several Liability 110
10.25 Creation of Security Interest 110
10.26 Cross Default; Cross Collateralization 110
10.27 Contribution Among Borrowers 110
10.28 Certain Additional Rights of Lender 111
10.29 Set-Off 111
10.30 Intentionally Omitted 112
10.31 Counterparts 112
10.32 Negation of Implied Right to Cure Events of Default 112
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10.33 Acknowledgement and Consent to Bail-In of Affected Financial
Institutions. 112
10.34 Registered Obligations. 114
10.35 Waiver Respecting Benchmark and Benchmark Replacement 115
Schedules and Exhibits
Schedules:
Schedule 1 Location of Properties Schedule 2 Required Repairs
Schedule 3 Exceptions to Representations and Warranties Schedule 4 Organization of Borrower
Schedule 5 Definition of Special Purpose Bankruptcy Remote Entity Schedule 6 Allocated Loan Amounts
Schedule 7 Rent Roll
Schedule 8 Intellectual Property/Websites Schedule 9 REA
Schedule 10 Approved Operating Budget Schedule 11 Schedule of Up-Front Reserves Schedule 12-1 Annual Reports Officer’s Certificate
Schedule 12-2 Monthly/Quarterly Reports Officer’s Certificate Schedule 12-3 Compliance Certificate
Schedule 13 Crown Residential Lease
Exhibits:
Exhibit A Form of Tenant Direction Letter
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LOAN AGREEMENT
LOAN AGREEMENT dated as of September 23, 2026 (as the same may be modified, supplemented, amended or otherwise changed, this “Agreement”) by and among ENVY RECREATIONAL LLC, a Delaware limited liability company (“Envy Recreational”), and ENVY DEVELOPMENT DE, LLC, a Delaware limited liability company (“Envy Development”; Envy Recreational and Envy Development are each a “Borrower” and collectively together with their respective permitted successors and assigns, “Borrowers”), and LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company (together with its successors and assigns, “Lender”).
1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1.1 Specific Definitions. The following terms have the meanings set forth below: “Acceptable Counterparty” shall mean a bank or other financial institution which
has: (i) a long-term unsecured debt rating of “A-” or higher by S&P; and (ii) a long-term unsecured debt rating of not less than “A3” by Moody’s; provided however, that SMBC Capital Markets, Inc. (with an Acceptable SMBC Credit Support Party as its credit support party) will be an Acceptable Counterparty so long as the rating of its credit support party (provided such credit support party shall be an Acceptable SMBC Credit Support Party) is not downgraded, withdrawn or qualified by S&P or Moody’s from the long and short term ratings issued by such rating agencies below the lesser of the above rating (as applicable) or its ratings as of the date hereof. As used herein, an “Acceptable SMBC Credit Support Party” shall mean (a) Sumitomo Mitsui Banking Corporation or a replacement guarantor that meets the foregoing rating requirements and provides a guaranty on substantially the same form as the guaranty provided by Sumitomo Mitsui Banking Corporation on the date hereof and (b) provided any such credit support party guaranty guaranties all current and future obligations under the Interest Rate Protection Agreement.
“ADA” shall mean the Americans with Disabilities Act of July 26, 1990, Pub. L. No. 101-336, 104 Stat. 327, 42 U.S.C. § 12101, et. seq., as amended from time to time.
“Administrative Fee” shall mean an administrative fee payable to (x) LCC, if Lender is an Affiliate of LCC or a securitization vehicle managed by LCC or an Affiliate of LCC, or (y) Lender, if Lender is not an Affiliate of LCC or a securitization vehicle managed by LCC or an Affiliate of LCC, each month during the Term in an amount equal to $1,000 per month.
“Affiliate” shall mean, as to any Person (for purposes of this definition, the “Subject Person”), any other Person: (i) which, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the Subject Person; (ii) which, directly or indirectly, beneficially owns or holds twenty percent (20%) or more of any class of stock or any other ownership interest in the Subject Person; (iii) twenty percent (20%) or more of the direct or indirect ownership of which is beneficially owned or held by the Subject Person; (iv) which is a member of the family (as defined in Section 267(c)(4) of the Code) of the Subject Person or which is a trust or estate, the beneficial owners of which are members of the family (as defined in Section 267(c)(4) of the Code) of the Subject Person; or (v) which, directly or indirectly, is a general partner, controlling shareholder, managing member or director of the Subject Person.
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“Allocated Loan Amount” shall mean with respect to the Property owned by each Borrower, the amount set forth with respect to such Property on Schedule 6 hereto.
“Approved Capital Expenses” shall mean out-of-pocket Capital Expenses incurred by a Borrower and payable to third parties that are not Affiliates of any Borrower Party, which Capital Expenses shall either be (i) included in the Approved Capital Expenses Budget for the Property owned by such Borrower for the current calendar month or (ii) reasonably approved by Lender.
“Approved Leasing Expenses” shall mean the actual out-of-pocket expenses incurred by a Borrower and payable to third parties that are not Affiliates of any Borrower Party in leasing the approximately 5,575 rentable square feet of ground floor commercial space at the Property owned by Envy Development pursuant to Leases entered into in accordance with the Loan Documents, including brokerage commissions and tenant improvement costs and allowances, which expenses (i) are (a) approved by Lender in connection with approving the applicable Lease, (b) incurred in the ordinary course of business and on market terms and conditions in connection with Leases which do not require Lender’s approval under the Loan Documents, and Lender shall have received (and approved, if applicable) a budget for such tenant improvement costs and a schedule of leasing commission payments payable in connection therewith, or (c) otherwise approved by Lender, which approval shall not be unreasonably withheld or delayed, and (ii) are substantiated by executed documents and contracts evidencing the same, including Lease documents and brokerage agreements
“Approved Operating Expenses” shall mean during a Cash Management Period, operating expenses incurred by a Borrower that are (i) included in the Approved Operating Budget for the Property owned by such Borrower for the current calendar month, (ii) for Real Estate Taxes, Insurance Premiums, electric, gas, oil, water, sewer or other utility service to such Property, (iii) Emergency Expenditures or (iv) reasonably approved by Lender.
“Approved Security Upgrade Expenses” shall mean out-of-pocket costs and expenses incurred by a Borrower that are (i) for security enhancements at the Properties including, without limitation, the installation and maintenance of a controlled entry system (e.g., an electronic intercom system or key fob system), the installation and implementation of vehicle license plate readers and the installation of security cameras at access points throughout the Property or (ii) for other security enhancement purposes as reasonably approved by Lender.
“Benchmark” shall mean, with respect to any Interest Period, initially, Term SOFR; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date, have occurred with respect to Term SOFR or to the then current Benchmark, then “Benchmark” shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior Benchmark pursuant to Section 2.2.3 hereof (provided, however, that during any applicable period set forth in Section 2.2.3(h) hereof, the “Benchmark” shall be as set forth in Section 2.2.3(h)). The Benchmark shall be expressed as a percentage per annum rounded upwards, if necessary, to the nearest one sixteenth (1/16th) of one percent (1%). In no event shall the Benchmark for any Interest Period be less than the Benchmark Floor.
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“Benchmark Conforming Changes” shall mean, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day”, “U.S. Government Securities Business Day”, “Interest Period”, “Interest Determination Date”, “Payment Date”, “Periodic Term SOFR Determination Day”, “Term SOFR”, the timing and frequency of determining rates and making payments of interest, the timing of borrowing requests, prepayment, conversion or continuation notices, the length of lookback periods, the applicability of breakage provisions, preceding and succeeding business day conventions, provisions pertaining to the Interest Rate Protection Agreement and other administrative or operational matters) that Lender determines may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by Lender in a manner substantially consistent with Industry Accepted Practices (or, if Lender determines that adoption of any portion of such Industry Accepted Practice is not administratively feasible or if Lender determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as Lender determines is reasonably necessary in connection with the administration of the Loan, this Agreement and the other Loan Documents).
“Benchmark Floor” shall mean 3.35%.
“Benchmark Replacement” shall mean, with respect to any Benchmark Transition Event, the alternate benchmark rate selected by Lender as the replacement for the then-current Benchmark, giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) Industry Accepted Practices.
“Benchmark Replacement Condition” shall mean, with respect to any conversion of the Benchmark to a Benchmark Replacement if the Loan is included in a REMIC Trust, either (i) receipt by Lender of an opinion of nationally recognized REMIC Trust counsel reasonably acceptable to Lender, in form and substance reasonably acceptable to Lender, obtained at Borrowers’ sole cost and expense, that such conversion complies with the applicable REMIC Trust requirements as determined under the Code, the regulations, revenue rulings, revenue procedures and other administrative, legislative and judicial guidance relating to the tax treatment of REMIC Trusts, including without limitation, in each case as and to the extent required by Lender, that such conversion will not cause the REMIC Trust to fail to qualify as a “REMIC” as defined by Section 860D of the Code, or the Loan to fail to be a “qualified mortgage” within the meaning of Section 860G(a)(3)(A) of the Code, or cause such REMIC Trust to be subject to a tax on “prohibited transactions” under Section 860F(a) of the Code or (ii) formal guidance shall have been issued by the IRS to the effect that such conversion will comply with such REMIC Trust requirements.
“Benchmark Replacement Date” shall mean:
1. in the case of a Benchmark Transition Event pursuant to clauses (1) or (2) of the definition thereof, the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the
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calculation thereof) permanently or indefinitely ceases to provide such Benchmark;
2. in the case of a Benchmark Transition Event pursuant to clause (3) of the definition thereof, the date of the public statement or publication of information referenced therein; or
3. in the case of a Benchmark Transition Event pursuant to clause (4) of the definition thereof, the date selected by Lender.
For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as the Interest Determination Date in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred immediately prior to the Interest Determination Date for such determination. Notwithstanding the foregoing, in no event shall the Benchmark Replacement Date occur prior to satisfaction of the Benchmark Replacement Condition or waiver thereof by Lender.
“Benchmark Transition Event” shall mean the occurrence of one or more of the following events with respect to the then current Benchmark:
1. a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide such Benchmark for one-month periods, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark;
2. a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, which states that the administrator of such Benchmark has ceased or will cease to provide such Benchmark for one-month periods permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark;
3. a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark announcing that such Benchmark is no longer representative; or
4. Lender determines in good faith that, following any Benchmark Transition Event that results in a Benchmark Replacement other than Term SOFR being utilized in determining the Interest Rate under this Agreement, the
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applicable successor alternate benchmark rate is not consistent with Industry Accepted Practices, and the provision of notice of the foregoing to Borrowers.
“Benchmark Unavailability Period” shall mean the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.2.3 hereof and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.2.3 hereof.
“Borrower Party” shall mean any Borrower, Sole Member, any Guarantor and any Affiliate that Controls, is Controlled by or is under Common Control with a Borrower.
“Business Day” shall mean any day other than a Saturday, Sunday or any day on which commercial banks in New York, New York are authorized or required to close.
“Calculation Date” shall mean the last day of each calendar quarter during the
Term.
“Capital Expenses” shall mean expenses that are capital in nature or required under
GAAP to be capitalized.
“Cash Management Bank” shall mean PNC Bank, National Association, a national banking association, or any other bank or depository selected by Lender.
“Cash Management Period” shall mean a period that:
(i) commences as of the Closing Date (such Cash Management Period occurring under this clause (i) is referred to herein as the “Initial Cash Management Period”), and ends, provided that no other Cash Management Period then exists under any other clause of the definition of Cash Management Period, on the next Payment Date following the date upon which Lender has determined that both (x) the Debt Yield equals or exceeds six percent (6.0%) for the two (2) most recent Calculation Dates (and if the Debt Yield calculation and related back-up information reasonably required to be delivered to Lender pursuant to Section 6.3.4 hereof is not delivered to Lender as and when required hereunder, a Cash Management Period shall be ongoing, unless and until such calculation and back-up information are delivered and they indicate that, in fact, no Cash Management Period is ongoing under this clause (i)) and (y) the Debt Service Coverage Ratio equals or exceeds 1.05:1.00 for the two (2) most recent Calculation Dates (and if the Debt Service Coverage Ratio calculation and related back-up information reasonably required to be delivered to Lender pursuant to Section 6.3.4 hereof is not delivered to Lender as and when required hereunder, a Cash Management Period shall be ongoing, unless and until such calculation and back-up information are delivered and they indicate that, in fact, no Cash Management Period is ongoing under this clause (i)); or;
(ii) commences upon the date on which an Event of Default occurs, and ends, provided that no other Cash Management Period then exists under any other clause
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of the definition of Cash Management Period, on the next Payment Date following the date upon which such Event of Default has been cured and such cure has been accepted by Lender, or such Event of Default has been waived by Lender (provided that in no event shall Lender have any obligation to accept such a cure of, or waive, any Event of Default), and no other Event of Default is then continuing; or
(iii) commences upon Lender’s determination that the Debt Yield is less than six percent (6.0%) as of any Calculation Date occurring after the end of the Initial Cash Management Period, and ends, provided that no other Cash Management Period then exists under any other clause of the definition of Cash Management Period, on the next Payment Date following the date upon which the Debt Yield equals or exceeds six percent (6.0%) for the two (2) most recent Calculation Dates (and if the Debt Yield calculation required under Section 6.3.4 hereof is not delivered to Lender as and when required hereunder, a Cash Management Period shall be deemed to have commenced and be ongoing, unless and until such calculation and back-up information are delivered and they indicate that, in fact, no Cash Management Period is ongoing under this clause (ii) and a Cash Management Period is not otherwise ongoing under this definition of “Cash Management Period”); or
(iv) commences upon Lender’s determination that the Debt Service Coverage Ratio is less than 1.05:1.00 as of any Calculation Date occurring after the end of the Initial Cash Management Period, and ends, provided that no other Cash Management Period then exists under any other clause of the definition of Cash Management Period, on the next Payment Date following the date upon which Lender has determined that the Debt Service Coverage Ratio equals or exceeds 1.05:1.00 for the two (2) most recent Calculation Dates (and if the Debt Service Coverage Ratio calculation required under Section 6.3.4 hereof is not delivered to Lender as and when required hereunder, a Cash Management Period shall be deemed to have commenced and be ongoing, unless and until such calculation and back-up information are delivered and they indicate that, in fact, no Cash Management Period is ongoing under this clause (iii) and a Cash Management Period is not otherwise ongoing under this definition of “Cash Management Period”).
Notwithstanding the foregoing, in no event shall a Cash Management Period be deemed to have ended (a) if the Stated Maturity Date has occurred or (b) if any other Cash Management Period is continuing.
For the avoidance of doubt, if a Cash Management Period will commence as a result of either the Debt Yield or Debt Service Coverage Ratio as of any Calculation Date, Borrower may avoid the commencement of such Cash Management Period if, at such time, Borrower prepays a portion of the unpaid Principal in accordance with Section 2.3.3 hereof to a level such that, as applicable, the Debt Yield equals or exceeds six percent (6.00%) and the Debt Service Coverage Ratio equals or exceeds 1.05:1.00; provided that such prepayment shall not require the payment of any Spread Maintenance Premium (unless such prepayment occurs prior to the Spread Maintenance Date), but shall require the payment of the applicable Exit Fee.
“Closing Date” shall mean the date hereof.
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“Code” shall mean the U.S. 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 “Pledged Collateral” as defined in the Pledge Agreement.
“Construction Consultant” shall mean one or more third party construction consultants, construction loan administration or servicing firms or comparable firms as may be retained by Lender, at Borrowers’ sole cost and expense, from time to time to monitor the scope and status of any Material Alteration or Restoration.
“Contractual Obligation” shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound.
“Control” shall mean, with respect to any Person, either (i) ownership directly or indirectly of fifty percent (50%) or more of all equity interests in such Person or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract or otherwise; it being acknowledged that (i) the mere granting of commercially typical major decision consent or approval rights to a third party direct or indirect owner in a Person shall not, in it of itself, (x) be deemed to constitute Control of such Person by such third party owner or (y) be deemed to diminish the Control rights of the direct or indirect owner that is otherwise in Control of such Person, and (ii) a Person shall be deemed to Control a corporation if such Person (or such Person together with its Affiliates) holds outstanding shares in such corporation carrying votes in sufficient number to elect a majority of the board of directors of such corporation. The terms Controlled, Controlling and common Control shall have correlative meanings.
“Crowdfunding” shall mean any offer or sale of equity or debt securities of any Borrower or any Guarantor or any Affiliate of any of them, involving or relating to direct or indirect interests, or any combination of direct or indirect interests, in any of the foregoing Persons, that is conducted or proposed to be conducted via the internet or through the use of other general solicitation or advertising of the investment opportunity to prospective investors by the issuer of such securities or an outline or other funding portal in a transaction or series of transactions intended to be exempt from the registration requirements of the Securities Act of 1933, as amended, including but not limited to pursuant to the exemptions provided by Section 4(a)(6) thereof or Rule 506(c) promulgated thereunder, any other similar state securities law, or any similar transaction.
“Crown Residential” shall mean Crown Residential LLC, a Florida limited liability
company.
“Debt” shall mean the unpaid Principal, all interest accrued and unpaid thereon, all
Exit Fees, any Spread Maintenance Premium, all transaction costs, all late fees and all other sums due to Lender in respect of the Loan or under any Loan Document (including any protective advances funded by Lender hereunder).
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“Debt Service” shall mean, with respect to any particular period, the scheduled interest payments due under the Note in such period.
“Debt Service Coverage Ratio” shall mean, as of any date, the ratio calculated by Lender of (i) the Net Operating Income to (ii) the Debt Service with respect to such period.
“Debt Yield” shall mean, as of any date, the ratio (expressed as a percentage) calculated by Lender of (i) the Net Operating Income to (ii) the then outstanding principal balance of the Loan as of such date.
“Default” shall mean the occurrence of any event hereunder or under any other Loan Document which, with the giving of notice or passage of time, or both, would be an Event of Default.
“Default Rate” shall mean a rate per annum equal to the lesser of (i) the maximum rate permitted by applicable law, or (ii) five percent (5%) above the Interest Rate, compounded monthly.
“Eligible Account” shall mean a separate and identifiable account from all other funds held by the holding institution that is either (i) an account or accounts (or subaccounts thereof) (a) maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (b) if a Securitization has occurred and required pursuant to the applicable Pooling and Servicing Agreement, as to which Lender has received a Rating Comfort Letter from each of the applicable Rating Agencies with respect to holding funds in such account, or (ii) a segregated trust account or accounts (or subaccounts thereof) maintained with the corporate trust department of a federal depository institution or state chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulations §9.10(b), having in either case corporate trust powers, acting in its fiduciary capacity, and a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal and state authorities. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
“Eligible Institution” shall mean (i) a depository institution insured by the Federal Deposit Insurance Corporation the short term unsecured debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody’s and F-1+ by Fitch, in the case of accounts in which funds are held for thirty (30) days or less or, in the case of Letters of Credit or accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least (a) “AA” by S&P, (b) “AA” and/or “F1+” (for securities) and/or “AAAmmf” (for money market funds), by Fitch and (c) “Aa2” by Moody’s or (ii) a depository institution or trust company insured by the Federal Deposit Insurance Corporation otherwise acceptable to Lender or Servicer, provided such depository institution or trust company has at least investment grade ratings from a Rating Agency for its long term and short term unsecured debt obligations.
“Emergency Expenditures” shall mean the incurrence of expenses that were necessary in order to (i) avoid imminent bodily injury, harm or damage to individuals or a Property, (ii) avoid the suspension of any necessary service to a Property, or (iii) comply with Legal
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Requirements, and, in each such case, with respect to which it would be impractical, in Borrowers’ reasonable judgment, under the circumstances, to obtain Lender’s prior written consent; provided that Borrowers shall give Lender notice of such Emergency Expenditures as soon as practicable and Lender shall have the right to consent or not consent to payment of same as an Approved Additional Operating Expense.
“Environmental Report” shall mean that certain Phase I Environmental Site Assessment with respect to the Properties prepared by EBI Consulting (EBI Project Number 260069060PR) dated July 5, 2026.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that together with any Borrower or any Guarantor is treated as a “single employer”, or otherwise aggregated, with Borrower or any Guarantor under Section 414 of the Code or Title IV of ERISA.
“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to Lender or required to be withheld or deducted from a payment to Lender, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of Lender being organized under the laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account of Lender with respect to an applicable interest in the Loan pursuant to a law in effect on the date on which (i) Lender acquires such interest in the Loan or (ii) Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.2.4, amounts with respect to such Taxes were payable either to Lender’s assignor immediately before Lender became a party hereto or to Lender immediately before it changed its lending office, (c) Taxes attributable to Lender’s failure to comply with Section 2.2.4(e) and (d) any U.S. federal withholding Taxes imposed under FATCA.
“Exit Fee” shall mean with respect to any repayment or prepayment of Principal, an amount equal to one percent (1%) of the amount of Principal being repaid or prepaid.
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date hereof (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“Fiscal Year” shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the Term.
“GAAP” shall mean generally accepted accounting principles in the United States of America as of the date of the applicable financial report.
“Governmental Authority” shall mean the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any court, board, agency, authority, instrumentality, regulatory body, court, central bank or other entity
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exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank), now or hereafter in existence.
“Guarantors” shall mean, collectively, (i) Shaun Quin, an individual, (ii) Glen Steward, an individual, (iii) Bernard Hsiao, an individual, (iv) Michael Hsiao, an individual,
(v) Stewards, Inc., a Nevada corporation, and (vi) any other Person that now or hereafter guarantees any of Borrower’s obligations hereunder or any other Loan Document, on a several basis, each of whom is referred to herein as a “Guarantor”.
“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower or any Guarantor under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Industry Accepted Practices” shall mean any evolving or then-prevailing market convention for floating rate interest rate benchmarks or spread adjustments, as appliable, used (A) for U.S. dollar-denominated floating rate syndicated loans (including CMBS or loans originated for a CRE-CLO) or bilateral credit facilities primarily secured directly by real estate and/or by commercial mortgage loans at such time, (B) by any institutional warehouse or repurchase lender that is not an Affiliate of Lender providing financing backed in whole or in part by an interest in the Loan or (C) to determine the interest rate payable to investors with respect to an applicable Securitization backed in whole or in part by an interest in the Loan.
“Insolvency Law” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as the same has been or may be amended or superseded from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder (the “Bankruptcy Code”), or any other applicable domestic or foreign laws relating to liquidation, conservatorship, bankruptcy, receivership, insolvency, reorganization or any similar debtor relief rights affecting the rights, remedies, powers, privileges and benefits of creditors generally.
“Insolvency Proceeding” shall mean any case, proceeding or other action against any Person, whether voluntary or involuntary, under any Insolvency Law.
“Interest Determination Date” shall mean (i) with respect to the Initial Interest Period, the date that is two (2) U.S. Government Securities Business Days prior to the date hereof and (ii) with respect to any other Interest Period, (a) with respect to any Interest Period during which the Benchmark is Term SOFR, the date that is two (2) U.S. Government Securities Business Days prior to the fifteenth (15th) day of the calendar month in which such Interest Period commenced (the “Periodic Term SOFR Determination Day” with respect to such Interest Period),
(b) with respect to any Interest Period during which the Benchmark is not Term SOFR or the Prime Rate, the date and time determined by Lender in accordance with the Benchmark Conforming Changes, and (c) with respect to any Interest Period during which the Benchmark is the Prime Rate, the date that is two (2) Business Days prior to the fifteenth (15th) day of the calendar month in which such Interest Period commenced.
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“Interest Period” shall mean (i) the period from (and including) the date hereof to (and including) the first day thereafter that is the 8th day of a calendar month (the “Initial Interest Period”) and (ii) thereafter, (a) with respect to any period during which the Benchmark is Term SOFR, each period from (and including) the 9th day of each calendar month to (and including) the 8th day of the following calendar month or (b) with respect to any period during which the Benchmark is not Term SOFR, the period determined by Lender in accordance with the Benchmark Conforming Changes (in each such case, even if such Interest Period extends beyond the Maturity Date). Notwithstanding the foregoing, if Lender exercises its right to change the Payment Date to a New Payment Date in accordance with Section 2.2.7 hereof, then from and after such election, each Interest Period shall be the period from (and including) the New Payment Date in each calendar month to (and including) the day in the next succeeding calendar month immediately preceding the New Payment Date in such calendar month.
“Interest Rate” shall mean, with respect to each Interest Period, the sum of (x) the then applicable Benchmark (subject to the provisions of Section 2.2.3 hereof), determined as of the applicable Interest Determination Date for such Interest Period plus (y) the Spread (or, when applicable pursuant to this Agreement or any other Loan Document, the Default Rate).
“Key Principals” shall mean shall collectively mean (i) Shaun Quin, an individual, and (ii) Glen Steward, an individual, each of whom is referred to herein as a “Key Principal”.
“LCC” shall mean LoanCore Capital Credit REIT LLC, a Delaware limited liability
company.
“Lease” or “Leases” shall mean all leases and other agreements or arrangements
heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, a Property or the Improvements, including any guarantees, extensions, expansion options, renewals, modifications or amendments thereof and all additional remainders, reversions and other rights and estates appurtenant thereunder.
“Lease Event Payments” shall mean (i) all fees, penalties, commissions or other payments made to any Borrower in connection with or relating to the amendment, modification, rejection, consent, settlement of claims, termination, 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 any Borrower in lieu of cash security deposits, which such Borrower is permitted to retain pursuant to the applicable provisions of any Lease and (iii) any payments made to any Borrower relating to unamortized tenant improvements and leasing commissions under any Lease.
“Legal Requirements” shall mean statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities (including those regarding fire, health, handicapped access, sanitation, ecological, historic, zoning, environmental protection, wetlands and building laws and the ADA and all regulations promulgated pursuant thereto) affecting any Borrower, Sole Member, any Loan Document or all or part of any Property or the Collateral or the construction, ownership, use, alteration, administration or operation thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and
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regulations relating thereto, at any time in force affecting all or part of any Property or the Collateral.
“Lien” shall mean any mortgage, deed of trust, deed to secure debt, indemnity deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement, restrictive covenant, preference, assignment, security interest, PACE Loan or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting (i) all or any part of any Property or any interest therein, or (ii) any direct or indirect interest in any Borrower or Sole Member, or (iii) all or part of the Collateral, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
“Loan Documents” shall mean this Agreement and all other documents, agreements and instruments now or hereafter evidencing, securing or delivered to Lender in connection with the Loan, including the following, each of which is dated as of the date hereof: (i) the Amended and Restated Promissory Note made by Envy Development to Lender in the aggregate principal amount equal to the Loan (the “Note”); (ii) the Amended and Restated Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by Envy Development, in favor of Lender which covers the Property owned by Envy Development (the “Envy Development Mortgage”); (iii) the Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing made by Envy Recreational, in favor of Lender (the “Envy Recreational Mortgage”; the Envy Development Mortgage and the Envy Recreational Mortgage are referred to herein collectively as, the “Mortgages”); (iv) the Assignment of Leases and Rents from Borrowers to Lender (the “Assignment of Leases and Rents”); (v) the Assignment of Agreements, Licenses, Permits and Contracts from Borrowers to Lender; (vi) the Deposit Account Control Agreement (the “Clearing Account Agreement”) among each Borrower, Lender and the Clearing Bank; (vii) the Cash Management Agreement (the “Cash Management Agreement”) among Borrowers, Lender and the Cash Management Bank; (viii) the Payment Guaranty made by Envy Recreational for the benefit of Lender (the “Envy Recreational Guaranty”); (ix) the Guaranty of Recourse and Other Obligations made by Guarantors (the “Guaranty”) for the benefit of Lender; (x) the Collateral Assignment of Interest Rate Protection Agreement from Borrowers to Lender; (xi) the Consent and Subordination of Manager from Manager to Lender (“Manager Consent”); (xii) the Pledge Agreement; (xiii) the Payment Guaranty made by Sole Member for the benefit of Lender (the “Payment Guaranty”); and (xiv) each UCC Financing Statement filed in connection with the foregoing; as each of the foregoing may be (and each of the foregoing defined terms shall refer to such documents as they may be) amended, restated, replaced, severed, split, supplemented or otherwise modified from time to time (including pursuant to Section 9.2 hereof).
“Major Contract” shall mean (i) any management, brokerage or leasing agreement,
(ii) any cleaning, maintenance, service or other contract or agreement of any kind (other than Leases) requiring a Borrower to make payments in excess of $200,000.00 per annum (unless cancelable on thirty (30) days or less notice without requiring the payment of any material termination fees or payments of any kind)), in either case, relating to the ownership, leasing, management, use, operation, maintenance, repair or restoration of a Property, whether written or oral or (iii) any cleaning, maintenance, service or other contract or agreement of any kind (other than Leases) that is between any Borrower and an Affiliate of such Borrower, and (iv) any contract
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and agreement relating solely or primarily to environmental remediation or other environmental matters.
“Management Agreement” shall mean the management agreement as approved by Lender between a Borrower and Manager, pursuant to which Manager is to manage the Property owned by such Borrower or, if the context requires, the Replacement Management Agreement.
“Manager” shall mean ZRS Management, LLC, a Florida limited liability company, or, if the context requires, a Qualified Manager that is managing a Property in accordance with the terms and provisions of this Agreement pursuant to a Replacement Management Agreement.
“Material Adverse Effect” shall mean a material adverse effect that has occurred or is reasonably likely to occur with respect to (i) any Property, (ii) the business, profits, prospects, management, operations or financial condition of any Borrower, any Guarantor or any Property, (iii) the enforceability, validity, perfection or priority of the lien of any Mortgage or the other Loan Documents, (iv) the ability of any Borrower or Sole Member to timely perform its obligations under this Agreement or the other Loan Documents, or (v) the ability of any Guarantor to perform its obligations under the Guaranty.
“Material Alteration” shall mean (i) any individual alteration affecting
(a) structural elements of any Property, (b) a roof of any Property or (c) any building system of any Property, (ii) any alteration to any Property that will have an adverse effect in any material respect on the zoning or any permits or licenses from any Governmental Authorities with respect to such Property or (iii) any non-structural alteration the cost of which exceeds $500,000; provided, however, that in no event shall any of the following constitute a Material Alteration: (1) any Required Repairs, (2) any tenant improvement work performed pursuant to any Lease existing on the date hereof or entered into hereafter in accordance with the provisions of this Agreement, (3) alterations performed as part of a Restoration, or (4) alterations or capital improvements set forth in the Approved Operating Budget or as an Approved Capital Expenses Budget.
“Material Lease” shall mean all Leases which (i) individually or in the aggregate with respect to the same tenant and its Affiliates, and assuming the exercise of all expansion rights and all preferential rights to lease additional space contained in such Lease, demise at least five (5) rental units at any Property, (ii) provide the tenant thereunder with an option or other preferential right to purchase all or any portion of any Property, (iii) provides for a use by the tenant thereunder other than exclusively for multi-family residential purposes for any residential rental unit, or (iv) are entered into with a tenant who is an Affiliate of a Borrower Party.
“Maturity Date” shall mean the date on which the final payment of principal of the Note becomes due and payable as therein provided, whether at the Stated Maturity Date, by declaration of acceleration, or otherwise.
“Minor Lease” shall mean any Lease that is not a Material Lease.
“Monthly Operating Expense Budgeted Amount” shall mean the monthly amount set forth in the Approved Operating Budget incurred or to be incurred for or as of the calendar month in which such Payment Date occurs ; provided that, management fees payable to Manager
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as part of the Monthly Operating Expense Budgeted Amount shall not exceed three percent (3.0%) of Rents (the “Management Fee Cap”).
“Net Operating Income” shall mean for any period, the net operating income of the Property determined by Lender in its reasonable discretion and on a cash basis of accounting, after Lender’s consideration and calculation of the following: (i) (A) rental income shall be calculated based on the annualized actual rental revenue (collections) for the most recently reported three-month period preceding the date of calculation (using financial reporting not more than 60 days old), plus (B) other income, which shall be calculated reflecting the actual trailing twelve (12) month period ending with the most recently reported calendar month preceding the date of calculation (using financial reporting not more than 60 days old), minus (C) non-recurring extraordinary items of income (including, without limitation, repayment of delinquent Rents and Rents paid more than 30 days in advance), minus (D) to the extent not otherwise reflected in the annualized actual rental revenue collected or included in any other calculation or deduction hereunder, concessions, which shall be calculated reflecting the actual trailing twelve (12) month period ending with the most recently reported calendar month preceding the date of calculation, minus (E) operating expenses, which shall be calculated based on the trailing twelve (12) month period ending, other than taxes and insurance, which will be based on current estimates for the actual period of calculation and not necessarily that amount of deposits to any reserves required under this Agreement, minus (F) deposits to (but not withdrawals from) the Capital Expense Reserve Subaccount and/or the Rollover Reserve Subaccount made pursuant to Section 3.15(a) hereof, and (ii) making further adjustments for (a) market vacancies equal to the greater of (x) actual vacancy and (y) five percent (5%) and (b) market-rate third party management expenses.
“Officer’s Certificate” shall mean a certificate delivered to Lender which is signed by an authorized senior officer or authorized representative of the Person on behalf of whom the certificate is delivered, which officer or representative is most knowledgeable with respect to the subject matter set forth in the applicable Officer’s Certificate.
“Operations Agreements” shall mean the REA, and any other covenants, restrictions, easements, declarations or agreements of record relating to the construction, operation or use of a Property, together with all amendments, modifications or supplements thereto.
“Other Charges” shall mean all ground rents, maintenance charges, impositions other than Taxes, any “common expenses” or expenses allocated to and required to be paid by a Borrower under the REA, and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining any Property, now or hereafter levied or assessed or imposed against any Property or any part thereof.
“Other Connection Taxes” shall mean, with respect to Lender, Taxes imposed as a result of a present or former connection between Lender and the jurisdiction imposing such Tax (other than connections arising from Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
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“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
“PACE Loan” shall mean (i) any “Property-Assessed Clean Energy loan” or (ii) any other indebtedness, without regard to the name given to such indebtedness, which is (a) incurred for improvements to any Property for the purpose of increasing energy efficiency, increasing use of renewable energy sources, resource conservation, or a combination of the foregoing, and (b) repaid through multi-year assessments against any Property.
“Payment Date” shall mean the 9th day of each calendar month or, upon Lender’s exercise of its right to change the Payment Date in accordance with Section 2.2.7 hereof, the New Payment Date (in either case, if such day is not a Business Day, the Payment Date shall be the immediately preceding Business Day). The Payment Date may be subject to adjustment as described in Section 2.2.3 hereof. The first Payment Date hereunder shall be November 9, 2026.
“Pension Plan” shall mean any employee pension benefit plan (as defined in Section 3(2) of ERISA) which is (currently or hereafter), or within the prior six (6) years was, (i) established, maintained, or contributed to (or required to be contributed to) by any Borrower or any ERISA Affiliate, and (ii) subject to Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
“Permitted Encumbrances” shall mean: (i) the Liens created by the Loan Documents; (ii) all Liens and other matters disclosed in the Title Insurance Policies; (iii) Liens, if any, for Real Estate Taxes or Other Charges not yet due and payable and not delinquent; (iv) any workers’, mechanics’ or other similar Liens on a Property provided that any such Lien is discharged from the title record of such Property within thirty (30) days after a Borrower first receives notice of such Lien (whether by bonding or otherwise), and (v) such other title and survey exceptions or other encumbrances as Lender approves in writing, which approval shall not be unreasonably withheld, conditioned or delayed.
“Permitted Hazardous Substances” shall mean commercially reasonable amounts of Hazardous Materials used in the ordinary course of construction or operation of a Property which are in de minimis amounts and used and stored in accordance with all Environmental Laws.
“Permitted Transfers” shall mean:
(i) a Lease entered into in accordance with the Loan Documents;
(ii) a Permitted Encumbrance;
(iii) any Transfer in respect of, or of a direct or indirect interest in, any Person listed on a nationally or internationally recognized stock exchange or stock quotation system (including, without limitation, so-called “over the counter” markets);
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(iv) a foreclosure of the Pledge Agreement (or assignment-in-lieu of foreclosure) by Lender or its designee;
(v) a Transfer of any direct or indirect interest in Borrowers (other than the membership interest in each Borrower held by Sole Member) that occurs (I) by devise or bequest or by operation of law upon the death of a natural person that was the holder of such interest or (II) in connection with the estate planning of such transferor to (1) an immediate family member of such interest holder (or to partnerships or limited liability companies Controlled solely by one or more of such family members) or (2) a trust established for the benefit of such immediate family member, provided that:
(A) if such Transfer would cause the transferee, together with its Affiliates, to acquire direct or indirect Control of each Borrower or to acquire or to increase its direct or indirect interest in such Borrower to an amount which equals or exceeds in the aggregate (1) twenty percent (20%) is such transferee is a domestic Person (U.S. domicile or formation), or (2) ten (10%) if such transferee is not formed or domiciled in the United States (either such case (the “KYC Threshold”), (x) such Borrower shall provide Lender with notice of such Transfer not more than thirty (30) days after the date of such Transfer and (y) such transferee, and all other Persons that shall then become an owner of an indirect interest in such Borrower in excess of the KYC Threshold, shall be a Qualified Transferee;
(B) Borrowers shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer not more than thirty (30) days after the date of such Transfer;
(C) each Borrower shall continue to be a Special Purpose Bankruptcy Remote Entity;
(D) if such Transfer results in a change of Control of a Borrower to a Person other than (x) Key Principal (directly or indirectly) or (y) the estate of Key Principal (during the pendency of the settlement by the estate of Key Principal and if such Transfer occurs as a result of the death of Key Principal), such Transfer is approved by Lender in writing within thirty (30) days after any such Transfer, which approval shall not be unreasonably withheld; and
(E) such Transfer shall not otherwise result in a change of control over the day-to-day operation of any Property;
(vi) provided that no Event of Default shall then exist, a Transfer of a direct or indirect interest in Sole Member to any Person provided that:
(A) such Transfer shall not (x) cause a change of Control of any Borrower, (y) cause the transferee (other than a Key Principal), together with its Affiliates, to acquire Control of any Borrower or Sole Member or to acquire or to increase its direct or indirect interest in any Borrower or in Sole Member to an amount which exceeds forty-nine percent (49%) or (z) result in any Borrower or
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Sole Member no longer being Controlled (pursuant to clause (ii) of the definition of “Control” herein) by at least one (1) Key Principal;
(B) if such Transfer would cause the transferee, together with its Affiliates, to own, directly or indirectly, an aggregate ownership interest in a Borrower or in Sole Member to an amount which equals or exceeds twenty percent (20%) (or equal to or in excess of ten percent (10%) if such transferee is not formed or domiciled in the United States of America), and such proposed transferee, together with its Affiliates, did not, prior to such proposed Transfer, own a twenty percent (20%) or greater aggregate (or, in the case of a transferee that is not formed or domiciled in the United States of America, ten percent (10%) or greater aggregate) direct or indirect interest in such Borrower or in Sole Member, such transferee shall be a Qualified Transferee;
(C) Borrowers shall give Lender notice of such Transfer together with copies of all instruments effecting such Transfer and a post-Transfer organizational chart not less than twenty (20) days prior to the date of such Transfer (other than a Transfer by devise or descent or by operation of law upon the death or as a result of the legal incapacity of a natural person of such Person’s interest in such Borrower to the person or persons lawfully entitled thereto, provided Borrowers deliver written notice to Lender as soon as practicable thereafter);
(D) the legal and financial structure of Borrowers and their members and the single purpose nature and bankruptcy remoteness of Borrowers and their members after such Transfer, shall satisfy Lender’s then current applicable underwriting criteria and requirements; and
(E) such Transfer shall not cause the direct or indirect ownership interests in any Borrower or any Property to include any Prohibited Entity/Ownership Structure;
(vii) a Transfer of any interest in Stewards Real Estate LLC, a Nevada limited liability company, or another direct or indirect subsidiary of Stewards, Inc., a Nevada corporation (other than a Borrower or Sole Member) (such entity, the “Token Sponsor”), of not more than forty-nine percent (49%) of the indirect interest in a 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 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, provided that:
(A) such Transfer shall not (x) cause a change of Control of any Borrower or (y) result in any Borrower or Sole Member no longer being Controlled (pursuant to clause (ii) of the definition of “Control” herein) by at least one (1) Key Principal;
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(B) if such Transfer would cause the transferee, together with its Affiliates, to own, directly or indirectly, an aggregate ownership interest in a Borrower or in Sole Member to an amount which equals or exceeds twenty percent (20%) (or equal to or in excess of ten percent (10%) if such transferee is not formed or domiciled in the United States of America), and such proposed transferee, together with its Affiliates, did not, prior to such proposed Transfer, own a twenty percent (20%) or greater aggregate (or, in the case of a transferee that is not formed or domiciled in the United States of America, ten percent (10%) or greater aggregate) direct or indirect interest in such Borrower or in Sole Member, such transferee shall be a Qualified Transferee; and
(C) each Borrower shall continue to be a Special Purpose Bankruptcy Remote Entity; or
(viii) 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.
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.
For the avoidance of doubt, any Transfer made pursuant to clause (vii) shall not be deemed to constitute Crowdfunding under this Agreement.
“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other person or entity, and any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
“Physical Conditions Report” shall mean that certain Property Condition Report, prepared by EBI Consulting (EBI Project Number 260069060PR) and dated as of July 6, 2026.
“Plan” shall mean any “employee benefit plan” (as defined in Section 3(3) of ERISA) established, maintained or sponsored by any Borrower, any Guarantor or any of their respective subsidiaries, including any Welfare Plan.
“Pledge Agreement” shall mean that certain Pledge and Security Agreement dated as of the date hereof and made by Sole Member in favor of Lender which creates a security interest in the 100% ownership interest of Borrower.
“Pooling and Servicing Agreement” shall mean any pooling and servicing agreement or similar agreement entered into as a result of a Secondary Market Transaction.
“Prime Rate” mean the rate of interest published in The Wall Street Journal from time to time as the “Prime Rate.” If more than one “Prime Rate” is published in The Wall Street Journal for a day, the average of such “Prime Rates” shall be used, and such average shall be
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rounded up to the nearest one hundredth of one percent (0.01%). If The Wall Street Journal ceases to publish the “Prime Rate,” Lender shall select an equivalent publication that publishes such “Prime Rate,” and if such “Prime Rates” are no longer generally published or are limited, regulated or administered by a governmental or quasigovernmental body, then Lender shall select a comparable interest rate index.
“Principal” shall mean the unpaid principal balance of the Loan at the time in
question.
“Prohibited Entity/Ownership Structure” shall mean any direct or indirect
ownership of any Property or any Borrower by (a) a statutory trust organized under 12 Del.C. § 3801 et seq., or any successor statute thereto, or under any similar other state of federal law, (b) any one of more Persons as tenants in common or any similar ownership structure, or (c) any one or more Persons as a result of any Crowdfunding.
“Properties” shall mean, collectively, the parcels of real property and Improvements thereon owned by Borrowers and encumbered by the Mortgages, together with all rights pertaining to such real property and Improvements, and all other collateral for the Loan as more particularly described in the granting clauses of the Mortgages and referred to therein as the Mortgaged Property. The Properties consist of (i) a 214 unit Class A mixed use multi-family apartment building owned by Envy Development, including approximately 5,575 square feet of ground floor retail space, and (ii) a marina with twenty-six (26) boat slips and related facilities (the “Marina”) and “Community Center” owned by Envy Recreational, upon which Envy Recreational operates, directly or indirectly, a three (3)-story commercial building. The location of each Property is identified on Schedule 1 hereto.
“Property Taxes” shall mean all (i) real estate taxes, assessments, water rates or sewer rents, maintenance charges, impositions, mortgage recording taxes, vault charges and license fees (“Real Estate Taxes”), or (ii) personal property taxes, in each case, now or hereafter levied or assessed or imposed against all or part of any of the Properties. In no event shall any PACE Loan be considered a Property Tax for purposes of this Agreement.
“Qualified Manager” shall mean (i) Manager, (ii) Crown Residential, or (iii) a manager acceptable to Lender (or, at Lender’s option during the continuance of an Event of Default, selected by Lender) that, in the judgment of Lender, is a Person that is a reputable and experienced management organization (which, provided no Event of Default is then continuing, may be an Affiliate of a Borrower) possessing experience in managing properties similar in size, scope, use and value as applicable Property or Properties, provided that (a) if a Securitization has occurred and required pursuant to the applicable Pooling and Servicing Agreement, Borrowers shall have obtained a Rating Comfort Letter from the applicable Rating Agencies with respect to the change of management of the applicable Property, (b) if such Person is an Affiliate of Borrowers, Borrowers shall have delivered to Lender a non-consolidation opinion in form acceptable to Lender (and, if a Securitization has occurred and required by the applicable Pooling and Servicing Agreement, the applicable Rating Agency) and (c) such Person shall have entered into a Replacement Management Agreement.
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“Qualified Transferee” shall mean a transferee for whom, prior to the Transfer, Lender shall have received: (i) evidence reasonably acceptable to Lender that neither the proposed transferee nor its Affiliates (pursuant to clause (i) of the definition of Affiliate) (a) has ever been indicted or convicted of, or pled guilty or no contest to, a felony, (b) has ever been indicted or convicted of, or pled guilty or no contest to, a Patriot Act Offense and is not on any Government List, (c) has been the subject of an Insolvency Proceeding (to the extent the same has not been discharged) within the past ten (10) years, (d) has any material outstanding judgments against such proposed transferee, (e) is or has engaged in any lender liability actions, or (f) has ever been in material default under any other loan from Lender, and (ii) a credit, regulatory and background check against such proposed transferee that is reasonably acceptable to Lender (including a verification that such proposed transferee’s ownership position does not cause a violation of Lender’s “loan to one borrower” policy).
“Rating Agency” shall mean, prior to the final Securitization of the Loan (or if a Securitization has not occurred), each of Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”), Fitch, Inc., a division of Fitch Ratings Ltd. (“Fitch”), DBRS, Inc. (a/k/a DBRS Morningstar), Kroll Bond Rating Agency or any other nationally-recognized statistical rating organization which has been designated by Lender, and after the final Securitization of the Loan, any of the foregoing that have rated any of the securities issued in connection with the Securitization.
“Rating Comfort Letter” shall mean a letter issued by each of the applicable Rating Agencies which confirms that the taking of the action referenced to therein will not result in any qualification, withdrawal or downgrading of any existing ratings of Securities created in a Secondary Market Transaction.
“REA” shall mean, collectively, those certain agreements more particularly described on Schedule 9 attached hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement.
“Regulatory Change” shall mean any change effective after the date of this Agreement in any statute, treaty, rule, regulation, ordinance, executive order or administrative or judicial precedents or authorities (including Regulation D of the Board of Governors of the Federal Reserve System of the United States (or any successor)) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks, including any Lender, of or under any statute, treaty, rule, regulation, ordinance, executive order or administrative or judicial precedents or authorities (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary authority charged with the interpretation or administration thereof or compliance by Lender with any request or directive regarding capital adequacy. Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Regulatory Change”, regardless of the date enacted, adopted or issued.
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“Relevant Governmental Body” shall mean the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.
“REMIC Trust” shall mean a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code that holds the Note.
“Rents” shall mean all rents (including additional rents of any kind and percentage rents), rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in an Insolvency Proceeding) or in lieu of rent or rent equivalents, royalties (including all coal, oil and gas, mineral or other substances royalties and bonuses), income, fees, receivables, receipts, revenues, economic stimulus, incentive or other similar payments received directly or indirectly from any Governmental Authority or quasi-Governmental Authority, whether in the form of aide, money, relief or another compensation scheme (including any of the foregoing initiated in connection with the COVID-19 virus or any other pandemic or epidemic), deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other payment and consideration of whatever form or nature received by or paid to or for the account of or benefit of each Borrower, Manager or any of their agents or employees from any and all sources arising from or attributable to each Property and the Improvements, including charges for parking, parking rents, oil, gas, water, steam, heat, ventilation, air-conditioning, electricity, license fees, maintenance fees, charges for Taxes, operating expenses or other amounts payable to a Borrower (or for the account of a Borrower), revenue from telephone services, vending and all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of each Property or rendering of services by a Borrower, Manager or any of their agents or employees and proceeds, if any, from business interruption or other loss of income insurance.
“Replacement Management Agreement” shall mean, collectively, (i) either (a) a management agreement with a Qualified Manager substantially in the same form and substance as the Management Agreement or (b) a management agreement with a Qualified Manager which is reasonably acceptable to Lender in form and substance (and, if a Securitization has occurred and required by the applicable Pooling and Servicing Agreement, the applicable Rating Agency), and (ii) an assignment of management agreement and subordination of management fees substantially in the form of the Manager Consent (or of such other form and substance reasonably acceptable to Lender), executed and delivered to Lender by Borrowers and such Qualified Manager at Borrowers’ expense.
“Restoration Threshold” shall mean, with respect to the effected Property, an amount equal to four percent (4%) of the Allocated Loan Amount for such Property.
“Security Documents” shall mean, collectively: (i) the Pledge, (ii) a notice of pledge to Borrowers, (iii) the Uniform Commercial Code financing statement filed with respect to the security interest in personal property created pursuant to the Pledge, (iv) the Pledged Securities and (v) all other documents and agreements executed or delivered to Lender by Borrowers or Sole Member in connection with any of the foregoing documents.
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“Servicer” shall mean a servicer selected by Lender to service the Loan, including any “master servicer” or “special servicer” appointed under the terms of any Pooling and Servicing Agreement, together with its agents, nominees or designees.
“Shortfall” shall mean (i) with respect to any Payment Date during the continuance of a Cash Management Period, the insufficiency of funds then on deposit in the Cash Management Account on any such Payment Date to fully fund all payments required to be made under clauses (i) through (vii) of Section 3.15(a) hereof (including, without limitation, interest at the Default Rate, if applicable), and (ii) with respect to any Payment Date when a Cash Management Period is not continuing, the insufficiency of the Rents collected by Borrowers during the immediately preceding Interest Period to fully pay for (x) all payments required to be paid by Borrowers on such Payment Date under Sections 2.2.1, 3.3, 3.4 and 3.5 hereof and (y) the Monthly Operating Expense Budgeted Amount and any then-current Approved Additional Operating Expenses (the amounts required to be paid by Borrowers and described in clauses (i) and (ii) above being referred to herein as the “Required Payments”).
“SOFR” shall mean with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” shall mean the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Sole Member” shall mean SRC Envy Holdco LLC, a Delaware limited liability company, the sole member of Borrowers.
“Spread” shall mean three and sixty hundredths of one percent (3.60%) (or from and after a Benchmark Replacement Date in the event of and with respect to a Benchmark Transition Event, the Replacement Spread pursuant to Section 2.2.3(e) hereof).
“Spread Maintenance Date” shall mean the eighteenth (18th) Payment Date after the closing of the Loan.
“Spread Maintenance Premium” shall mean, with respect to any payment or prepayment of Principal (or acceleration of the Loan) prior to the Spread Maintenance Date, an amount equal to the product of the following: (i) the amount of such prepayment (or the amount of Principal so accelerated), multiplied by (ii) the Spread, multiplied by (iii) a fraction (expressed as a percentage) having a numerator equal to the number of days from the commencement of the next succeeding Interest Period (which may also be the prepayment date) through and including the end of the Interest Period at the Spread Maintenance Date and a denominator equal to 360. The calculation of the Spread Maintenance Premium shall be made by Lender and shall, absent manifest error, be final, conclusive and binding upon the parties.
“State” shall mean as to any Property, the state in which such Property is located.
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“Stated Maturity Date” shall mean October 9, 2028 (the “Initial Stated Maturity Date”), as such date may be changed in accordance with Section 2.2.7 hereof. If the term of the Loan has been extended pursuant to Section 2.8 hereof, the “Stated Maturity Date” shall mean the Extended Maturity Date.
“Stewards” shall mean Stewards, Inc., a Nevada corporation.
“Strike Rate” means (x) for so long as the Benchmark is Term SOFR, 4.50% per annum, and (y) following a Benchmark Transition Event and the Benchmark Replacement Date with respect thereto, a replacement strike rate as determined by Lender in an amount that would provide an approximation of the protection under a replacement Interest Rate Protection Agreement that Lender would have received if the Benchmark Transition Event had not occurred.
“Surveys” shall mean the surveys of the Properties prepared by a surveyor licensed in the State and satisfactory to Lender and the company or companies issuing the Title Insurance Policies, and containing a certification of such surveyor satisfactory to Lender.
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Temporary Apartment Rental” shall mean any lease or license of all or any portion of a unit (i) on a short term basis (i.e., hourly, daily or weekly basis for a term of less than thirty (30) days) or (ii) resulting from any advertisement or listing of the availability of the unit for rental on an hourly, daily or weekly or other short term basis in any newspaper, internet (e.g. airbnb.com, VRBO.com, Vacasa, tripadvisor.com or any other website or similar service) or any other similar forum.
“Term” shall mean the entire term of this Agreement, which shall expire upon repayment in full of the Debt and full performance of each and every obligation to be performed by Borrowers pursuant to the Loan Documents.
“Term SOFR” shall mean, with respect to each Interest Period, the Term SOFR Reference Rate for a one-month period as determined by Lender on the Periodic Term SOFR Determination Day with respect to such Interest Period, as such rate is published by the Term SOFR Administrator; provided, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for a one-month period has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR for the related Interest Period will be the Term SOFR Reference Rate for a one-month period as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for a one-month period was published by the Term SOFR Administrator. Notwithstanding the foregoing or anything herein to the contrary, in no event shall Term SOFR be less than the Benchmark Floor.
“Term SOFR Administrator” shall mean CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by Lender in its sole but good faith discretion).
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“Term SOFR Reference Rate” shall mean the forward-looking term rate for a one-month period based on SOFR currently identified on the Term SOFR Administrator’s website at https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html.
“Title Insurance Policies” shall mean the ALTA mortgagee title insurance policies in the form acceptable to Lender issued with respect to each Property and insuring the Liens of the Mortgages.
“Transfer” shall mean:
(i) any direct or indirect sale, conveyance, transfer, encumbrance, pledge, hypothecation, lease or assignment of lease, or the entry into any agreement to sell, convey, transfer, encumber, pledge, hypothecate, lease or assign, whether voluntary or involuntary, by law or otherwise, whether or not for consideration or of record, of, on, in or affecting (a) all or part of any Property or the Collateral (including any legal or beneficial direct or indirect interest therein), (b) any direct or indirect interest in any Borrower (including any preferred equity interest, profit interest or rights to distribution of cash), or
(c) any direct or indirect interest in Sole Member;
(ii) entering into or subjecting any Property to a PACE Loan;
(iii) with respect to any Borrower or Sole Member or any Person that has a direct or indirect interest in any Borrower, the division (whether pursuant to Section 18-217 of the Delaware Act or otherwise) of any assets and liabilities of such entity amongst one or more new or existing entities; or
(iv) any change of Control of any Borrower or Sole Member.
For purposes hereof, (A) a Transfer of an interest in a Borrower or Sole Member shall be deemed to include (y) with respect to a corporation, the voluntary or involuntary sale, conveyance or transfer of such corporation’s stock (or the stock of any corporation directly or indirectly controlling such corporation by operation of law or otherwise) or the creation or issuance of new stock in one or a series of transactions by which an aggregate of more than twenty percent (20%) of such corporation’s stock shall be vested in a party or parties who are not now stockholders or any change in the control of such corporation and (z) with respect to a limited or general partnership, joint venture or limited liability company, the change, removal, resignation or addition of a general partner, managing partner, limited partner, joint venturer or member or the transfer of the partnership interest of any general partner, managing partner or limited partner or the transfer of the interest of any joint venturer or member and (B) a change of Control of a Borrower or Sole Member shall be deemed to have occurred if (y) there is any change in the identity of any individual or entity or any group of individuals or entities who have the right, by virtue of any partnership agreement, articles of incorporation, by-laws, articles of organization, operating agreement or any other agreement, with or without taking any formative action, to cause a Borrower (or Sole Member) to take some action or to prevent, restrict or impede such Borrower (or Sole Member) from taking some action which, in either case, such Borrower (or Sole Member) could take or could refrain from taking were it not for the rights of such
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individuals or (z) the individual or entity or group of individuals or entities that Control (pursuant to clause (ii) of the definition of “Control” herein) a Borrower (and Sole Member) as described in clause (y) ever cease to Control (pursuant to clause (ii) of the definition of “Control” herein) the day to day operations of such Borrower and Sole Member.
“UCC” shall mean, with respect to each Property, the Uniform Commercial Code as in effect in the state in which such Property is located; provided, however, that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection or priority of the security interest in any item or portion of the collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State in which such Property is located, “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement and the other Loan Documents relating to such perfection or effect of perfection or non-perfection or priority.
“U.S. Government Securities Business Day” shall mean any day except for (a) a Saturday, (b) a Sunday, or (c) a day on which the Securities Industry and Financial Markets Association, or any successor thereto, recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Welfare Plan” shall mean any employee welfare benefit plan, as defined in Section 3(1) of ERISA, established, maintained or sponsored by any Borrower, any Guarantor or any of their respective subsidiaries.
“Zoning Report” shall mean that certain Key Zoning Assessment with respect to the Properties prepared by Key Zoning Assessments, LLC (KZA 2026.1406.1) and dated September 16, 2026.
1.2 Index of Other Definitions. The following terms are defined in the sections or Loan Documents indicated below:
“Acceptable Blanket Policy” - 7.1.2
“Acceptable SMBC Credit Support Party” - 1.1 (Definition of Acceptable Counterparty) “Additional Operating Expense” - 6.3.7(a)
“Affected Financial Institution” - 10.33 “Annual Budget” - 6.3.6
“Approved Additional Operating Expense” - 6.3.7(a) “Approved Annual Budget” - 6.3.6
“Approved Capital Expenses Budget” - 6.3.6 “Approved Operating Budget” - 6.3.6
“Assignment of Leases and Rents” - 1.1 (Definition of Loan Documents) “Available Cash” - 3.15(a)
“Award” - 7.3.2
“Bail-In Action” - 10.33 “Bail-In Legislation” - 10.33
“Bankruptcy Code”- 1.1 (Definition of Insolvency Proceeding)
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“Borrower Obligation” - 10.34(c) “Borrower’s Recourse Liabilities” - 10.1 “Broker” - 10.2
“Capital Expense Reserve Subaccount” - 3.5 “Cash Collateral Subaccount” - 3.10
“Cash Management Account” - 3.1
“Cash Management System Accounts” - 3.14
“Cash Management Agreement” - 1.1 (Definition of Loan Documents) “Casualty” - 7.2.1
“Casualty/Condemnation Prepayment” - 2.3.2 “Casualty/Condemnation Subaccount” - 3.8 “Cause” - Schedule 5
“Clearing Account” - 3.1
“Clearing Account Agreement” - 1.1 (Definition of Loan Documents) “Clearing Bank” - 3.1
“Condemnation” - 7.3.1 “Delaware Act” - Schedule 5 “Disclosure Document” - 9.1.2 “Easements” - 4.14
“EEA Financial Institution” - 10.33 “EEA Member Country” - 10.33 “EEA Resolution Authority” - 10.33 “Embargoed Person” - 5.31(b) “Environmental Laws” - 4.21
“Envy Recreational Guaranty” - 1.1 (Definition of Loan Documents) “Equipment” - Mortgage
“Equity Collateral Enforcement Action” – 10.1 “Equity Collateral Transfer Date” – 10.1
“EU Bail-In Legislation Schedule” – 10.33 “Event of Default” - 8.1
“Exchange Act” - 9.1.2 “Extended Maturity Date” - 2.8 “Extension Period” - 2.8
“Fitch” - 1.1 (Definition of Rating Agency) “Government Lists” - 4.30(b)
“Guarantor” – 1.1 (Definition of Guarantors) “Guaranty” - 1.1 (Definition of Loan Documents) “Hazardous Substances” - 4.21
“Improvements” - Mortgage “Indemnified Liabilities” - 5.30 “Indemnified Party” - 5.30 “Independent Director” - Schedule 5 “Independent Manager” - Schedule 5
“Initial Shortfall Reserve Deposit” - 3.11(a)
“Initial Cash Management Period” - 1.1 (Definition of Cash Management Period) “Initial Interest Period” - 1.1 (Definition of Interest Period)
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“Initial Stated Maturity Date” - 1.1 (Definition of Stated Maturity Date) “Insurance Premiums” - 7.1.2
“Insurance Subaccount” - 3.4 “Insured Casualty” - 7.2.2 “Intellectual Property” - 4.28
“Interest Rate Protection Agreement” - 2.6.1 “Issuer” - 9.1.3
“Key Principal” – 1.1 (Definition of Key Principals) “KYC Threshold” - 1.1 (Definition of Permitted Transfer) “Late Payment Charge” - 2.5.3
“Lender Group” - 9.1.3 “Lender’s Consultant” - 5.8.1 “Liabilities” - 9.1.3
“Licenses” - 4.11
“Loan” - 2.1
“Loan Amount” - 2.1
“Management Fee Cap” - 1.1 (Definition of Monthly Operating Expense Budgeted Amount)
“Manager Consent” - 1.1 (Definition of Loan Documents) “Marina” – 1.1 (Definition of Properties)
“Moody’s” - 1.1 (Definition of Rating Agency) “Mortgages” - 1.1 (Definition of Loan Documents) “Nationally Recognized Service Company” - Schedule 5 “New Payment Date” - 2.2.7
“Note” - 1.1 (Definition of Loan Documents) “Notice” - 6.1
“O & M Program” - 5.8.3 “OFAC” - 4.30(b)
“Participant Register” - 10.34(b) “Patriot Act” - 5.31
“Patriot Act Offense” - 4.30(b)
“Payment Guaranty” - 1.1 (Definition of Loan Documents)
“Periodic Term SOFR Determination Day” - 1.1 (Definition of Interest Determination Date) “Permitted Indebtedness” - 5.22
“Policies” - 7.1.2
“Proceeds” - 7.2.2
“Proposed Material Lease” - 5.10.2 “Provided Information” - 9.1.1 “Qualified Carrier” - 7.1.1
“Real Estate Taxes” - 1.1 (Definition of Property Taxes) “Register” - 10.34(c)
“Registration Statement” - 9.1.3 “Remedial Work” - 5.8.2
“Rent Roll” - 4.16
“Replacement Rate Notice” - 2.2.3(e) “Replacement Spread” - 2.2.3(e)
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“Required Records” - 6.3.9 “Required Repairs” - 3.2.1
“Required Repairs Subaccount” - 3.2.2 “Restoration” - 7.4.1
“Review Waiver” - 10.5
“Rollover Reserve Subaccount” - 3.6 “S&P” - 1.1 (Definition of Rating Agency) “Secondary Market Transaction” - 9.1.1 “Securities” - 9.1.1
“Securities Act” - 9.1.2 “Securitization” - 9.1.1
“Security Deposit Subaccount” - 3.9 “Security Upgrade Reserve Subaccount” - 3.7 “Servicing Agreement” - 10.3
“Shortfall Reserve Replenishment Trigger Amount” - 3.11(a) “Shortfall Reserve Subaccount” - 3.11(a)
“Significant Casualty” - 7.2.2
“Single Member Bankruptcy Remote LLC” - Schedule 5 “Special Member”- Schedule 5
“Special Purpose Bankruptcy Remote Entity” - 5.13 “Springing Recourse Event” - 10.1
“Subaccounts” - 3.1
“Subject Person” - 1.1 (Definition of Affiliate) “Substitute IRPA” - 2.6.6(b)
“Tax Subaccount” - 3.3
“Tenant Direction Letter” - 3.1(c)
“Tokens” - 1.1 (Definition of Permitted Transfer)
“Token Sponsor” - 1.1 (Definition of Permitted Transfer) “Toxic Mold” - 4.21
“UK Financial Institution” - 10.33 “UK Resolution Authority” - 10.33 “Underwriter Group” - 9.1.3 “Underwriters” - 9.1.3
“Write-Down and Conversion Powers” - 10.33
1.3 Principles of Construction. Unless otherwise specified, (i) all references to sections and schedules are to those in this Agreement, (ii) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision, (iii) all definitions are equally applicable to the singular and plural forms of the terms defined, (iv) the word “including” means “including but not limited to,” and (v) accounting terms not specifically defined herein shall be construed in accordance with GAAP.
2. GENERAL LOAN TERMS
2.1 The Loan. Subject to and upon the terms and conditions set forth herein, Lender is making a loan (the “Loan”) to Borrowers on the date hereof, in the original principal amount of Forty-Seven Million Seven Hundred Thousand and No/100 Dollars ($47,700,000.00) (the “Loan
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Amount”), which shall mature on the Stated Maturity Date. Each Borrower acknowledges receipt of the Loan, the proceeds of which are being and shall be used to (i) repay and discharge existing loans relating to the Properties, (ii) fund certain of the Subaccounts, and (iii) pay transaction costs. Any excess proceeds may be used for any lawful purpose. Borrowers shall receive only one borrowing hereunder in respect of the Loan and no amount repaid in respect of the Loan may be reborrowed. The Loan shall be evidenced by the Note and shall be repaid in accordance with the terms of this Agreement, the Note and the other Loan Documents.
2.2 Interest; Monthly Payments.
2.2.1 Generally. From and after the date hereof, interest on the outstanding Principal shall accrue at the Interest Rate and be due and payable as hereinafter provided.
(a) On the date hereof, Borrowers shall pay interest on the unpaid Principal at the Interest Rate from September 22, 2026, through and including the last day of the Initial Interest Period.
(b) On November 9, 2026, and each Payment Date thereafter through and including the Maturity Date, Borrowers shall pay interest on the unpaid Principal which has accrued through the last day of the Interest Period immediately preceding such Payment Date (unless such Payment Date is the first day of an Interest Period, in which case Borrowers shall, on such Payment Date, pay interest on the unpaid Principal accrued through the last day of the Interest Period that ended immediately preceding such Payment Date).
(c) All accrued and unpaid interest and unpaid Principal shall be due and payable on the Maturity Date. If the Loan is repaid on any date other than on a Payment Date (whether prior to or after the Stated Maturity Date), Borrowers shall also pay interest that would have accrued on such repaid Principal at the Interest Rate through and including the last day of the Interest Period in which such payment is made.
2.2.2 Default Rate. After the occurrence and during the continuance of an Event of Default, the entire unpaid Debt shall bear interest at the Default Rate, calculated from the date such payment was due or such underlying Default shall have occurred without regard to any grace or cure periods contained herein, and shall be payable within ten (10) Business Days of written demand therefor from time to time, to the extent permitted by applicable law.
2.2.3 Effect of a Benchmark Transition Event.
(a) Notwithstanding anything to the contrary herein or in any other Loan Document, if Lender has determined that a Benchmark Transition Event and its related Benchmark Replacement Date, have occurred on or prior to the Interest Determination Date in respect of any determination of the Benchmark for any Interest Period, the Benchmark Replacement will replace the then-current Benchmark for all purposes under this Agreement and under any other Loan Document in respect of such Interest Determination Date and all determinations on all subsequent dates, without requiring any amendment to, or further action by, or consent of Borrowers or any other party to this Agreement or any other Loan Document.
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(b) In connection with either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, Lender will have the right to make Benchmark Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Conforming Changes will become effective without requiring any further action by, or consent of Borrowers or of any other party to, this Agreement or any other Loan Document. Borrowers shall promptly pay to Lender, within ten (10) Business Days of written demand therefor, any additional amounts necessary to compensate Lender for any costs incurred by Lender in making any conversion or Benchmark Conforming Changes in accordance with this Agreement.
(c) Lender will promptly notify Borrowers of (i) any occurrence of (A) a future Benchmark Transition Event (it being acknowledged that a Benchmark Transition Event has previously occurred as indicated in the definition thereof) and (B) the Benchmark Replacement Date with respect thereto, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Conforming Changes, and (iv) the commencement or conclusion of any Benchmark Unavailability Period.
(d) If Lender determines that adequate and reasonable means do not exist for ascertaining the then-current Benchmark, as of any Interest Determination Date or if Lender determines that it is unlawful to determine interest due and payable hereunder with reference to the then-current Benchmark, Lender may give notice to Borrowers, whereupon the Benchmark portion of the interest rate for such Interest Determination Date, and for all subsequent Interest Determination Dates until such notice has been withdrawn by Lender (or until the occurrence of both (i) any Benchmark Transition Event with respect to the Benchmark which cannot be ascertained or is unlawful, and (ii) the related Benchmark Replacement Date), the Benchmark shall be determined pursuant to Section 2.2.3(h) hereof unless and until a Benchmark Replacement is determined by Lender pursuant to the definition of “Benchmark Replacement” and, subject to satisfaction or waiver by Lender of the Benchmark Replacement Condition, the Benchmark Replacement Date has occurred with respect to such Benchmark Replacement.
(e) Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, upon the occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date, Lender may replace the current Benchmark with a Benchmark Replacement and set a replacement spread determined by Lender pursuant to this Section 2.2.3(e) that (when added to the applicable Benchmark Replacement) shall be no less than the approximation of the return that Lender would have received if the Benchmark Transition Event and related Benchmark Replacement Date had not occurred (the “Replacement Spread”); provided that, in determining the Replacement Spread (i) Lender may consider the spread, any margin, continuing interest rate protection agreement requirements, and other economic factors that would be implemented simultaneously with the selection of such Benchmark Replacement for the purpose of preserving Lender’s, and Borrowers’ intent relative to the economics of the Loan prior to the Benchmark Transition Event and (ii) Lender may give due consideration to (A) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then current Benchmark with the Benchmark Replacement by the Relevant Governmental Body or (B) Industry Accepted Practices. Lender shall provide written notice to Borrowers of any new Benchmark Replacement and the Replacement Spread associated therewith (the “Replacement Rate Notice”), which notice shall (y) identify both the
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Benchmark Replacement and the Replacement Spread applicable thereto (which shall be used to calculate the Interest Rate until such time, if any, as Lender determines that the current Benchmark should be replaced pursuant to this Section 2.2.3(e)) and (z) set forth the date such new Interest Rate shall become effective, which shall be on the first day of the immediately succeeding Interest Period or such other effective date determined by Lender and set forth therein. Any determination, decision or election that may be made by Lender pursuant to this Section 2.2.3(e) will be conclusive and binding absent manifest error and may be made its sole but good faith discretion and without consent from any other party to this Agreement or any other Loan Document.
(f) Lender does not warrant or accept responsibility for, and shall not have any liability with respect to (i) the administration of, submission of, calculation of or any other matter related to the rates in the definition of Term SOFR and Term SOFR Reference Rate, any component definition thereof or rates referenced in the definition thereof or any alternative, comparable or successor rate thereto (including any then current Benchmark or any Benchmark Replacement), including whether the composition or characteristics of any such alternative, comparable or successor rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, Term SOFR and/or the Term SOFR Reference Rate or (ii) the effect, implementation or composition of any Benchmark Conforming Changes. Borrowers agree Lender shall not be liable in any manner for its selection of a Benchmark Replacement or the reliability, availability and/or economic returns intended when Lender chose the then current Benchmark, provided that Lender makes such selection in good faith and the same is generally being applied across Lender’s commercial real estate loan portfolio.
(g) Any change in the rate of interest hereunder, including any determination, decision or election that may be made by Lender pursuant to this Section and any determination with respect to a rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, due to a change in the Interest Rate shall become effective as of the opening of business on the first day on which such change in the Interest Rate shall become effective. Each determination or election made by Lender pursuant to this Section, including any determination with respect to a rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, shall be conclusive and binding for all purposes, absent manifest error and may be made in Lender’s sole discretion and without consent from Borrowers or any other party to this Agreement or any other Loan Document.
(h) During the continuance of any Benchmark Unavailability Period or any period set forth in Section 2.2.3(d) hereof for which the Benchmark is to be determined pursuant to this Section 2.2.3(h), the Benchmark shall be the Prime Rate.
2.2.4 Taxes.
(a) Any and all payments by or on account of any obligation of Borrowers hereunder and under the other Loan Documents shall be made free and clear of and without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law requires the deduction or withholding of any Tax from any such payment by Borrowers, then Borrowers shall be entitled to make such deduction or withholding and shall timely pay the full
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amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by Borrowers shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) Borrowers shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Lender timely reimburse it for the payment of, any Other Taxes.
(c) Each Borrower shall jointly and severally indemnify Lender, within 10 Business Days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by Lender or required to be withheld or deducted from a payment to Lender and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrowers by a Lender shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Taxes by Borrowers or any Guarantor to a Governmental Authority pursuant to this Section 2.2.4, Borrowers or such Guarantor, as applicable, shall deliver to Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Lender.
(e) If Lender is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document, Lender shall deliver to Borrowers, at the time or times reasonably requested by Borrowers, such properly completed and executed documentation reasonably requested by Borrowers as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, if reasonably requested by Borrowers, Lender shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrowers as will enable Borrowers to determine whether or not Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation shall not be required if in Lender’s reasonable judgment such completion, execution or submission would subject Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of Lender.
(f) Each party’s obligations under this Section 2.2.4 shall survive any assignment of rights by, or the replacement of, Lender, and the repayment, satisfaction or discharge of all obligations under any Loan Document.
2.2.5 Change in Law; Additional Costs. If any Regulatory Change or any other change in the interpretation or application of any requirement of law, or compliance by Lender with any request or directive (whether or not having the force of law) hereafter issued from any central bank or other Governmental Authority (it being expressly agreed that the Dodd-Frank Wall
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Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a change in law and/or a change in capital adequacy requirements, as applicable, regardless of the date enacted, adopted or issued) shall hereafter:
(a) impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of Lender which is not otherwise included in the determination of the Benchmark hereunder;
(b) have the effect of reducing the rate of return on Lender’s capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration Lender’s policies with respect to capital adequacy) by any amount deemed by Lender to be material; or
(c) impose on Lender any other condition and the result of any of the foregoing is to increase the cost to Lender of making, renewing or maintaining loans or extensions of credit or to reduce any amount receivable hereunder;
then, in any such case, Borrowers shall promptly pay Lender, within ten (10) Business Days of written demand therefor, any additional amounts necessary to compensate Lender for such additional cost or reduced amount receivable which Lender deems to be material as reasonably determined by Lender, provided that such demand by Lender shall apply to all loans similarly affected by such change. Payments pursuant to this Section 2.2.5 shall be made within ten (10) days after the date Lender makes written demand therefor. Lender shall not be entitled to claim compensation pursuant to this Section 2.2.5 for any increased cost or reduction in amounts received or receivable hereunder, or any reduced rate of return, which was incurred or which accrued more than ninety (90) days before the date Lender notified Borrowers of the change in law or other circumstance on which such claim of compensation is based and delivered to Borrowers a written statement setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this subsection, which statement shall be conclusive and binding upon all parties hereto absent manifest error. Borrowers’ obligations under this Section 2.2.5 shall survive the payment of the Debt.
2.2.6 Breakage Indemnity. Borrowers shall indemnify Lender against any loss or expense which Lender may actually sustain or incur in liquidating or redeploying deposits from third parties acquired to effect or maintain the Loan or any part thereof as a consequence of (i) any payment or prepayment of the Loan or any portion thereof made on a date other than a Payment Date, (ii) any payment or prepayment of the Loan or any portion thereof made on a date that is a Payment Date if Borrowers did not give the prior written notice of such prepayment required pursuant to the terms of this Agreement, (iii) intentionally omitted, and/or (iv) the occurrence of the Benchmark Replacement Date. Lender shall deliver to Borrowers a statement for any such sums which it is entitled to receive pursuant to this Section 2.2.6, which statement shall be binding and conclusive absent manifest error. Borrowers’ obligations under this Section 2.2.6 are in addition to Borrowers’ obligations to pay any Exit Fee and Spread Maintenance Premium applicable to a payment or prepayment of Principal and shall survive the payment of the Debt.
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2.2.7 New Payment Date. Lender shall have the right, to be exercised not more than once during the term of the Loan (other than as a result of Benchmark Conforming Changes), to change the Payment Date to a date other than the ninth (9th) day of each month (a “New Payment Date”), on thirty (30) days’ written notice to Borrowers; provided, however, that any such change in the Payment Date: (a) shall not modify the amount of regularly scheduled monthly principal and interest payments, except that the first payment of principal and interest payable on the New Payment Date shall be accompanied by interest at the interest rate herein provided for the period from the Payment Date in the month in which the New Payment Date first occurs to the New Payment Date, and (b) shall change the Stated Maturity Date to the New Payment Date occurring in the month set forth in the definition of Stated Maturity Date.
2.3 Loan Repayment.
2.3.1 Repayment. Borrowers shall pay to Lender on the Maturity Date the entire outstanding principal balance of the Loan, all accrued and unpaid interest and all other amounts due and owing under the Loan Documents, including all interest that would accrue on the outstanding principal balance of the Loan through and including the end of the Interest Period in which the Maturity Date occurs (even if such Interest Period extends beyond the Maturity Date).Borrowers shall have no right to prepay all or any portion of the Principal except in accordance with Sections 2.3.2, 2.3.3 and 2.4.2 hereof. Except during the continuance of an Event of Default, all proceeds of any repayment, including any prepayments of the Loan, shall be applied by Lender as follows in the following order of priority: First, accrued and unpaid interest at the Interest Rate; Second, to Principal; and Third, to the Administrative Fee, the Exit Fee and any other amounts then due and owing under the Loan Documents, including the Spread Maintenance Premium (if such repayment or prepayment occurs prior to the Spread Maintenance Date). If prior to the then-scheduled Stated Maturity Date the Debt is accelerated by reason of an Event of Default, then Lender shall be entitled to receive, in addition to the unpaid Principal and accrued interest and other sums due under the Loan Documents, an amount equal to the Exit Fee applicable to such Principal so accelerated. Any repayment made pursuant to this Section 2.3.1 shall be subject to payment of the Spread Maintenance Premium pursuant to Section 10.20 hereof, to the extent applicable. During the continuance of an Event of Default, all proceeds of repayment, including any payment or recovery on one or more of the Properties (or any portion thereof) (whether through foreclosure, deed-in-lieu of foreclosure, or otherwise) shall, unless otherwise provided in the Loan Documents, be applied in such order and in such manner as Lender shall elect.
2.3.2 Mandatory Prepayments. The Loan is subject to mandatory prepayment in certain instances of Insured Casualty or Condemnation (each a “Casualty/Condemnation Prepayment”), in the manner and to the extent set forth in Section 7.4.2 hereof. Each Casualty/Condemnation Prepayment, after deducting Lender’s costs and expenses (including reasonable attorneys’ fees and expenses) in connection with the settlement or collection of the Proceeds or Award, shall be applied in the same manner as repayments under Section 2.3.1 hereof, and if such Casualty/Condemnation Prepayment is made on any date other than a Payment Date, then such Casualty/Condemnation Prepayment shall include interest that would have accrued on the Principal prepaid through and including the last day of the Interest Period in which such payment is made. Provided that no Event of Default is continuing, any such mandatory prepayment under this Section 2.3.2 shall be without the payment of the Spread Maintenance
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Premium, but subject to the payment of the Exit Fee. Notwithstanding anything to the contrary contained herein, each Casualty/Condemnation Prepayment shall be applied in inverse order of maturity and shall not extend or postpone the due dates of the monthly installments due under the Note or this Agreement, or change the amounts of such installments.
2.3.3 Optional Prepayments. Provided no Event of Default has occurred and is continuing, Borrowers shall have the right to prepay all or any portion of the Principal on any Payment Date provided that Borrowers give Lender at least fifteen (15) days prior written notice thereof and such prepayment is accompanied by (a) the Spread Maintenance Premium applicable thereto (if such prepayment occurs prior to the Spread Maintenance Date) and (b) the Exit Fee applicable thereto. Borrowers may modify, revoke or cancel any such prepayment notice so long as (i) Borrowers provide written notice to Lender of such modification, revocation or cancellation on or before the date that is two (2) Business Days prior to the prepayment date set forth in such prepayment notice and (ii) Borrowers pay a processing fee equal to all out-of-pocket costs and expenses actually incurred by Lender as a result of such revocation, cancellation or modification, including any amounts pursuant to Section 2.2.6 hereof. If any such prepayment is not made on a Payment Date, Borrowers shall also pay interest that would have accrued on such prepaid Principal through and including the last day of the Interest Period in which such payment is made.
2.3.4 Prepayments; Generally. Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document regardless of whether any prepayment is made on a Payment Date or a date that is not a Payment Date (but subject to any prepayment restrictions and conditions set forth in the Loan Documents), in connection with such prepayment Borrowers shall pay to Lender, simultaneously with such prepayment, all interest on the principal balance of the Loan then being prepaid which would have accrued through and including the last day of such Interest Period then in effect notwithstanding that such Interest Period extends beyond the prepayment date. Any prepayment received by Lender on a date other than a Payment Date shall be held by Lender as collateral security for the Loan and shall be applied to the Debt on the next Payment Date.
2.4 Release of Properties on Payment in Full. Lender shall, upon the written request and at the expense of Borrowers, upon payment in full of the Debt in accordance herewith, release or, if requested by Borrowers, assign to Borrowers’ designee (without any representation or warranty by and without any recourse against Lender whatsoever) the Liens of the Loan Documents if not theretofore released. In connection with the releases of the Liens, Borrowers shall submit to Lender, not less than ten (10) Business Days prior to the date of repayment (or such shorter time as is reasonably acceptable to Lender), releases of Liens (and related Loan Documents) for execution by Lender. Such releases shall be in a form appropriate in the jurisdiction in which the Properties are located and contain standard provisions protecting the rights of the releasing lender. In addition, Borrowers shall provide all other documentation Lender reasonably requires to be delivered by Borrowers in connection with such releases. Borrowers shall pay all costs, Taxes and expenses associated with the releases of the Liens of the Mortgages, including Lender’s reasonable attorneys’ fees.
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2.5 Payments and Computations.
2.5.1 Making of Payments. Each payment by a Borrower or Borrowers shall be made in funds settled through the New York Clearing House Interbank Payments System or other funds immediately available to Lender by 2:00 p.m., New York City time, on the date such payment is due, to Lender by deposit to such account as Lender may designate by written notice (which notice may be sent by email) to Borrowers. Other than payments due on a Payment Date or the Stated Maturity Date (which shall be subject to a preceding Business Day convention as set forth in the definition of Payment Date), whenever any other payment shall be stated to be due on a day that is not a Business Day, such payment shall be made on the first Business Day thereafter (notwithstanding such adjustment of due dates, Borrowers shall not be entitled to any deduction of interest due under this Agreement, the Note or any of the other Loan Documents). All such payments shall be made irrespective of, and without any deduction, set-off or counterclaim whatsoever and are payable without relief from valuation and appraisement laws and with all costs and charges incurred in the collection or enforcement thereof, including attorneys’ fees and court costs.
2.5.2 Computations. Interest payable under the Loan Documents shall be computed on the basis of the actual number of days elapsed over a 360-day year.
2.5.3 Late Payment Charge. If any Principal, interest or other sum due under any Loan Document is not paid by Borrowers on the date on which it is due (other than payment of Principal on the Maturity Date or any acceleration thereof), Borrowers shall pay to Lender within ten (10) Business Days of written demand therefor an amount equal to the lesser of five percent (5%) of such unpaid sum or the maximum amount permitted by applicable law (the “Late Payment Charge”), in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment. Such amount shall be secured by the Loan Documents. The acceptance of a Late Payment Charge hereunder shall not constitute a waiver by Lender of any Event of Default then existing pursuant to the Loan Documents. Lender’s failure to collect a Late Payment Charge at any time shall not constitute a waiver of Lender’s right thereafter, at any time and from time to time (including upon acceleration of the Note or upon payment in full of the Loan), to collect such previously uncollected Late Payment Charge or to collect subsequently accruing Late Payment Charges.
2.6 Interest Rate Protection Agreements.
2.6.1 Interest Rate Protection Agreement. As of the date hereof, Borrowers have entered into, made all payments required under, and satisfied all conditions precedent to the effectiveness of, an interest rate protection agreement that satisfies all of the following conditions (such interest rate protection agreement together with (i) any extension thereof or (ii) any other interest rate protection agreement entered into pursuant to Sections 2.6.1(d) or 2.8 hereof, being referred to herein as the “Interest Rate Protection Agreement”):
(a) The Interest Rate Protection Agreement (i) is with an Acceptable Counterparty, (ii) has a term ending no earlier than the then-scheduled Stated Maturity Date, (iii) is an interest rate cap (A) in respect of a notional amount not less than the maximum principal
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amount of the Loan and (B) that shall have the effect of capping the Benchmark at the applicable Strike Rate and (iv) provides that the only obligation of Borrowers thereunder is the making of a single payment upon the execution and delivery thereof.
(b) Borrowers’ interest in such Interest Rate Protection Agreement has been assigned to Lender pursuant to documentation satisfactory to Lender in form and substance, and the counterparty to such Interest Rate Protection Agreement has executed and delivered to Lender an acknowledgment of such assignment, which acknowledgment includes such counterparty’s agreement to pay directly into the Clearing Account all sums payable by such counterparty pursuant to the Interest Rate Protection Agreement and shall otherwise be satisfactory to Lender in form and substance.
(c) In connection with an Interest Rate Protection Agreement, Borrowers shall obtain and deliver to Lender an opinion of counsel from counsel (in-house or independent) for the issuer of the Interest Rate Protection Agreement (upon which Lender and its successors and assigns may rely) which shall provide in relevant part, that: (i) the issuer is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has the organizational power and authority to execute and deliver, and to perform its obligations under, the Interest Rate Protection Agreement; (ii) the execution and delivery of the Interest Rate Protection Agreement by the issuer, and any other agreement which the issuer has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been and remain duly authorized by all necessary action and do not contravene any provision of its certificate of incorporation or by-laws (or equivalent organizational documents) or any law, regulation or contractual restriction binding on or affecting it or its property; (iii) all consents, authorizations and approvals required for the execution and delivery by the issuer of the Interest Rate Protection Agreement, and any other agreement which the issuer has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been obtained and remain in full force and effect, all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with any Governmental Authority or regulatory body is required for such execution, delivery or performance; and (iv) the Interest Rate Protection Agreement, and any other agreement which the issuer has executed and delivered pursuant thereto, has been duly executed and delivered by the issuer and constitutes the legal, valid and binding obligation of the issuer, enforceable against the issuer in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(d) In the event of any downgrade, withdrawal or qualification of the rating of the issuer of the Interest Rate Protection Agreement below (x) a long-term unsecured debt rating of “A-” by S&P or (y) a long-term unsecured debt rating of “A3” by Moody’s, Borrowers shall either (i) replace (or cause the cap provider to replace) the Interest Rate Protection Agreement with a replacement Interest Rate Protection Agreement from an Acceptable Counterparty (with terms identical to the Interest Rate Protection Agreement being replaced, or otherwise approved by Lender in its reasonable discretion and the Rating Agencies) or (ii) if a guaranty was delivered in connection with the Interest Rate Protection Agreement from an Acceptable Counterparty at closing, cause the issuer to provide a replacement guaranty of its obligations under the Interest Rate Protection Agreement from another Acceptable Counterparty not later than thirty (30) days
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following receipt of notice from Lender or the Servicer of such downgrade, withdrawal or qualification.
2.6.2 Execution of Documents. Borrowers shall promptly execute and deliver to the counterparty of the Interest Rate Protection Agreement such confirmations and agreements as may be requested by such counterparty in connection with such Interest Rate Protection Agreement.
2.6.3 No Obligation of Lender. Borrowers agree that Lender shall not have any obligation, duty or responsibility to any Borrower or any other Person by reason of, or in connection with, any Interest Rate Protection Agreement (including any duty to provide or arrange any Interest Rate Protection Agreement, to consent to any mortgage or pledge of any Property or any portion thereof as security for Borrowers’ performance of its obligations under any Interest Rate Protection Agreement, or to provide any credit or financial support for the obligations of Borrowers or any other Person thereunder or with respect thereto). No Interest Rate Protection Agreement shall alter, impair, restrict, limit or modify in any respect the obligation of Borrowers to pay interest on the Loan as and when the same becomes due and payable in accordance with the provisions of the Loan Documents.
2.6.4 Receipts from Interest Rate Protection Agreements. All payments made by the counterparty to the Interest Rate Protection Agreement shall be deposited into the Clearing Account and applied in the same manner as Rents are applied under Section 3.15 hereof.
2.6.5 Failure to Provide Interest Rate Protection Agreement. If Borrowers breach their obligation to enter into, extend, modify or replace an Interest Rate Protection Agreement to the extent required hereunder, Lender may, but shall have no obligation to, at Borrowers’ sole cost and expense and on Borrowers’ behalf, enter into, extend, modify and/or replace an Interest Rate Protection Agreement as so required. Lender is hereby irrevocably appointed the true and lawful attorney of Borrowers (coupled with an interest), in its name and stead, to execute such an Interest Rate Protection Agreement and all necessary documents ancillary thereto, and for that purpose Lender may execute all necessary agreements and instruments, Borrowers hereby ratifying and confirming all that its said attorney shall lawfully do by virtue hereof. All fees, costs and expenses incurred by Lender (including reasonable attorneys’ fees), together with interest thereon at the Default Rate until paid to Lender pursuant to this Section 2.6.5 shall be paid by Borrowers within five (5) days after Lender’s demand and such sums and liabilities, including such interest, shall be deemed and shall constitute advances under this Agreement and be evidenced by the Note and be secured by the Loan Documents.
2.6.6 Benchmark Replacement; Substitute IRPA.
(a) Notwithstanding anything to the contrary contained above in this Section 2.6, in Section 2.8(c) hereof or elsewhere in this Agreement, if, at any time, Lender gives Borrowers notice that a Benchmark Replacement has been selected in accordance with Section
2.2.3 hereof, then:
(i) within thirty (30) days after giving notice of such Benchmark Replacement Date, Borrowers shall enter into, make all payments under, and satisfy all
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conditions precedent to the effectiveness of, a Substitute IRPA (and in connection therewith, but not prior to Borrowers taking all the actions described in this clause (i), Borrowers shall have the right to terminate any then-existing Interest Rate Protection Agreement); and
(ii) following such Benchmark Replacement Date, (x) in lieu of satisfying the condition described in Section 2.6.1(d) hereof with respect to the requirement to replace the Interest Rate Protection Agreement, Borrowers shall instead enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of a Substitute IRPA, and (y) in lieu of satisfying the condition described in Section 2.8(c) hereof with respect to any Extension Period not then yet commenced, Borrowers 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.
(b) As used herein, “Substitute IRPA” shall mean an interest rate protection agreement that satisfies all of the following requirements:
(i) it has a term expiring no earlier than, in the case of Section 2.6.6(a)(i) hereof, the then-scheduled Stated Maturity Date, and in the case of Section 2.6.6(a)(ii) hereof, the last day of the requested Extension Period;
(ii) it has a notional amount not less than the maximum principal amount of the Loan;
(iii) it provides that the only obligation of Borrowers thereunder is the making of a single payment to the counterparty thereunder upon the execution and delivery thereof;
(iv) it provides a hedge against increases in the Benchmark Replacement and has a strike rate that is equal to or less than the applicable Strike Rate, as determined by Lender as of the Benchmark Replacement Date; and
(v) without intending to limit any of the provisions of the preceding clauses (i) through (iv), it satisfies all of the requirements of Sections 2.6.1(a) (other than clause (iii)(B) thereof), (b), (c) and (d) hereof.
If a Substitute IRPA is not then commercially available, then Borrowers may propose for Lender’s reasonable approval an alternative hedging instrument that would afford Lender substantially equivalent protection from increases in the interest rate); provided, however, that if Lender rejects Borrowers’ proposal, then Lender will direct the alternative and Borrowers shall comply with such directive.
(c) From and after the date of any Rate Conversion, all provisions in this Agreement that refer or relate to an “Interest Rate Protection Agreement” (other than Section 2.6.1(a)(iii)(B), Section 2.6.6(a)(i), Section 2.6.6(b)(iv), and this Section 2.6.6(c)) shall be deemed to refer or relate, as applicable, to a Substitute IRPA.
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2.7 Fees; Spread Maintenance Premium.
2.7.1 Administrative Fee. Borrowers shall pay the Administrative Fee on each Payment Date during the Term.
2.7.2 Origination Fee. On the date hereof, Borrowers shall pay to Lender an origination fee equal to one percent (1.0%) of the Loan Amount, which origination fee shall be deemed to be earned by Lender upon the funding of the Loan and shall not be considered “unmatured interest” (or the economic equivalent thereof) under Section 502(b)(2) of the Bankruptcy Code.
2.7.3 Exit Fee. Upon any repayment or prepayment of Principal (in whole or in part), Borrowers shall pay to Lender on the date of such repayment or prepayment the Exit Fee applicable thereto. Upon any acceleration or final repayment of the Loan, Borrowers shall immediately pay to Lender on account of the Exit Fee the amount by which (a) one percent (1%) of the original Principal exceeds (b) the total amount of Exit Fees theretofore paid by Borrowers pursuant to this Section 2.7.3. All Exit Fees hereunder shall be deemed to be earned by Lender upon the funding of the Loan.
2.7.4 Spread Maintenance Premium. Upon any repayment or prepayment of Principal (including in connection with an acceleration of the Loan) made prior to the Spread Maintenance Date, Borrowers shall pay to Lender on the date of such repayment or prepayment (or acceleration of the Loan) the Spread Maintenance Premium applicable thereto. All Spread Maintenance Premium payments hereunder shall be deemed to be earned by Lender upon the funding of the Loan and shall not be considered “unmatured interest” (or the economic equivalent thereof) under Section 502(b)(2) of the Bankruptcy Code.
2.8 Extension Options. Borrowers shall have the right, at their option, to extend the term of the Loan until October 9, 2029 (the “Extended Maturity Date”) (and the period of time during such extension period being referred to herein as the “Extension Period”), by giving notice of such extension to Lender at least thirty (30) days prior and not more than ninety (90) days prior to the commencement of the requested Extension Period. Upon receipt of such request to extend the term of the Loan, Lender will confirm to Borrowers in writing whether or not the term of the Loan will be so extended, which extension will be granted upon the satisfaction of the following conditions, as determined by Lender:
(a) no Event of Default exists at the time such request is made and on the then scheduled Stated Maturity Date;
(b) Borrowers deliver to Lender an Officer’s Certificate confirming the accuracy of the information contained in clause (a) above and certifying that each of the representations and warranties of Borrower contained in the Loan Documents is true, complete and correct in all material respects as of the date of such Officer’s Certificate to the extent such representations and warranties are not matters which by their nature can no longer be true and correct as a result of the passage of time;
(c) on or prior to the commencement of the requested Extension Period, Borrowers either (i) extend the term of the Interest Rate Protection Agreement to a date not earlier
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than the expiration of the requested Extension Period or (ii) enter into a new interest rate protection agreement which expires no earlier than the expiration of the requested Extension Period, and which extension or new agreement is in respect of a notional amount equal to the outstanding Principal as of the first day of such requested Extension Period and is otherwise on the same terms set forth in Section 2.6.1 hereof (including the delivery of such documents as set forth therein) and has the effect of capping the Benchmark at no more than the applicable Strike Rate;
(d) as of the commencement of the requested Extension Period, the Debt Yield (which shall be calculated based on financial reports requested by Lender and delivered by Borrowers no earlier than sixty (60) days prior to the requested Extension Period, and if such financial reports are not delivered by Borrowers within such period, this condition shall be deemed not satisfied) is at least six and one-half percent (6.50%); provided that if the Debt Yield is less than such percentage Borrowers may prepay a portion of the unpaid Principal to a level such that the Debt Yield is equal to or greater than such percentage, and any such prepayment shall be subject to the payment of the Exit Fee;
(e) in accordance with the terms and conditions of Section 3.11 hereof, on or before the commencement of the Extension Period, in the event that the undisbursed balance of the Shortfall Reserve Subaccount is less than $400,000, Borrowers shall be required to pay to Lender for deposit into the Shortfall Reserve Subaccount an amount such that the funds on deposit in the Shortfall Reserve Subaccount (after giving effect to such deposit) shall be equal to the lesser of (i) $800,000 and (ii) the amount then determined by Lender in its reasonable discretion to cover the projected and anticipated Shortfalls for the Extension Period;
(f) no Material Adverse Effect shall have occurred at the time such request is made and on the then scheduled Stated Maturity Date;
(g) at Lender’s election, Lender shall have received updated title reports showing the Mortgage as a prior and paramount lien on each of the Properties, that title to each of the Properties is vested in the applicable Borrower and that no claim for mechanics’ or materialmen’s liens then encumber any of the Properties in violation of the terms and conditions of this Agreement; and
(h) Borrowers pay to Lender no later than the commencement of the requested Extension Period, an extension fee in an amount equal to 0.50% of the outstanding Principal as of the first day of such requested Extension Period.
If Borrowers are unable to satisfy all of the foregoing conditions within the applicable time frames for each, Lender shall have no obligation to extend the term of the Loan hereunder.
3. CASH MANAGEMENT AND RESERVES
3.1 Cash Management Arrangements.
(a) Borrowers shall (or shall cause Manager to) collect all Rents relating to the Properties, and thereafter deposit all such Rents within one (1) Business Day of receipt into an Eligible Account (the “Clearing Account”) established and maintained by Borrower at a bank
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selected by Borrower and reasonably approved by Lender, which shall at all times be an Eligible Institution (the “Clearing Bank”) as more fully described in the Clearing Account Agreement; provided, however that the collection of Rents from non-residential tenants of the Properties shall be governed by the terms of Section 3.1(b) hereof. Without in any way limiting the foregoing, if Borrowers or Manager receive any Rents, then (a) such amounts shall be deemed to be collateral for the Loan and shall be held in trust for the benefit, and as the property, of Lender, (b) such amounts shall not be commingled with any other funds or property of Borrowers or Manager, and (c) Borrowers or Manager shall deposit such amounts into the Clearing Account within one (1) Business Day of receipt. Funds deposited into the Clearing Account shall be swept by the Clearing Bank on a daily basis into the applicable Borrower’s operating account at the Clearing Bank or such other bank selected by Borrower, unless a Cash Management Period is continuing, in which event such funds shall be swept on a daily basis into an Eligible Account at the Cash Management Bank controlled by Lender (the “Cash Management Account”) and applied and disbursed in accordance with this Agreement and the Cash Management Agreement (provided that, if the Cash Management Account is not open on the date that the first Cash Management Period commences, then such funds shall, at the election of Lender, be swept by the Clearing Bank into an account as directed by Lender or retained in the Clearing Account, in either case, until such time that the Cash Management Account is opened). Lender will also establish subaccounts of the Cash Management Account or, if applicable, the Servicer’s account, which shall at all times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts) (such subaccounts are referred to herein as “Subaccounts”). The Cash Management Account and any Subaccounts will be under the sole control and dominion of Lender, and no Borrowers shall have any right of withdrawal therefrom. Borrowers shall pay for all expenses of opening and maintaining all of the above accounts. Notwithstanding anything to the contrary contained herein, in the Clearing Account Agreement or the Cash Management Agreement, Borrowers shall bear the risk of any loss or liability due to, and Lender shall not be liable for, (x) any acts, omissions, errors in judgment or mistakes of fact or law of the Cash Management Bank or the Clearing Bank, (y) any breach by the Cash Management Bank of the Cash Management Agreement or the Clearing Bank of the Clearing Account Agreement, or (z) the conservatorship, bankruptcy, receivership, insolvency, reorganization, or any similar debtor relief laws affecting the rights, remedies, powers, privileges and benefits of creditors generally, of the Cash Management Bank or the Clearing Bank (except as may be otherwise provided for in the Cash Management Agreement).
(b) Within one (1) Business Day after the Closing Date, Borrowers or Manager shall deliver a notice in the form of Exhibit A attached hereto to each existing non-residential Tenant at the Properties (the “Tenant Direction Letter”), directing such Tenants to remit their rent checks directly to the Clearing Account in accordance with such Tenant Direction Letter, and shall also deliver a Tenant Direction Letter to each future Tenant at the Properties.
3.2 Required Repairs.
3.2.1 Completion of Required Repairs. Borrowers shall perform and complete each item of the repairs and environmental remedial work at the Properties described on Schedule 2 hereto (the “Required Repairs”) within three (3) months of the date hereof or such shorter period of time for such item set forth on Schedule 2 hereto.
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3.2.2 Required Repairs Reserve. On the date hereof, Borrowers shall deposit with Lender the aggregate amount set forth on Schedule 2 hereto and Lender shall cause such amount to be transferred to a Subaccount (the “Required Repairs Subaccount”). Provided that no Event of Default shall have occurred and is continuing, Lender shall disburse funds held in the Required Repairs Subaccount to Borrowers, within fifteen (15) days after the delivery by Borrowers to Lender of a request therefor (but not more often than once per month), in increments of at least $5,000 (or such lesser amount equal to the remaining balance of the Required Repairs Subaccount), and, with respect to any particular disbursement for any portion of the Required Repairs, in an amount not to exceed the amount set forth on Schedule 2 with respect to such particular portion or item of the Required Repairs, accompanied by the following items (which items shall be in form and substance satisfactory to Lender): (a) an Officer’s Certificate (i) certifying that the Required Repairs or any portion thereof which are the subject of the requested disbursement have been completed in a good and workmanlike manner and in accordance with all applicable Legal Requirements, (ii) identifying each Person that supplied materials or labor in connection with such Required Repairs or any portion thereof and (iii) stating that each such Person has been or, upon receipt of the requested disbursement, will be paid in full with respect to the portion of the Required Repairs which is the subject of the requested disbursement; (b) to the extent applicable, copies of appropriate lien waivers or other evidence of payment reasonably satisfactory to Lender; (c) to the extent applicable, at Lender’s option, a title search for the applicable Property indicating that it is free from all Liens not previously approved by Lender for any work costing in excess of $25,000.00; (d) a copy of each License required to be obtained with respect to the portion of the Required Repairs which is the subject of the requested disbursement; and (e) such other evidence as Lender shall reasonably request that the Required Repairs which are the subject of the requested disbursement have been completed and paid for. Provided no Event of Default shall have occurred and is continuing, upon Borrowers’ completion of all Required Repairs in accordance with this Section 3.2, Lender shall release any funds remaining in the Required Repairs Subaccount, if any, to Borrowers.
3.3 Real Estate Taxes. Borrowers shall pay to Lender (a) $835,000.00 on the date hereof on account of Real Estate Taxes, and (b) on each Payment Date, one-twelfth (1/12) of the Real Estate Taxes that Lender estimates will be payable during the next twelve (12) months (initially $101,000.00 per month) in order to accumulate with Lender sufficient funds to pay all such Real Estate Taxes at least thirty (30) days prior to their respective due dates. Such amounts will be transferred by Lender to a Subaccount (the “Tax Subaccount”). Provided that no Event of Default has occurred and is continuing, Lender will (i) apply funds in the Tax Subaccount to payments of Real Estate Taxes required to be made by Borrowers pursuant to Section 5.2 hereof, provided that Borrowers have promptly supplied Lender with notices of all Real Estate Taxes due, or (ii) reimburse Borrowers for such amounts upon presentation of evidence of payment; subject, however, to Borrowers’ right to contest Real Estate Taxes in accordance with Section 5.2 hereof. In making any payment relating to Real Estate Taxes, Lender may do so according to any bill, statement or estimate procured from the appropriate public office, without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If Lender determines in its reasonable judgment that the funds in the Tax Subaccount will be insufficient to pay (or in excess of) the Real Estate Taxes next coming due, Lender may increase (or decrease) the monthly contribution required to be made by Borrowers to the Tax Subaccount.
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3.4 Insurance. Borrowers shall pay to Lender (a) $265,000.00 on the date hereof on account of Insurance Premiums and (b) on each Payment Date one-twelfth (1/12) of the Insurance Premiums that Lender estimates will be payable (initially $43,100.00 per month) for the renewal of the coverage afforded by the Policies upon the expiration thereof in order to accumulate with Lender sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to the expiration of the Policies. Such amounts will be transferred by Lender to a Subaccount (the “Insurance Subaccount”). Provided that no Event of Default has occurred and is continuing, Lender will (i) apply funds in the Insurance Subaccount to payments of Insurance Premiums required to be made by Borrowers pursuant to Section 7.1 hereof, provided that Borrowers have promptly supplied Lender with notices of all Insurance Premiums due, or (ii) reimburse Borrowers for such amounts upon presentation of evidence of payment. In making any payment relating to Insurance Premiums, Lender may do so according to any bill, statement or estimate procured from the insurer or agent, without inquiry into the accuracy of such bill, statement or estimate. If Lender determines in its reasonable judgment that the funds in the Insurance Subaccount will be insufficient to pay (or in excess of) the Insurance Premiums next coming due, Lender may increase (or decrease) the monthly contribution required to be made by Borrowers to the Insurance Subaccount.
3.5 Capital Expense Reserve. Borrowers shall pay to Lender (a) $45,000.00 on the date hereof and (b) on each Payment Date, an amount initially equal to $4,904.17. Lender will transfer such amounts into a Subaccount (the “Capital Expense Reserve Subaccount”). Additionally, upon thirty (30) days’ prior notice to Borrowers, Lender may reassess and increase the amount of the monthly payment required under this Section 3.5 from time to time in its reasonable discretion (based upon its then current underwriting standards). Provided that no Event of Default has occurred and is continuing, Lender shall disburse funds held in the Capital Expense Reserve Subaccount to Borrowers, within fifteen (15) days after the delivery by Borrowers to Lender of a request therefor (but not more often than once per month), in increments of at least $10,000 provided that: (i) such disbursement is for an Approved Capital Expense incurred after the initial funding of the Capital Expense Reserve; (ii) Lender shall have (if it desires) verified (by an inspection conducted at Borrowers’ expense) performance of the work associated with such Approved Capital Expense; and (iii) the request for disbursement is accompanied by (A) an Officer’s Certificate certifying (1) that such funds will be used to pay or reimburse Borrowers for Approved Capital Expenses and a description thereof, (2) that all outstanding trade payables (other than those to be paid from the requested disbursement or those constituting Permitted Indebtedness) have been paid in full, (3) that the same has not been the subject of a previous disbursement, and (4) that all previous disbursements have been used to pay the previously identified Approved Capital Expenses, (B) lien waivers or other evidence of payment satisfactory to Lender unless the requested disbursement shall be used to pay for such Approved Capital Expenses directly (and not reimburse Borrowers for the Approved Capital Expenses previously paid for by Borrowers), in which case Borrowers shall be required to deliver such items with respect to the Approved Capital Expenses which were the subject of the previous disbursement and conditional lien waivers with respect to the requested items to be paid for from the requested disbursement, (C) at Lender’s option, a title search for the applicable Property or Properties indicating that such Property or Properties are free from all Liens, claims and other encumbrances not previously approved by Lender, and (D) such other evidence as Lender shall reasonably request that the Approved Capital Expenses at the subject Property or Properties to be funded by the requested disbursement have been completed and are paid for or will be paid upon such
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disbursement to Borrowers. Any such disbursement of more than $50,000 to pay (rather than reimburse) Approved Capital Expenses may, at Lender’s option, be made by direct check payable to the payee of such Approved Capital Expenses.
3.6 Rollover Reserve. Borrowers shall pay to Lender $250,000.00 on the date hereof to be used for Approved Leasing Expenses, and Lender will transfer such amount into a Subaccount (the “Rollover Reserve Subaccount”). Provided that no Event of Default has occurred and is continuing, Lender shall disburse funds held in the Rollover Reserve Subaccount to Borrowers, within fifteen (15) days after the delivery by Borrowers to Lender of a request therefor (but not more often than once per month), in increments of at least $10,000, provided that: (i) such disbursement is for an Approved Leasing Expense; (ii) Lender shall have (if it desires) verified (by an inspection conducted at Borrowers’ expense) performance of any construction work associated with such Approved Leasing Expense; (iii) with respect to any tenant improvement work, Borrowers shall have furnished to Lender copies of all permits, licenses and approvals required by any Governmental Authority with regard to such work that is the subject of the requested disbursement, whether necessary for commencement, completion, use or otherwise; (iv) with respect to any tenant improvement work, the Retainage shall be retained by Lender and shall be paid over by Lender to Borrowers, provided that no lien claims are then filed against the applicable Property, when all of the requirements for the release of such applicable Retainage have been satisfied pursuant to the terms of the applicable construction contract; and (v) the request for disbursement is accompanied by (A) an Officer’s Certificate certifying (1) that such funds will be used only to pay (or reimburse Borrowers for) Approved Leasing Expenses and a description thereof, (2) that all outstanding trade payables (other than those to be paid from the requested disbursement or those constituting Permitted Indebtedness) have been paid in full, (3) that the same has not been the subject of a previous disbursement and (4) that all previous disbursements have been used only to pay (or reimburse Borrowers for) the previously identified Approved Leasing Expenses, (B) lien waivers or other evidence of payment satisfactory to Lender unless the requested disbursement shall be used to pay for such Approved Leasing Expense directly (and not reimburse Borrowers for the Approved Leasing Expense previously paid for by Borrowers), in which case Borrowers shall be required to deliver such items with respect to the Approved Leasing Expense which was the subject of the previous disbursement and conditional lien waivers with respect to the requested items to be paid for from the requested disbursement and (C) reasonably detailed supporting documentation as to the amount, necessity and purpose therefor. Any such disbursement of more than $50,000 to pay (rather than reimburse) Approved Leasing Expenses may, at Lender’s option, be made by direct check payable to the payee of such Approved Leasing Expenses.
3.7 Security Upgrade Reserve. Borrowers shall pay to Lender $30,000.00 on the date hereof, and Lender will transfer such amounts into a Subaccount (the “Security Upgrade Reserve Subaccount”). Provided that no Event of Default has occurred and is continuing, Lender shall disburse funds held in the Security Upgrade Reserve Subaccount to Borrowers, within fifteen (15) days after the delivery by Borrowers to Lender of a request therefor (but not more often than once per month), in increments of at least $2,500 provided that: (i) such disbursement is for an Approved Security Upgrade Expense; and (ii) the request for disbursement is accompanied by (A) an Officer’s Certificate certifying (1) that such funds will be used to pay or reimburse Borrowers for Approved Security Upgrade Expenses and a description thereof, (2) that all outstanding trade payables (other than those to be paid from the requested disbursement or those constituting
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Permitted Indebtedness) have been paid in full, (3) that the same has not been the subject of a previous disbursement, and (4) that all previous disbursements have been used to pay the previously identified Approved Security Upgrade Expenses, (B) lien waivers or other evidence of payment satisfactory to Lender unless the requested disbursement shall be used to pay for such Approved Security Upgrade Expenses directly (and not reimburse Borrowers for the Approved Security Upgrade Expenses previously paid for by Borrowers), in which case Borrowers shall be required to deliver such items with respect to the Approved Security Upgrade Expenses which were the subject of the previous disbursement and conditional lien waivers with respect to the requested items to be paid for from the requested disbursement, and (C) such other evidence as Lender shall reasonably request that the Approved Security Upgrade Expenses at the subject Property or Properties to be funded by the requested disbursement have been completed and are paid for or will be paid upon such disbursement to Borrowers.
3.8 Casualty/Condemnation Subaccount. Borrowers shall pay, or cause to be paid, to Lender all Proceeds or Awards due to any Casualty or Condemnation to be transferred to a Subaccount (the “Casualty/Condemnation Subaccount”) in accordance with the provisions of Article 7 hereof. All amounts in the Casualty/Condemnation Subaccount shall be disbursed in accordance with the provisions of Article 7 hereof.
3.9 Security Deposits. Each Borrower shall keep and hold all security deposits under Leases in accordance with applicable Legal Requirements and at a separately designated account under such Borrower’s control at the Clearing Bank or other bank selected by Borrower (and in the case of a letter of credit, assigned with full power of attorney and executed sight drafts to Lender) so that the security deposits shall not be commingled with any other funds of such Borrower. During any Cash Management Period, Borrowers shall, upon Lender’s request or at Borrower’s option and reasonably approval by Lender, if permitted by applicable Legal Requirements, turn over to Lender the security deposits (and any interest theretofore earned thereon) under Leases, to be held by Lender in a Subaccount (the “Security Deposit Subaccount”) subject to the terms of the Leases. Security deposits held in the Security Deposit Subaccount will be released by Lender upon notice from Borrowers together with such evidence as Lender may reasonably request that such security deposit is required to be returned to a tenant pursuant to the terms of a Lease or may be applied as Rent pursuant to the rights of Borrowers under the applicable Lease. During any Cash Management Period, any funds in the Security Deposit Subaccount which a Borrower is permitted to retain pursuant to the applicable provisions of any Lease shall be transferred by Lender into the Cash Management Account, to be applied and disbursed in accordance with the provisions of Section 3.15 hereof. Any letter of credit or other instrument that any Borrower receives in lieu of a cash security deposit under any Lease entered into after the date hereof shall (a) be maintained in full force and effect in the full amount unless replaced by a cash deposit as hereinabove described and (b) if permitted pursuant to any Legal Requirements, name Lender as payee or mortgagee thereunder (or at Lender’s option, be fully assignable to Lender).
3.10 Cash Collateral Subaccount. If a Cash Management Period shall have commenced, then on the immediately succeeding Payment Date and on each Payment Date (or, if a Cash Management Period commences on a Payment Date, then on such Payment Date) thereafter during the continuance of such Cash Management Period, all Available Cash shall be paid to Lender, which amounts shall be transferred by Lender into a Subaccount (the “Cash Collateral Subaccount”) as cash collateral for the Debt. Any funds in the Cash Collateral Subaccount and
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not previously disbursed or applied shall, upon the termination of such Cash Management Period, be disbursed to Borrowers. Lender shall have the right, but not the obligation, at any time whether or not an Event of Default has occurred and is continuing, to apply all sums then on deposit in the Cash Collateral Subaccount to the Debt, in such order and in such manner as Lender shall elect, including to make a prepayment of Principal (together with the applicable Exit Fee and Spread Maintenance Premium applicable thereto).
3.11 Shortfall Reserve.
(a) On the date hereof, Borrowers shall deposit with Lender the amount of
$1,300,000.00 (such amount being equal to Lender’s estimate of the projected and anticipated Shortfalls for the first twelve (12) months of the Term) (the “Initial Shortfall Reserve Deposit”) for the purpose of creating a reserve for Shortfalls. Lender shall cause such amount to be transferred to a Subaccount (the “Shortfall Reserve Subaccount”). In addition to the foregoing, if at any time, the funds in the Shortfall Reserve Subaccount are less than $400,000 (such amount, the “Shortfall Reserve Replenishment Trigger Amount”), Borrowers shall, within ten (10) Business Days of notice of the same, deposit with Lender an amount such that the funds on deposit in the Shortfall Reserve Subaccount (after giving effect to such deposit) shall be equal to the lesser of (A) $800,000 and (B) the amount then determined by Lender to cover the projected and anticipated Shortfalls through the Stated Maturity Date. Borrowers’ obligations under this Section 3.11(a)(i) are continuing obligations and Borrowers shall be required to make such deposit as described herein at any time that Lender reasonably determines that the amount of funds on deposit in the Shortfall Reserve Subaccount are less than the Shortfall Reserve Replenishment Trigger Amount. Lender’s determination of any projected Shortfalls pursuant to this clause (i) shall be conclusive absent manifest error. If, with respect to any given Payment Date, Borrowers request an amount on account of operating expenses that is less than the then applicable Monthly Operating Expense Budgeted Amount for such Payment Date, then, solely for the purposes of determining whether funds in the Shortfall Reserve Subaccount are less than the Shortfall Reserve Replenishment Trigger Amount, the full amount of the Monthly Operating Expense Budgeted Amount shall be deemed to have been funded to Borrowers. Borrowers shall have no right to deposit funds in the Shortfall Reserve Subaccount, other than pursuant to Lender’s request for replenishment as set forth in this Section 3.11.
(b) Provided that no Event of Default has occurred and is continuing (other than an Event of Default that can be avoided by the operation of this Section 3.11), if on any Payment Date there is a Shortfall, then (i) if such Shortfall occurs during a Cash Management Period, Lender shall disburse to itself and in accordance with Section 3.15 hereof (or with respect to any Shortfall with respect to the Monthly Operating Expense Budgeted Amount, Lender shall disburse such funds to Borrower) funds from the Shortfall Reserve Subaccount to cover any such Shortfall, and such disbursement shall be credited towards the applicable Required Payments under Section 3.15 hereof, and (ii) if such Shortfall occurs at any time when a Cash Management Period is not then continuing, Lender shall disburse funds held in the Shortfall Reserve Subaccount to Borrower after delivery by Borrower to Lender of a request therefor (which shall be given at least five (5) Business Days prior to any Payment Date), provided such request for disbursement is accompanied by (A) an Officer’s Certificate certifying (1) that such funds will be used to pay a Shortfall, (2) that no Borrower will use any of the Rents collected during such Interest Period for the purpose of making current or future distributions to its members, and (3) reasonably detailed evidence
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reasonably satisfactory to Lender demonstrating that there shall be an anticipated Shortfall on the applicable Payment Date, which shall include evidence and backup as to the amount of Rents collected by Borrowers during the subject Interest Period, the amount (and a description) of all operating expenses paid by Borrowers during such Interest Period, and all other Required Payments payable by Borrowers to Lender on the Payment Date in question. Additionally, provided no Event of Default has occurred and is continuing, Lender shall have the right (in the absence of any request for disbursement from Borrowers), but not the obligation, concurrently with written notice thereof to Borrowers, to disburse to itself funds from the Shortfall Reserve Subaccount to cover any such Shortfall, if any, on any Payment Date and such disbursement shall be credited towards Borrowers’ obligation to pay the applicable Required Payment.
(c) Notwithstanding anything herein to the contrary, except as expressly set forth above in this Section 3.11, only funds in the Shortfall Reserve Subaccount may be used to cover Shortfalls (and not Borrowers’ own funds or equity) and Borrowers shall not be permitted to deposit its own funds into the Clearing Account, the Shortfall Reserve Subaccount or any Cash Management Account (i.e., only Rents shall be permitted to be deposited into any of the foregoing accounts or Subaccounts).
3.12 Intentionally Omitted.
3.13 Intentionally Omitted.
3.14 Grant of Security Interest; Application of Funds. As security for payment of the Debt and the performance by Borrowers of all other terms, conditions and provisions of the Loan Documents, each Borrowers hereby pledges and assigns to Lender, and grants to Lender a security interest in, all such Borrower’s right, title and interest in and to all Rents and in and to all payments to or monies held in the Clearing Account, the Cash Management Account, and all Subaccounts created pursuant to this Agreement (collectively, the “Cash Management System Accounts”). Each Borrower hereby grants to Lender a continuing security interest in, and agrees to hold in trust for the benefit of Lender, all Rents in its possession prior to the (a) payment of such Rents to Lender or (b) deposit of such Rents into the Cash Management System Account. No Borrower shall, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in any Cash Management System Account, or permit any Lien 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. This Agreement is, among other things, intended by the parties to be a security agreement for purposes of the UCC. Upon the occurrence and during the continuance of an Event of Default, Lender may apply any sums in any Cash Management System Account in any order and in any manner as Lender shall elect without seeking the appointment of a receiver and without adversely affecting the rights of Lender to foreclose the Lien of any Mortgage and/or the Pledge Agreement or exercise its other rights under the Loan Documents. Cash Management System Accounts shall not constitute trust funds and may be commingled with other monies held by Lender. All interest which accrues on the funds in any Cash Management System Account (other than the Tax Subaccount and the Insurance Subaccount) shall accrue for the benefit of Borrowers and shall be taxable to Borrowers 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; provided that, (x) all interest which accrues on the funds in any Cash Management System Account during the continuance of an Event of Default or with respect
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to the Property Tax Subaccount or Insurance Subaccount, shall not be added to or become part of such accounts and shall be the sole property of and shall be paid to Lender, and (y) Lender shall have no obligation to maintain the Cash Management System Account as an interest-bearing account. The amount of funds on deposit in each Subaccount is set forth on Schedule 11 attached hereto. Upon repayment in full of the Debt, all remaining funds in the Subaccounts, if any, shall be promptly disbursed to Borrowers.
3.15 Property Cash Flow Allocation.
(a) During any Cash Management Period, all amounts deposited into the Cash Management Account during the immediately preceding Interest Period shall be applied on each Payment Date as follows in the following order of priority:
(i) First, to make payments into the Tax Subaccount as required under Section 3.3 hereof;
(ii) Second, to make payments into the Insurance Subaccount as required under Section 3.4 hereof;
(iii) Third, to pay the monthly portion of the fees charged by the Cash Management Bank in accordance with the Cash Management Agreement;
(iv) Fourth, to pay the Administrative Fee due on such Payment Date;
(v) Lender to pay the interest due on such Payment Date (plus, if applicable, interest at the Default Rate and all other amounts, other than those described under other clauses of this Section 3.15(a), then due to Lender under the Loan Documents);
(vi) Sixth, to make payments into the Capital Expense Reserve Subaccount as required under Section 3.5 hereof;
(vii) Seventh, funds in an amount equal to the Monthly Operating Expense Budgeted Amount and any then-current Approved Additional Operating Expenses shall be disbursed to Borrowers (or to an account designated by Borrowers); and
(viii) Lastly, all amounts remaining after payment of the amounts set forth in clauses (i) through (vii) above (the “Available Cash”) shall be deposited into the Cash Collateral Subaccount in accordance with Section 3.10 hereof.
(b) The failure of Borrowers to make all of the payments required under clauses
(i) through (vi) of Section 3.15(a) hereof in full on each Payment Date shall constitute an Event of Default under this Agreement; provided, however, if adequate funds are available in the Cash Management Account or the Shortfall Reserve Subaccount for such payments and Borrowers have satisfied the conditions for disbursement thereof, the failure by the Cash Management Bank to allocate such funds into the appropriate Subaccounts shall not constitute an Event of Default.
(c) Notwithstanding anything to the contrary contained in this Section 3.15 or elsewhere in the Loan Documents, after the occurrence of an Event of Default, Lender may apply
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all Rents deposited into the Cash Management Account, all funds on deposit in the Subaccounts and all other proceeds of repayment in such order and in such manner as Lender shall elect. Lender’s right to withdraw and apply any of the foregoing funds shall be in addition to all other rights and remedies provided to Lender under the Loan Documents.
4. REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant to Lender as of the date hereof that, except to the extent (if any) disclosed on Schedule 3 attached hereto with reference to a specific Section of this Article 4:
4.1 Organization; Special Purpose.
(a) Each Borrower and Sole Member is duly organized, validly existing and in good standing under the laws of the state of its formation, with requisite power and authority, and all rights, licenses, permits and authorizations, governmental or otherwise, necessary to own its properties and to transact the business in which it is now engaged. Each Borrower is duly qualified to do business and is in good standing in the jurisdiction in which the Property owned by such Borrower is located and in each other jurisdiction where it is required to be so qualified in connection with its properties, business and operations.
(b) Envy Recreational and Sole Member have at all times since its formation been, and as of the date hereof is, a Special Purpose Bankruptcy Remote Entity, and Envy Development, as of the date hereof, is a Special Purpose Bankruptcy Remote Entity.
4.2 Proceedings; Enforceability. Each Borrower has taken all necessary action to authorize the execution, delivery and performance of the Loan Documents to which it is a party, and has the power and authority to execute, deliver and perform under the Loan Documents and all the transactions contemplated thereby. The Loan Documents have been duly authorized, executed and delivered by each Borrower that is a party to such Loan Document and constitute legal, valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by any Borrower, Sole Member or any Guarantor, including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable, and none of Borrowers, Sole Member or Guarantors have asserted any right of rescission, set-off, counterclaim or defense with respect thereto.
4.3 No Conflicts. The execution, delivery and performance of the Loan Documents by each Borrower and the transactions contemplated hereby will not conflict with any provision of any law or regulation to which any Borrower is subject, or conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien (other than pursuant to the Loan Documents) upon any of the property of such Borrower pursuant to the terms of, any agreement or instrument to which such Borrower is a party or by which any Borrower or any Borrower’s property is subject, nor will such action result
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in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority having jurisdiction over any Borrower or any of its property. No Borrower’s rights under the Licenses and the Management Agreement will be adversely affected by the execution and delivery of the Loan Documents, any Borrower’s performance thereunder, the recordation of the Mortgages, or the exercise of any remedies by Lender. Any consent, approval, authorization, order, registration or qualification of or with any Governmental Authority required for the execution, delivery and performance by any Borrower of, or compliance by any Borrower with, the Loan Documents or the consummation of the transactions contemplated hereby, has been obtained and is in full force and effect. In addition, the Pledge Agreement, together with any Uniform Commercial Code financing statements required to be filed in connection therewith and the delivery of the original Certificate (as defined in the Pledge Agreement) to Lender, will create a valid, first priority, perfected Lien on Sole Member’s interest in the Collateral, all in accordance with the terms thereof.
4.4 Litigation. There are no actions, suits or other proceedings at law or in equity by or before any Governmental Authority now pending or threatened against or affecting any Borrower, Sole Member, any Guarantor, Manager or any Property, in any court or by or before any other Governmental Authority, which, if adversely determined, would reasonably be likely to have a Material Adverse Effect.
4.5 Agreements. No Borrower is a party to any agreement or instrument or subject to any restriction which would reasonably be expected to have a Material Adverse Effect. No Borrower is in default with respect to any order or decree of any court or any order, regulation or demand of any Governmental Authority, which default would reasonably be expected to have a Material Adverse Effect. No Borrower is in default or has received written notice of any event or condition that with the giving of notice or the passage of time would constitute a default, in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which any Borrower is a party or by which any Borrower or any Property is bound, and to each Borrower’s knowledge, there are no defaults under any such agreement by such other party thereto.
4.6 Title. Borrowers have good, marketable and indefeasible title in fee simple to the real property and good title to the balance of the Properties, free and clear of all Liens except the Permitted Encumbrances. All transfer Taxes, deed stamps, intangible Taxes or other amounts in the nature of transfer Taxes required to be paid by any Person under applicable Legal Requirements in connection with the transfer of each Property to a Borrower have been paid or are being paid simultaneously herewith. The Mortgages when properly recorded in the appropriate records, together with any UCC Financing Statements required to be filed in connection therewith, will create (a) a valid, perfected first priority liens on Borrowers’ interest in the Properties and (b) valid and perfected first priority security interests in and to, and perfected collateral assignments of, all personalty (including the Leases), all in accordance with the terms thereof, in each case subject only to any applicable Permitted Encumbrances. All Other Taxes have been paid or are being paid simultaneously herewith. All Taxes and governmental assessments due and owing in respect of any of the Properties have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established hereunder or are insured against by the Title Insurance Policies. The Permitted Encumbrances, individually or in the aggregate, do not (i) materially interfere with the benefits of the security intended to be provided by the Mortgages and this Agreement, (ii)
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materially and adversely affect the value, operation or use of any of the Properties, or (iii) impair Borrowers’ ability to repay the Loan. No Condemnation or other proceeding has been commenced or, to Borrowers’ knowledge after due inquiry, is contemplated with respect to all or any portion of any of the Properties or for the relocation of roadways providing access to any of the Properties. There are no mechanics’, materialman’s or other similar Liens or claims which have been filed for work, labor or materials affecting any Property which are or may become a Lien on such Property. There are no outstanding options to purchase or rights of first refusal affecting all or any portion of any Property. The Surveys do not fail to reflect any material matter affecting any of the Properties or the title thereto. All of the Improvements which were included in determining the appraised value of each Property lie wholly within the boundaries and building restriction lines of such Property, and no improvements on adjoining properties encroach upon such Property, and no easements or other encumbrances affecting such Property encroach upon any of the Improvements, so as to affect the value or marketability of such Property, except those which are set forth on the Surveys and insured against by the Title Insurance Policies. Each parcel comprising each Property is a separate tax lot and is not a portion of any other tax lot that is not a part of such Property. There are no pending or proposed special or other assessments for public improvements or otherwise affecting any Property, nor are there any contemplated improvements to any Property that may result in such special or other assessments. With respect to each Title Insurance Policy, (A) such Title Insurance Policy is in full force and effect, (B) such Title Insurance Policy is freely assignable by Lender to and will inure to the benefit of the transferee of the Loan (subject to recordation of an assignment of mortgage) without the consent or any notification to the insurer, (C) the premium with respect thereto has been paid in full (or will be paid in full with a portion of the proceeds of the Loan), (D) the Title Insurance Policies are issued by a title insurance company licensed to issue policies in the State, (E) no claims have been made under any Title Insurance Policy and no other action has been taken that would materially impair any Title Insurance Policy and (F) no Title Insurance Policy contains any exclusions for any of the following circumstances, or it affirmatively insures Lender against losses relating to any of the following circumstances (unless the applicable Property is located in a jurisdiction where such affirmative insurance is not available): (y) that the applicable Property has access to a public road and (z) that the area shown on the applicable Survey is the same as the property legally described in the applicable Mortgage.
4.7 No Bankruptcy Filing. No Borrower nor any of such Borrower’s constituent Persons are contemplating either the filing an Insolvency Proceeding or the liquidation of all or a major portion of such Borrower’s assets or properties, and Borrowers have no knowledge of any Person contemplating the filing of any such petition against any Borrower or such constituent Persons. In addition, no Borrower nor Sole Member, any Guarantor, nor any principal nor Affiliate of any Borrower, Sole Member or any Guarantor has been a party to, or the subject of an Insolvency Proceeding for the past ten (10) years.
4.8 Full and Accurate Disclosure. No statement of fact made by any Borrower in any Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained therein not misleading. There is no material fact presently known to any Borrower that has not been disclosed to Lender which adversely affects, or, as far as any Borrower can foresee, would reasonably be likely to have a Material Adverse Effect. All financial data, including the statements of cash flow and income and operating expense, that have been delivered to Lender in respect of Borrowers, Guarantors and the Properties (a) are true, complete and correct in all material respects, (b) accurately represent the financial condition
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of each Borrower, Guarantors and each Property as of the date of such reports, and (c) to the extent prepared by an independent certified public accounting firm, have been prepared in accordance with GAAP consistently applied throughout the periods covered, except as disclosed therein. No Borrower has any contingent liabilities, liabilities for Taxes, unusual forward or long-term commitments, unrealized or anticipated losses from any unfavorable commitments or any liabilities or obligations not expressly permitted by this Agreement. Since the date of such financial statements, there has been no materially adverse change in the financial condition, operations or business of any Borrower, any Guarantor or any Property from that set forth in said financial statements. As of the date of this Agreement, Borrowers have delivered to Lender all material contracts relating to any of the Properties and all material documentation relating to the zoning and entitlement of any of the Properties and has specified in writing to Lender any material contract or agreement relating to any Property where a Borrower Party is a party thereto.
4.9 Tax Filings. To the extent required by applicable law, each Borrower has duly and timely filed (or has obtained effective extensions for filing) all Tax returns required to be filed and has paid or made adequate provision for the payment of all Taxes payable by such Borrower. Each Borrower’s Tax returns (if any) properly reflect the income and Tax liability of such Borrower for the periods covered thereby, subject only to reasonable adjustments required by the Internal Revenue Service or other applicable tax authority upon audit.
4.10 ERISA; No Plan Assets. As of the date hereof and throughout the Term, (a) No Borrower, no Guarantor nor any ERISA Affiliate is, or is acting on behalf of, an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, a “plan” (as defined in Section 4975 of the Code) that is subject to Section 4975 of the Code, or a “benefit plan investor” (as defined in 29 C.F.R. 2510.3-101, as modified by Section 3(42) of ERISA), (b) none of the assets of any Borrower or any Guarantor constitutes or will constitute “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA, (c) no Borrower or no Guarantor is or will be a “governmental plan” within the meaning of Section 3(32) of ERISA, and (d) transactions by or with any Borrower or any Guarantor are not and will not be subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans. None of Borrower, Guarantors nor any ERISA Affiliate maintains, sponsors or contributes to or has any liability (including any contingent or secondary liability) with respect to any Pension Plan, including any “defined benefit plan” (within the meaning of Section 3(35) of ERISA) or “multiemployer pension plan” (within the meaning of Section 3(37)(A) of ERISA). No Borrower or no Guarantor has engaged in any transaction in connection with which it could be subject to a material civil penalty assessed pursuant to the provisions of Section 502 of ERISA, material damages pursuant to Section 409 of ERISA, or a material Tax imposed under the provisions of Section 4975 of the Code. Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each Borrower, each Guarantor and each of their respective subsidiaries are in compliance with all applicable provisions and requirements of ERISA and the Code and the regulations and published interpretations thereunder with respect to each Plan, and have performed all of their obligations under each Plan, (ii) each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service or is comprised of a master or prototype plan that has received a favorable opinion letter from the Internal Revenue Service, and, nothing has occurred since the date of such determination that would adversely affect such determination (or, in the case of a Plan with no determination, nothing has occurred that would adversely affect
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the issuance of a favorable determination letter or otherwise materially adversely affect such qualification), (iii) there are no actions, suits or claims pending against or involving a Plan (other than routine claims for benefits) or, to the knowledge of any Borrower or any Guarantor, threatened, which would reasonably be expected to be asserted successfully against any Plan, (iv) each Borrower, each Guarantor, and each of their respective subsidiaries has made all contributions to or under each such Plan required by law, the terms of such Plan, or any agreement requiring contributions to such Plan, within the applicable time limits prescribed thereby, and (v) none of any Borrower, any Guarantor nor any of their respective subsidiaries has any contingent liability with respect to any post-retirement benefit under any Welfare Plan, other than liability for required continuation coverage described in Part 6 of Title I of ERISA (COBRA).
4.11 Compliance. Each Borrower and each Property (including the Improvements) and the use thereof comply in all material respects with all applicable Legal Requirements (including with respect to parking, building and applicable zoning and land use laws, codes, regulations and ordinances). No Borrower is in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority, the violation of which is reasonably likely to be a Material Adverse Effect. No Borrower has committed any act which may give any Governmental Authority the right to cause such Borrower to forfeit the Property owned by such Borrower or any part thereof or any monies paid in performance of such Borrower’s obligations under any of the Loan Documents. The Properties are used exclusively for (i) a 214 unit Class A mixed use multi-family apartment building owned by Envy Development, including approximately 5,575 square feet of ground floor retail space, and (ii) the Marina owned by Envy Recreational, upon which Envy Recreational operates, directly or indirectly, a three (3) story commercial building. Except as otherwise disclosed in the Zoning Report, in the event that all or any part of the Improvements at any Property are destroyed or damaged, said Improvements can be legally reconstructed to their condition prior to such damage or destruction, and thereafter exist for the same use without violating any zoning or other ordinances applicable thereto and without the necessity of obtaining any variances or special permits. No legal proceedings are pending or, to the knowledge of Borrowers, threatened with respect to the zoning of any Property. Neither the zoning nor any other right to construct, use or operate any Property is in any way dependent upon or related to any property other than such Property. All certifications, permits, licenses and approvals, including certificates of completion and occupancy permits required of each Borrower for the legal use, occupancy and operation of the Properties for its current use (collectively, the “Licenses”), have been obtained and are in full force and effect. The use being made of each Property is in conformity with the certificate of occupancy issued for such Property and all other restrictions, covenants and conditions affecting such Property.
4.12 Major Contracts. No Borrower has entered into, or is not bound by, any Major Contract which continues in existence, except those previously disclosed in writing to Lender. Each of the Major Contracts is in full force and effect, there are no monetary or other material defaults by any Borrower thereunder and, to the knowledge of each Borrower after due inquiry, there are no monetary or other material defaults thereunder by any other party thereto. None of Borrowers, Manager or any other Person acting on any Borrower’s behalf has given or received any notice of default under any of the Major Contracts that remains uncured or in dispute. Borrowers have delivered true, correct and complete copies of the Major Contracts (including all amendments and supplements thereto) to Lender. No Major Contract has as a party an Affiliate of any Borrower.
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4.13 Federal Reserve Regulations; Investment Company Act; Bank Holding Company. No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose that would be inconsistent with such Regulation U or any other regulation of such Board of Governors, or for any purpose prohibited by Legal Requirements or any Loan Document. No Borrower is (a) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended or (b) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money. No Borrower is a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.
4.14 Easements; Utilities and Public Access. All easements, cross easements, licenses, air rights and rights-of-way or other similar property interests (collectively, “Easements”), if any, necessary for the full utilization of the Improvements for their intended purposes have been obtained, are described in the Title Insurance Policies and are in full force and effect without default thereunder. Each Property has rights of access to public ways and is served by water, sewer, sanitary sewer and storm drain facilities adequate to service such Property for its intended uses. All public utilities necessary or convenient to the full use and enjoyment of each Property are located in the public right-of-way abutting such Property, and all such utilities are connected so as to serve such Property without passing over other property absent a valid irrevocable easement. All roads necessary for the use of each Property for its current purpose have been completed and dedicated to public use and accepted by all Governmental Authorities.
4.15 Physical Condition/FEMA. Except as may be expressly set forth in the Physical Conditions Reports, each Property, including all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and repair in all material respects; there exists no structural or other material defects or damages to any Property, whether latent or otherwise. No Borrower has received notice from any insurance company or bonding company of any defects or inadequacies in any Property, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or any termination or threatened termination of any policy of insurance or bond. No portion of any Property is located in an area as identified by the Federal Emergency Management Agency as an area having special flood hazards, or, if so located the flood insurance required pursuant to Section 7.1.1 hereof is in full force and effect with respect to such Property. The Improvements have suffered no material casualty or damage which has not been fully repaired and the cost thereof fully paid.
4.16 Leases. The rent roll attached hereto as Schedule 7 (the “Rent Roll”) is true, complete and correct in all material respects and no Property is subject to any Leases other than the Leases described in the Rent Roll. Except as set forth on the Rent Roll: (a) each Lease is in full force and effect; (b) except as otherwise disclosed to Lender or shown on the Rent Roll, the tenants under the Leases (other than any Lease for the Marina) have accepted possession of and are in occupancy of all of their respective demised premises, have commenced the payment of rent
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under the Leases, and there are no offsets, claims or defenses to the enforcement thereof; (c) all rents due and payable under the Leases have been paid and no portion thereof has been paid for any period more than thirty (30) days in advance; (d) the rent payable under each Lease is the amount of fixed rent set forth in the Rent Roll, and there is no claim or basis for a claim by the tenant thereunder for an adjustment to the rent; (e) no tenant has made any claim against the landlord under any Lease which remains outstanding, there are no defaults on the part of the landlord under any Lease, and no event has occurred which, with the giving of notice or passage of time, or both, would constitute such a default; (f) to Borrowers’ knowledge after due inquiry, there is no present material default by the tenant under any Lease; (g) all security deposits under Leases are as set forth on the Rent Roll and are held consistent with Section 3.9 hereof; (h) the applicable Borrower is the sole owner of the entire lessor’s interest in each Lease; (i) each Lease is the valid, binding and enforceable obligation of such Borrower and the applicable tenant thereunder; (j) no Person has any possessory interest in, or right to occupy, any Property except under the terms of the Leases; (k) each Lease is subordinate to the Loan Documents, either pursuant to its terms or pursuant to a subordination and attornment agreement; (l) all work to be performed by the applicable Borrower under each Lease has been performed as required and has been accepted by the applicable tenant under such Lease; (m) except as otherwise disclosed or shown on the Rent Roll, any payments, free rent, partial rent, rebate of rent or other payments, credits, allowances or abatements required to be given by any Borrower to any tenant under any Lease has already been received by such tenant; (n) no tenant under any Lease (or any sublease) is an Affiliate of any Borrower; (o) intentionally omitted; (p) intentionally omitted; (q) no tenant under any Lease has assigned its Lease or sublet all or any portion of the premises demised thereby, no such tenant holds its leased premises under assignment or sublease, nor does anyone except such tenant and its employees (in connection with the commercial space at the Properties) occupy such leased premises (in connection with any commercial space in the Properties); (r) no tenant under any Lease has any right or option for additional space in the Improvements; and (s) each tenant is free from bankruptcy or reorganization proceedings. The copies of the Leases delivered to Lender are true, correct and complete in all material respects, and there are no oral agreements with respect thereto. None of the Leases contains any option to purchase or right of first refusal to purchase any Property or any part thereof. Neither the Leases nor the Rents have been assigned or pledged except to Lender or except to any prior unaffiliated lender in connection with any prior loan that has been repaid in full and the obligations under which have been fully and finally extinguished, and no other Person has any interest therein except the tenants thereunder.
4.17 Fraudulent Transfer. No Borrower has entered into the Loan or any Loan Document with the actual intent to hinder, delay, or defraud any creditor, and each Borrower has received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the transactions contemplated by the Loan Documents, the fair saleable value of each Borrower’s assets exceeds and will, immediately following the execution and delivery of the Loan Documents, exceed such Borrower’s total probable liabilities, including subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value of each Borrower’s assets is, and immediately following the making of the Loan, will be, greater than such Borrower’s probable liabilities, including the maximum amount of its contingent liabilities on its debts as such debts become absolute and matured. Each Borrower’s assets do not and, immediately following the execution and delivery of the Loan Documents will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. No Borrower intends to, and does not believe that it will, incur debts and liabilities (including contingent liabilities and
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other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be received by such Borrower and the amounts to be payable on or in respect of the obligations of such Borrower).
4.18 Ownership of Borrower. Borrowers’ exact legal names are: Envy Development DE, LLC and Envy Recreational LLC. Each Borrower is of the following organizational type (e.g., corporation, limited liability company): limited liability company, and the jurisdiction in which Borrower is organized is: Delaware. Borrowers’ U.S. federal tax I.D. numbers are 87-3199104 and 42-4001492, respectively, and Borrowers’ Delaware File Numbers are 6321878 and 10671189, respectively. The sole member of each Borrower is Sole Member. The membership interests in Sole Member and the membership interests in each Borrower are owned free and clear of all Liens, warrants, options and rights to purchase. No Borrower has any obligation to any Person to purchase, repurchase or issue any ownership interest in it. The organizational chart attached hereto as Schedule 4 is true, complete and accurate in all respects and illustrates all Persons who have a direct or indirect ownership interest in each Borrower, and the direct and indirect ownership interests in Borrowers or the Properties do not include any Prohibited Entity/Ownership Structure.
4.19 Purchase Options. No Property nor any part thereof is subject to any purchase options, rights of first refusal, rights of first offer or other similar rights in favor of any Person.
4.20 Management Agreement. The Management Agreement is in full force and effect. There is no default, breach or violation existing thereunder, and no event has occurred (other than payments due but not yet delinquent) that, with the passage of time or the giving of notice, or both, would constitute a default, breach or violation thereunder, by either party thereto.
4.21 Hazardous Substances. Except as set forth in Environmental Report, (a) no Property is in violation of any Legal Requirement pertaining to or imposing liability or standards of conduct concerning environmental regulation, contamination or clean-up, including the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Emergency Planning and Community Right-to-Know Act of 1986, the Hazardous Substances Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the Occupational Safety and Health Act, any state super-lien and environmental clean-up statutes (including with respect to Toxic Mold), any local law requiring related permits and licenses and all amendments to and regulations in respect of the foregoing laws (collectively, “Environmental Laws”); (b) no Property is subject to any private or governmental Lien or judicial or administrative notice or action or inquiry, proceedings, investigation or claim relating to hazardous, toxic and/or dangerous substances, toxic mold or fungus of a type that may pose a risk to human health or the environment or would negatively impact the value of such Property (“Toxic Mold”) or any other substances or materials which are included under or regulated by Environmental Laws (collectively, “Hazardous Substances”); (c) to each Borrower’s knowledge, after due inquiry, no Hazardous Substances are or have been (including the period prior to such Borrower’s acquisition of its Property), discharged, generated, treated, disposed of or stored on, incorporated in, or removed or transported from any Property other than in compliance with all Environmental Laws; (d) to each Borrower’s knowledge, after due inquiry, no Hazardous Substances are present in, on or under any nearby real property which could migrate to or otherwise affect any Property; (e) to
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Borrowers’ knowledge, after due inquiry, no Toxic Mold is on or about any Property which requires remediation; (f) no underground storage tanks or underground storage receptacles exist on any Property and no Property has ever been used as a landfill; and (g) there have been no environmental investigations, studies, audits, reviews or other analyses conducted by or on behalf of any Borrower Party or which are in any Borrower Party’s possession or control which have not been provided to Lender.
4.22 Name; Principal Place of Business. No Borrower uses or will use any trade name or has done or will not do business under any name other than its actual name set forth herein. The principal place of business of each Borrower is its primary address for notices as set forth in Section 6.1 hereof, and no Borrower has any other place of business.
4.23 Other Debt. There is no indebtedness with respect to any Property or any excess cash flow or any residual interest therein, whether secured or unsecured, other than Permitted Encumbrances and Permitted Indebtedness.
4.24 Assignment of Leases and Rents. The Assignment of Leases and Rents creates a valid assignment of, or valid security interest in, certain rights under the Leases, subject only to a license granted to Borrowers to exercise certain rights and to perform certain obligations of the lessor under the Leases, including the right to operate the Properties. No Person other than Lender has any interest in or assignment of the Leases or any portion of the Rents due and payable or to become due and payable thereunder.
4.25 Insurance. Borrowers have obtained and have delivered to Lender certificates of all of the Policies, with all premiums prepaid thereunder, reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. No claims have been made under any of the Policies, and no Person, including any Borrower, has done, by act or omission, anything which would impair the coverage of any of the Policies.
4.26 FIRPTA. No Borrower is a “foreign person” within the meaning of Sections 1445 or 7701 of the Code.
4.27 Fiscal Year. Each fiscal year of Borrowers commences on January 1.
4.28 Intellectual Property/Websites. Other than as set forth on Schedule 8 attached hereto, no Borrower nor any Affiliate (a) has or holds any tradenames, trademarks, servicemarks, logos, copyrights, patents or other intellectual property (collectively, “Intellectual Property”) with respect to any of the Properties or the use or operations thereof or (b) is the registered holder of any website with respect to any of the Properties (other than tenant websites).
4.29 Operations Agreements. Each Operations Agreement is in full force and effect and no Borrower nor, to Borrowers’ knowledge, any other party to any Operations Agreement, is in default thereunder, and to Borrowers’ knowledge after due inquiry, there are no conditions which, with the passage of time or the giving of notice, or both, would constitute a default thereunder. Except as described herein, the REA has not been modified, amended or supplemented.
4.30 Illegal Activity.
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(a) No portion of any of the Properties has been or will be purchased with proceeds of any illegal activity. To Borrower’s knowledge, there are no illegal commercial activities or commercial activities relating to controlled substances at any of the Properties (including any growing, distributing and/or dispensing of marijuana for commercial purposes, medical or otherwise).
(b) No Borrower nor any Person that Controls any Borrower (i) is listed on any Government Lists (as defined below), (ii) is a person who has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of OFAC (as defined below) or in any enabling legislation or other Presidential Executive Orders in respect thereof, (iii) has been previously indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense (as defined below), or (iv) is currently under investigation by any Governmental Authority for alleged criminal activity. For purposes of this Agreement, the term “Patriot Act Offense” shall mean any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States of America or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense under: (A) the criminal laws against terrorism; (B) the criminal laws against money laundering; (C) the Bank Secrecy Act, as amended; (D) the Money Laundering Control Act of 1986, as amended, or the (E) Patriot Act. “Patriot Act Offense” also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense. For purposes of this Agreement, the term “Government Lists” shall mean (1) the Specially Designated Nationals and Blocked Persons Lists maintained by the Office of Foreign Assets Control (“OFAC”), (2) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Lender notified Borrowers in writing is now included in “Government Lists”, or (3) any similar lists maintained by the United States Department of State, the United States Department of Commerce or any other Governmental Authority or pursuant to any Executive Order of the President of the United States of America that Lender notified Borrowers in writing is now included in “Government Lists”.
4.31 Intentionally Omitted.
4.32 Intentionally Omitted.
4.33 Intentionally Omitted.
4.34 Pledged Collateral.
(a) Sole Member is the sole beneficial owner of the Pledged Collateral and no Lien exists or will exist (except the Permitted Encumbrances) upon the Pledged Collateral at any time (and no right or option to acquire the same exists in favor of any other Person).
(b) The Pledged 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).
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(c) The chief place of business of Sole Member and the office where Sole Member keeps its records concerning the Pledged Collateral will be located at all times at the address specified as Borrowers’ address in Section 6.1.
(d) The Pledged Securities have been duly authorized and validly issued and are fully paid and non-assessable and are not subject to any options to purchase or similar rights of any Person.
(e) The Security Documents create a valid security interest in the Pledged Collateral, securing the payment of the Debt, and upon the filing in the appropriate filing offices of the financing statements to be delivered pursuant to this Agreement, such security interests will be perfected, first priority security interests, and all filings and other actions necessary to perfect such security interests will have been duly taken. Upon the exercise of its rights and remedies under the Pledge Agreement, Lender will succeed to all of the rights, titles and interest of Sole Member in each Borrower without the consent of any other Person and will, without the consent of any other Person, be admitted as the sole member in any Borrower.
4.35 No Contractual Obligations. Other than the Loan Documents and the organizational documents of Sole Member and each Borrower, as of the date of this Agreement, Sole Member is not subject to any Contractual Obligations and has not entered into any agreement, instrument or undertaking by which it or its assets are bound.
All of the representations and warranties in this Article 4 and elsewhere in the Loan Documents (i) shall survive for so long as any portion of the Debt remains owing to Lender and (ii) shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf, provided, however, that the representations, warranties and covenants set forth in Section 4.21 hereof shall survive in perpetuity.
5. COVENANTS
Until the end of the Term, Borrowers hereby covenant and agree with Lender that:
5.1 Existence. Each Borrower and Sole Member shall (a) do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, and franchises, (b) continue to engage in the business presently conducted by it, (c) obtain and maintain all Licenses and all applicable governmental authorizations, and (d) qualify to do business and remain in good standing under the laws of each jurisdiction, in each case as and to the extent required for the ownership, maintenance, management and operation of the Property owned by it.
5.2 Property Taxes and Other Charges. Borrowers shall pay all Property Taxes and Other Charges as the same become due and payable, and deliver to Lender receipts for payment or other evidence satisfactory to Lender that the Property Taxes and the Other Charges have been so paid no later than thirty (30) days before they would be delinquent if not paid (provided, however, that Borrowers need not pay any Real Estate Taxes nor furnish such receipts for payment of such Real Estate Taxes paid by Lender pursuant to Section 3.3 hereof). Borrowers shall not suffer and shall promptly cause to be paid and discharged any Lien or charge against any Property, and shall promptly pay for all utility services provided to any Property. After prior notice to Lender, Borrowers, at their own expense, may contest by appropriate legal proceeding, promptly
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initiated and conducted in good faith and with due diligence, the amount or validity or application of any Property Taxes 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 all applicable Legal Requirements, (c) such proceeding shall suspend the collection of such Property Taxes or such Other Charges, (d) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which any Borrower is subject and shall not constitute a default thereunder, (e) no part of or interest in any Property will be sold, forfeited, terminated, canceled or lost, (f) Borrowers shall have furnished such security as may be required in the proceeding, or as may be requested by Lender, to insure the payment of any such Property Taxes or Other Charges, together with all interest and penalties thereon, which shall not be less than 125% of the Property Taxes and Other Charges being contested, (g) Borrowers shall promptly upon final determination thereof pay the amount of such Property Taxes or Other Charges, together with all costs, interest and penalties, (h) such contest shall not affect the ownership, use or occupancy of any of the Properties, and (i) Borrowers shall, upon request by Lender, give Lender prompt notice of the status of such proceedings and/or confirmation of the continuing satisfaction of the conditions set forth in clauses (a) through (h) of this Section 5.2.Lender may pay over any such security or part thereof held by Lender to the claimant entitled thereto at any time when, in the judgment of Lender, the entitlement of such claimant is established or any Property (or any part thereof or interest therein) shall be sold, forfeited, terminated, cancelled or lost or there shall be any danger of the Lien of any Mortgage being primed by any related Lien.
5.3 Access to Properties. Borrowers shall permit agents, representatives, consultants and employees of Lender to inspect the Properties or any part thereof at reasonable hours upon reasonable advance notice (which may be given verbally). With Borrowers’ prior written consent, which shall not be unreasonably withheld, conditioned or delayed, Lender or its agents, representatives, consultants and employees as part of any inspection may take soil, air, water, building material and other samples from any Property, subject to the rights of tenants under Leases; provided, however, that Borrowers’ consent to any such inspection pursuant to the preceding sentence shall not be deemed unreasonably withheld, conditioned, or delayed if such inspection is requested by Lender more than once in any calendar year, unless Borrowers and/or Lender has received an environmental report or other third-party report reasonably evidencing a need for such inspection. Borrowers shall have the opportunity to have a representative accompany Lender when it accesses the Property but the availability of any such representative shall not preclude or delay any such access.
5.4 Repairs; Maintenance and Compliance; Alterations.
5.4.1 Repairs; Maintenance and Compliance. Borrowers shall at all times maintain, preserve and protect all franchises and trade names, and Borrowers shall cause the Properties to be maintained in a good and safe condition and repair and shall not remove, demolish or alter the Improvements or Equipment (except for Capital Expenses and alterations performed in accordance with Section 5.4.2 hereof and normal replacement of Equipment with Equipment of equivalent value and functionality). Borrowers shall promptly comply with all Legal Requirements and immediately cure any violation of a Legal Requirement. Borrowers shall not commit, permit or suffer to exist any illegal commercial activities or commercial activities relating to controlled substances at any of the Properties (including any growing, distributing and/or dispensing of marijuana for commercial purposes, medical or otherwise) for which Borrowers have
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knowledge thereof. Borrowers shall notify Lender in writing within five (5) Business Day after any Borrower first receives notice of any such material non-compliance. Borrowers shall promptly repair, replace or rebuild any part of any Property that becomes damaged, worn or dilapidated and shall complete and pay for any Improvements at any time in the process of construction or repair.
5.4.2 Alterations. Any Borrower may, without Lender’s consent, perform alterations to the Improvements and Equipment which (a) do not constitute a Material Alteration, (b) do not adversely affect any Borrower’s financial condition or the value of any Property or the net operating income of any Property and (c) are in the ordinary course of such Borrower’s business. No Borrower shall perform any Material Alteration without Lender’s prior written consent, which consent shall not be unreasonably withheld or delayed; provided, however, that Lender may, in its reasonably discretion, withhold consent to any alteration the cost of which is reasonably estimated to exceed $1,000,000 or which is likely to result in a decrease of Net Operating Income for the applicable Property by two and one-half percent (2.5%) or more for a period of thirty (30) days or longer. In connection with any Material Alteration: (i) at Lender’s election, if the aggregate cost for the Material Alteration is expected to exceed $500,000, (A) Lender shall have received and approved (which approval shall not be unreasonably withheld or delayed), any general contractor’s agreement, architect’s agreement and the plans and specifications for such work prepared by a licensed architect, in such instances where it is customary to have such plans and specifications prepared by a licensed architect (e.g., work of a structural nature) and (B) Lender shall have approved (which approval, including as to any reasonable list of proposed general contractors or architects submitted by Borrowers, shall not be unreasonably withheld or delayed) the general contractor and architect retained for such work; (ii) Lender has the right to retain a Construction Consultant to monitor the work in question, and upon the completion of such Material Alteration, Lender shall have received a report from Construction Consultant that all of the work completed has been done substantially in compliance with the approved plans and specifications and applicable Legal Requirements; and (iii) Lender may, as a condition to giving its consent to a Material Alteration, require that Borrowers deliver to Lender security for payment of the cost of such Material Alteration in an amount equal to 110% of the cost of the Material Alteration as estimated by Lender, which amount shall periodically be disbursed to Borrowers during the course of such Material Alteration in accordance with the procedures and requirements set forth in Section 3.5(b) hereof relating to disbursement of funds for Approved Capital Expenses. Upon substantial completion of the Material Alteration, Borrowers shall provide evidence reasonably satisfactory to Lender that (x) the Material Alteration was constructed in accordance with applicable Legal Requirements and substantially in accordance with the plans and specifications approved by Lender (which approval shall not be unreasonably withheld or delayed), (y) all contractors, subcontractors, materialmen and professionals who provided work, materials or services in connection with the Material Alteration have been paid in full and have delivered unconditional releases of liens and (z) all material Licenses necessary for the use, operation and occupancy of the portion of the applicable Property that is the subject of the Material Alteration (other than those which depend on the performance of tenant improvement work) have been issued. Borrowers shall reimburse Lender within ten (10) Business Days of written demand therefor for all out-of-pocket costs and expenses (including the reasonable out of pocket fees of Construction Consultant and any architect, engineer or other professional engaged by Lender) incurred by Lender in reviewing plans and specifications or in making any determinations necessary to implement the provisions of this Section 5.4.2.
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5.5 Performance of Other Agreements. Borrowers shall observe and perform each and every term to be observed or performed by one or more Borrowers pursuant to the terms of any agreement or instrument affecting or pertaining to any Property, including the Loan Documents.
5.6 Cooperate in Legal Proceedings. Borrowers shall cooperate fully with Lender with respect to, and permit Lender, at its option, and at Borrowers’ sole cost and expense, to participate in, any proceedings before any Governmental Authority which may in any way affect the rights of Lender under any Loan Document.
5.7 Further Assurances. Borrowers shall, at Borrowers’ sole cost and expense:
(a) execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the Debt and/or for the better and more effective carrying out of the intents and purposes of the Loan Documents, as Lender may reasonably require from time to time; (b) provide all such information as Lender may reasonably require (including any updates to the organizational chart attached hereto as Schedule 4) to ensure Borrowers’ ongoing compliance with Sections 5.26 and 5.31 hereof, including ensuring compliance with all “know your customer” procedures as Lender may from time-to-time institute with respect to loans that are of a similar size and nature as the Loan; and (c) upon Lender’s request therefor given from time to time after the occurrence of any Event of Default pay for (i) reports of UCC, federal tax lien, state tax lien, judgment and pending litigation searches with respect to any Borrower and Sole Member and (ii) searches of title to one or more of the Properties, each such search to be conducted by search firms reasonably designated by Lender in each of the locations reasonably designated by Lender.
5.8 Environmental Matters.
5.8.1 Hazardous Substances. So long as one or more Borrowers own or are in possession of one or more of the Properties, each such Borrower shall (i) keep the Property owned or possessed by it, and expressly require tenants at such Property to keep such Property, free from Hazardous Substances (other than Permitted Hazardous Substances) and in compliance with all Environmental Laws, (ii) keep the Property owned or possessed by it free from any liens or encumbrances imposed pursuant to any Environmental Laws, (iii) promptly notify Lender if such Borrower shall become aware that (A) any Hazardous Substance (other than Permitted Hazardous Substances) is on or near such Property, (B) such Property is in violation of any Environmental Laws or (C) any condition on or near such Property shall pose a threat to the health, safety or welfare of humans, (iv) not use construction materials containing asbestos nor install any improvements at the Property owned or possessed by it with any materials that contain asbestos and (v) remove such Hazardous Substances and/or cure such violations and/or remove such threats, as applicable, as required by law (or as shall be required by Lender in the case of removal which is not required by law, but in response to the opinion of a licensed hydrogeologist, licensed environmental engineer, licensed industrial hygienist or other qualified environmental consulting firm engaged by Lender (“Lender’s Consultant”)), promptly after such Borrower becomes aware of same, at Borrowers’ sole expense. Nothing herein shall prevent such Borrower from recovering such expenses from any other party that may be liable for such removal, remediation or cure.
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5.8.2 Environmental Monitoring.
(a) Borrowers shall give prompt written notice to Lender of (i) any proceeding or inquiry by any party (including any Governmental Authority) with respect to the presence of any Hazardous Substance on, under, from or about any Property, (ii) all investigations, actions or claims made or threatened by any third party (including any Governmental Authority) against any Borrower or any Property or any party occupying any Property relating to any loss or injury resulting from any Hazardous Substance, (iii) any Borrower’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Property that could cause such Property to be subject to any investigation or cleanup pursuant to any Environmental Laws and (iv) liens or other encumbrances imposed pursuant to any Environmental Laws, whether due to any act or omission by any Borrower or any other Person. Upon becoming aware of the presence of any mold or fungus at any Property, Borrowers shall (A) undertake an investigation to identify the source(s) of such mold or fungus and shall develop and implement an appropriate remediation plan to eliminate the presence of any Toxic Mold, (B) perform or cause to be performed all acts reasonably necessary for the remediation of any Toxic Mold (including taking any action necessary to clean and disinfect any portions of such Property affected by Toxic Mold, including providing any necessary moisture control systems at the affected Property), and (C) provide evidence reasonably satisfactory to Lender of the foregoing. Borrowers shall permit Lender to join and participate in, as a party if Lender so elects, any legal or administrative proceedings or other actions initiated with respect to any Property in connection with any Environmental Law or Hazardous Substance, and Borrowers shall pay all reasonable attorneys’ fees and disbursements incurred by Lender in connection therewith.
(b) Upon Lender’s request, at any time and from time to time, Borrowers shall provide an inspection or audit of one or more Properties designated by Lender prepared by a licensed hydrogeologist, licensed environmental engineer or qualified environmental consulting firm approved by Lender assessing the presence or absence of Hazardous Substances on, in or near such Property or Properties, and if an Event of Default has occurred and is continuing, or if Lender determines that reasonable cause exists for the performance of such environmental inspection or audit, then the cost and expense of such audit or inspection shall be paid by Borrowers. Such inspections and audit may include soil borings and ground water monitoring. If Borrowers fail to provide any such inspection or audit within thirty (30) days after such request, Lender may order same, and Borrowers hereby grant to Lender and its employees and agents access to the Properties and a license to undertake such inspection or audit.
(c) If any environmental site assessment report prepared in connection with such inspection or audit recommends that an operations and maintenance plan be implemented for any Hazardous Substance, whether such Hazardous Substance existed prior to the ownership of the applicable Property by any Borrower, or presently exists or is reasonably suspected of existing, Borrowers shall cause such operations and maintenance plan to be prepared and implemented at their expense, and with respect to any Toxic Mold, Borrowers shall take all action necessary to clean and disinfect any portions of the Improvements affected by Toxic Mold in or about the Improvements, including providing any necessary moisture control systems at the affected Property. If any investigation, site monitoring, containment, cleanup, removal, restoration or other work of any kind is reasonably necessary under an applicable Environmental Laws or to allow the continued use, occupation or operation of such Property (“Remedial Work”), Borrowers shall
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commence all such Remedial Work within thirty (30) days (or such longer time as reasonably practicable provided Borrowers are diligently and expeditiously proceeding to commence such Remedial Work) after becoming aware of the same and thereafter diligently prosecute to completion all such Remedial Work within such period of time as may be required under applicable law. All Remedial Work shall be performed by licensed contractors approved in advance by Lender and under the supervision of a consulting engineer approved by Lender. All costs of such Remedial Work shall be paid by Borrowers, including Lender’s reasonable attorneys’ fees and disbursements incurred in connection with the monitoring or review of such Remedial Work. If Borrowers do not timely commence and diligently prosecute to completion the Remedial Work, Lender may (but shall not be obligated to) cause such Remedial Work to be performed at Borrowers’ expense. Notwithstanding the foregoing, Borrowers shall not be required to commence such Remedial Work within the above specified time period: (i) if prevented from doing so by any Governmental Authority, (ii) if commencing such Remedial Work within such time period would result in any Borrower or such Remedial Work violating any Environmental Law, or (iii) if Borrowers, at their expense and after prior written notice to Lender, are contesting by appropriate legal, administrative or other proceedings, conducted in good faith and with due diligence, the need to perform Remedial Work. Borrowers shall have the right to contest the need to perform such Remedial Work, provided that, (A) Borrowers are permitted by the applicable Environmental Laws to delay performance of the Remedial Work pending such proceedings, (B) neither any Property nor any part thereof or interest therein will be sold, forfeited or lost if a Borrower fails to promptly perform the Remedial Work being contested, and if such Borrower fails to prevail in such contest such Borrower would thereafter have the opportunity to perform such Remedial Work, (C) Lender would not, by virtue of such permitted contest, be exposed to any risk of any civil liability for which Borrowers have not furnished additional security as provided in clause (D) below, or to any risk of criminal liability, and neither any Property nor any interest therein would be subject to the imposition of any Lien for which Borrowers have not furnished additional security as provided in clause (D) below, as a result of the failure to perform such Remedial Work and (D) Borrowers shall have furnished to Lender additional security in respect of the Remedial Work being contested and the loss or damage that may result from Borrowers’ failure to prevail in such contest in such amount as may be reasonably requested by Lender but in no event less than 125% of the cost of such Remedial Work as estimated by Lender or Lender’s Consultant and any loss or damage that may result from Borrowers’ failure to prevail in such contest.
(d) No Borrower shall install or permit to be installed on any Property any underground storage tank.
5.8.3 O & M Program. In the event any environmental report delivered to Lender in connection with the Loan recommends the development of or continued compliance with an operation and maintenance program for any Property (including with respect to the presence of asbestos, lead-based paint and/or moisture mitigation) (“O & M Program”), Borrowers shall develop (or continue to comply with, as the case may be) such O & M Program and shall, during the Term, including any extension or renewal thereof, comply in all material respects with the terms and conditions of the O & M Program.
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5.9 Title to the Properties. Borrowers will warrant and defend the title to the Properties, and the validity and priority of all Liens granted or otherwise given to Lender under the Loan Documents, subject only to Permitted Encumbrances, against the claims of all Persons.
5.10 Leases.
5.10.1 . Upon request, Borrowers shall furnish Lender with executed copies of all Leases then in effect. All renewals of Leases and all proposed leases shall provide for rental rates and terms comparable to existing local market rates and shall be arm’s-length transactions with bona fide, independent third-party tenants.
5.10.2 Material Leases. No Borrower shall enter into a proposed Material Lease or a proposed renewal, extension or modification of an existing Material Lease without the prior written consent of Lender, which consent shall not, so long as no Event of Default is continuing, be unreasonably withheld or delayed (it being acknowledged and agreed that it is reasonable for Lender to condition any approval on Borrowers funding additional tenant improvement and/or leasing commission reserves with respect to any Lease in connection with any such approval). Prior to seeking Lender’s consent to any Material Lease, Borrowers shall deliver to Lender a copy of such proposed lease (a “Proposed Material Lease”) blacklined to show changes from the standard form of Lease approved by Lender (to the extent any such standard form of Lease has been approved by Lender) and then being used by Borrowers, together with any information reasonably requested by Lender relating to the proposed tenant and lease guarantor (if applicable), including any credit and background checks performed by Borrowers relating to such tenant and lease guarantor, if any. Lender shall approve or disapprove each Proposed Material Lease or proposed renewal, extension or modification of an existing Material Lease for which Lender’s approval is required under this Agreement within ten (10) Business Days of the submission by Borrowers to Lender of a written request for such approval, accompanied by a final copy of the Proposed Material Lease or proposed renewal, extension or modification of an existing Material Lease. If requested by Borrowers, Lender will grant conditional approvals of Proposed Material Leases or proposed renewals, extensions or modifications of existing Material Leases at any stage of the leasing process, from initial “term sheet” through negotiated lease drafts, provided that Lender shall retain the right to disapprove any such Proposed Material Lease or proposed renewal, extension or modification of an existing Material Lease, if subsequent to any preliminary approval material changes are made to the terms previously approved by Lender, or additional material terms are added that had not previously been considered and approved by Lender in connection with such Proposed Material Lease or proposed renewal, extension or modification of an existing Material Lease.
5.10.3 Minor Leases. Notwithstanding the provisions of Section 5.10.2 hereof, provided that no Event of Default is continuing, renewals, amendments and modifications of existing Leases and proposed leases, shall not be subject to the prior approval of Lender provided (i) the proposed lease would be a Minor Lease or the existing Lease as amended or modified or the renewal Lease is a Minor Lease, (ii) the proposed lease shall be written substantially in accordance with the standard form of Lease which shall have been approved by Lender, (iii) the proposed lease shall be with a tenant that is creditworthy, as reasonably determined by Borrowers, (iv) the Lease as amended or modified or the renewal Lease or series of leases or proposed lease or series of leases: (A) shall provide for net effective rental rates and, if applicable, tenant
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improvements and leasing commission amounts, comparable to existing local market rates and otherwise on market terms, (B) shall be arm’s-length transactions with bona fide, independent third-party tenants, (C) shall, with respect to any residential Lease, have an initial term of not less than one (1) year and a maximum term (assuming the exercise of all extension options) of not greater than twenty-six (26) months, (D) shall provide for automatic self-operative subordination to the Mortgages and, at Lender’s option, (x) attornment to Lender and (y) the unilateral right by Lender, at the option of Lender, to subordinate the Liens of the Mortgages to the Lease, and (E) shall not contain any option to purchase, any right of first refusal to purchase, any right to terminate (except in the event of the destruction or condemnation of substantially all of the applicable Property), any requirement for a non-disturbance or recognition agreement, or any other provision which might adversely affect the rights of Lender under the Loan Documents in any material respect. Borrowers shall deliver to Lender copies of all Leases which are entered into pursuant to the preceding sentence together with Borrowers’ certification that it has satisfied all of the conditions of the preceding sentence within thirty (30) days after the execution of the Lease.
5.10.4 Temporary Apartment Rentals. In no event shall any Borrower enter into, or knowingly permit or knowingly suffer any tenant under any residential Lease to enter into, any Temporary Apartment Rental without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed. Borrowers agree to use commercially reasonable efforts to prohibit any residential tenants from listing their apartments for Temporary Apartment Rentals and enforce the terms and conditions of their Lease.
5.10.5 Additional Covenants with Respect to Leases. Each Borrower: (a) shall observe and perform the material obligations imposed upon the lessor under the Leases and shall not do or permit anything to impair the value of the Leases as security for the Debt; (b) shall promptly send copies to Lender of all notices of default that such Borrower shall send or receive under any Lease; (c) shall enforce, in accordance with commercially reasonable practices for properties similar to the applicable Property, the terms, covenants and conditions in the Leases to be observed or performed by the lessees, short of termination thereof; (d) shall not collect any of the Rents more than one (1) month in advance (other than security deposits); (e) shall not execute any other assignment of lessor’s interest in the Leases or the Rents (except as contemplated by the Loan Documents); (f) shall not modify any Lease in a manner inconsistent with the Loan Documents; (g) shall not convey or transfer or suffer or permit a conveyance or transfer of any Property so as to effect a merger of the estates and rights of, or a termination or diminution of the obligations of, lessees under Leases; (h) shall not consent to any assignment of or subletting under any Material Lease unless required in accordance with its terms without the prior consent of Lender, which, with respect to a subletting, may not, so long as no Event of Default is continuing, be unreasonably withheld or delayed; and (i) shall not cancel or terminate any Lease or accept a surrender thereof (except in the exercise of the applicable Borrower’s commercially reasonable judgment in connection with a tenant default under a Minor Lease) without the prior consent of Lender, which consent shall not, so long as no Event of Default is continuing, be unreasonably withheld or delayed.
5.11 Estoppel Statement. (a) After request by Lender, Borrowers shall within ten (10) days furnish Lender with a statement addressed to Lender, its successors and assigns, duly acknowledged and certified, setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii) the date installments of interest and/or Principal were last paid, (iv) any offsets or defenses to the
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payment of the Debt, and (v) that the Loan Documents are valid, legal and binding obligations and have not been modified or if modified, giving particulars of such modification.
(b) Borrowers shall deliver to Lender, upon request, estoppel certificates from each party under any Operations Agreement, in form and substance reasonably satisfactory to Lender; provided, that Borrowers shall not be required to deliver such certificates more than three (3) times during the Term and not more frequently than once per calendar year (or twice during any calendar year in which a Securitization occurs).
5.12 Property Management.
5.12.1 Management Agreement. Each Borrower shall (a) cause the Property owned by it to be managed pursuant to the Management Agreement; (b) promptly perform and observe all of the covenants required to be performed and observed by it under such Management Agreement and do all things necessary to preserve and to keep unimpaired its rights thereunder; (c) promptly notify Lender of any default under such Management Agreement of which it is aware; (d) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditure plan, and property improvement plan and any other notice, report and estimate received by such Borrower under its Management Agreement; and (e) promptly enforce the performance and observance of all of the covenants required to be performed and observed by Manager under such Management Agreement. If any Borrower shall default in the performance or observance of any material term, covenant or condition of the Management Agreement on the part of such Borrower to be performed or observed, then, without limiting Lender’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing such Borrower from any of its obligations hereunder or under the Management Agreement, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the material terms, covenants and conditions of the Management Agreement on the part of such Borrower to be performed or observed. Without Lender’s prior written consent, no Borrower shall (i) surrender, terminate, cancel, extend or renew its Management Agreement or otherwise replace the Manager or enter into any other management agreement (except pursuant to Sections 5.12.2 and 5.12.3 hereof); (ii) reduce or consent to the reduction of the term of its Management Agreement; (iii) increase or consent to the increase of the amount of any charges under its Management Agreement; (iv) otherwise modify, change, supplement, alter or amend in any material respect, or waive or release any of its rights and remedies under, its Management Agreement; or (v) suffer or permit the occurrence and continuance of a default beyond any applicable cure period under its Management Agreement (or any successor management agreement) if such default permits the Manager to terminate such Management Agreement (or such successor management agreement).
5.12.2 Termination of Manager. If: (a) an Event of Default shall be continuing;
(b) Manager is in default under the Management Agreement; (c) Manager shall become a debtor in any bankruptcy or insolvency proceeding; or (d) upon the gross negligence, malfeasance or willful misconduct of Manager; Borrowers shall, at the request of Lender, terminate the Management Agreement and replace Manager with a Qualified Manager pursuant to a Replacement Management Agreement. Borrowers’ failure to appoint an acceptable manager within thirty (30) days after Lender’s written request of Borrowers to terminate the Management Agreements shall constitute an immediate Event of Default. Borrowers may from time to time
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appoint a successor manager to manage the Properties, provided that such successor manager is a Qualified Manager is managing the Properties pursuant to a Replacement Management Agreement.
5.12.3 Replacement of Manager with Crown Residential. Notwithstanding anything to the contrary in this Agreement, including, without limitation, Section 5.12.1 hereof, on or before the date that is sixty (60) days after the Closing Date (the “Manager Replacement Date”), Borrowers shall (a) terminate the Management Agreement then in effect with respect to the Properties, (b) engage Crown Residential to manage the Properties pursuant to a Replacement Management Agreement substantially in the form of the property management agreement attached hereto as Schedule 13, and (c) deliver to Lender fully executed copies of such Replacement Management Agreement, together with evidence reasonably satisfactory to Lender that the prior Management Agreement has been terminated and that all amounts owing to the prior Manager thereunder have been paid in full. Lender’s execution of this Agreement shall constitute Lender’s consent, for all purposes of Section 5.12.1 hereof, to the termination of the prior Management Agreement and the engagement of Crown Residential as contemplated by this Section 5.12.3, and no further consent, approval or other action of Lender shall be required in connection therewith, provided the foregoing is effected strictly in accordance with the terms of this Section 5.12.3. Time is of the essence with respect to Borrowers’ obligations under this Section 5.12.3. From and after the effective date of such Replacement Management Agreement, (i) Crown Residential shall be deemed "Manager," and (ii) such Replacement Management Agreement shall be deemed the "Management Agreement," in each case for all purposes of this Agreement and the other Loan Documents, subject in all respects to Sections 5.12.1 and 5.12.2 hereof.
5.13 Special Purpose Bankruptcy Remote Entity. Each Borrower and Sole Member shall at all times be a Special Purpose Bankruptcy Remote Entity. No Borrower nor Sole Member shall directly or indirectly make any change, amendment or modification to its or such Sole Member’s organizational documents, or otherwise take any action which could result in such Borrower or such Sole Member not being a Special Purpose Bankruptcy Remote Entity. A “Special Purpose Bankruptcy Remote Entity” shall have the meaning set forth on Schedule 5 hereto.
5.14 Assumption in Non-Consolidation Opinion. Each Borrower and Sole Member shall conduct their business so that the assumptions (with respect to each Person) made in that certain substantive non-consolidation opinion letter dated the date hereof delivered by Borrowers’ counsel in connection with the Loan, shall be true and correct in all respects.
5.15 Change in Business or Operation of Properties. Borrowers shall not purchase or own any real property other than the Properties and shall not enter into any line of business other than the ownership and operation of the Properties, or make any material change in the scope or nature of their business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business or otherwise cease to operate the Properties as a (i) with respect to the portion of the Properties owned by Envy Development, a 214 unit Class A mixed use multi-family apartment building, including approximately 5,575 square feet of ground floor retail space, and (ii) with respect to the portion of the Properties owned by Envy Recreational, a marina with twenty-six (26) boat slips and related facilities and “Community Center” owned by Envy Recreational, upon which Envy Recreational operates, directly or
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indirectly, a three (3) story commercial building property, or terminate such business for any reason whatsoever (other than temporary cessation in connection with renovations to the Property).
5.16 Debt Cancellation. No Borrower shall cancel or otherwise forgive or release any claim or debt (other than termination of Leases in accordance herewith) owed to such Borrower by any Person, except for adequate consideration and in the ordinary course of such Borrower’s business.
5.17 Affiliate Transactions. No Borrower shall enter into, or be a party to, any transaction with an Affiliate of any Borrower or any of the direct or indirect legal or beneficial owners of any Borrower without the prior written consent of Lender, which consent shall not be unreasonably withheld if the terms are no less favorable to such Borrower or such Affiliate than would be obtained in a comparable arm’s-length transaction with an unrelated third party.
5.18 Zoning. No Borrower shall initiate or consent to any zoning reclassification of any portion of any Property or seek any variance under any existing zoning ordinance or use or permit the use of any portion of any Property in any manner that could result in such use becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, without the prior consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed so long as no Event of Default is then continuing.
5.19 No Joint Assessment. No Borrower shall suffer, permit or initiate the joint assessment of any Property (a) with any other real property constituting a tax lot separate from such Property, and (b) with any portion of such Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any Taxes which may be levied against such personal property shall be assessed or levied or charged to such Property.
5.20 Principal Place of Business. No Borrower shall change its principal place of business or chief executive office from the address set forth in Section 6.1 hereof without first giving Lender thirty (30) days’ prior written notice.
5.21 Change of Name, Identity or Structure. No Borrower shall change its name, identity (including its trade name or names) or, other than in connection with a Permitted Transfer in accordance with the terms hereof, such Borrower’s corporate, partnership or other structure without notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in such Borrower’s structure, without first obtaining the prior written consent of Lender, which consent, may be conditioned upon receipt of an updated substantive non-consolidation opinion (if Lender reasonably determines that the same is necessary as a result of such Borrower’s new structure). Each Borrower shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein. At the request of Lender, each Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which such Borrower intends to operate the Property or Properties owned by such Borrower, and representing and warranting that such Borrower does business under no other trade name with respect to the or Properties owned by such Borrower.
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5.22 Indebtedness. No Borrower shall directly or indirectly create, incur or assume any indebtedness other than (a) the Debt and (b) unsecured trade payables incurred in the ordinary course of business relating to the ownership and operation of the Property owned by such Borrower, which in the case of such unsecured trade payables (i) are not evidenced by a note, (ii) do not exceed, at any time, a maximum aggregate amount of two percent (2%) of the Allocated Loan Amount of the Property owned by such Borrower (or, when taken together with the unsecured trade payables of all Borrowers, two percent (2%) of the original amount of the Principal) and (iii) are paid within thirty (30) days of the date incurred (collectively, “Permitted Indebtedness”). In addition, and. with respect to Sole Member, the obligations under the Pledge Agreement and the Payment Guaranty shall be deemed to be “Permitted Indebtedness”.
5.23 Licenses; Intellectual Property; Website.
5.23.1 Licenses. No Borrower shall Transfer any License required for the operation of any of the Properties.
5.23.2 Intellectual Property. Each Borrower shall keep and maintain all Intellectual Property relating to the use or operation of the Property owned by it and all Intellectual Property shall be held by and (if applicable) registered in the name of such Borrower. No Borrower shall Transfer or let lapse any Intellectual Property without Lender’s prior consent.
5.23.3 Website. Any website with respect to the Properties (other than tenant websites or websites maintained by Manager) shall be maintained by or on behalf of the Borrower that owns such Property and any such website shall be registered in the name of the Borrower that owns such Property. No Borrower shall Transfer any such website without Lender’s prior consent.
5.24 Compliance with Restrictive Covenants. Borrowers shall at all times comply in all material respects with all Operations Agreements. No Borrower will enter into, modify, waive in any material respect or release any Easements, Operations Agreements or other Permitted Encumbrances, or suffer, consent to or permit the foregoing, without Lender’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
5.25 ERISA.
(a) No Borrower shall engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Lender or any assignee of any of its rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA or Section 4975 of the Code.
(b) Borrowers’ covenant in clause (a) above is based on the assumption that no portion of the assets used by Lender in connection with the transactions contemplated under this Agreement and the other Loan Documents constitutes assets of a “benefit plan investor” as defined in Section 3(42) of ERISA and with respect to which any Borrower is a party in interest (as defined in Section 3(14) of ERISA) or a disqualified person (as defined in Section 4975 of the Code) unless the conditions of an available prohibited transaction exemption are satisfied.
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(c) No Borrower shall maintain, sponsor, contribute to or become obligated to contribute to, or suffer or permit any ERISA Affiliate of such Borrower to, maintain, sponsor, contribute to or become obligated to contribute to, any Pension Plan or permit the assets of such Borrower to become “plan assets,” within the meaning of 29 C.F.R. 2510.3-101, as modified by Section 3(42) of ERISA.
(d) Borrowers shall deliver to Lender such certifications or other evidence from time to time throughout the Term, as requested by Lender, that: (i) no Borrower is or is acting on behalf of an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, a “plan” (as defined in Section 4975 of the Code) that is subject to Section 4975 of the Code, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (ii) no Borrower is subject to state statutes regulating investments of, and fiduciary obligations with respect to, governmental plans; and (iii) no assets of any Borrower constitute “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA.
(e) As soon as possible and, in any event within ten (10) days after Borrowers know, or have reason to know, that (i) any contribution required to be made with respect to a Plan has not been timely made, or (ii) any Borrower or any of their respective subsidiaries may incur any material liability (including any indirect, contingent, or secondary liability) (A) pursuant to any post-retirement benefit under any Welfare Plan (other than liability for required continuation coverage described in Part 6 of Title I of ERISA) or (B) to or with respect to any Plan, Borrowers shall deliver to Lender a certification of the president or chief financial officer setting forth the details of the applicable event(s) and the action, if any, that any Borrower or any of its respective subsidiaries proposes to take with respect thereto, together with a copy of any notice or filing from (or which may be required by) any agency or the United States government with respect thereto.
5.26 Prohibited Transfers. No Borrower shall directly or indirectly make, suffer or permit the occurrence of any Transfer other than a Permitted Transfer. Borrowers shall provide Lender with copies of all organizational documents (if any) relating to any Permitted Transfer, together with an updated organization chart reflecting such Permitted Transfer. Borrowers shall pay within ten (10) Business Days of demand all of the reasonable, out of pocket costs and expenses incurred by Lender, including reasonable attorneys’ fees and expenses, and, if a Securitization has occurred, including the fees and expenses of Rating Agencies and other outside entities, in connection with considering any proposed Transfer, whether or not the same is permitted or occurs.
5.27 Liens. Without Lender’s prior written consent, no Borrower shall create, incur, assume, permit or suffer to exist any Lien on all or any portion of any Property or any direct or indirect legal or beneficial ownership interest in any Borrower or Sole Member, except Liens in favor of Lender and Permitted Encumbrances. Within thirty (30) days after any Borrower first receives notice of such Lien, the applicable Borrower shall release, pay, discharge or bond such Lien recorded or filed against all or any portion of the applicable Property. Notwithstanding the preceding sentence, such Borrower may, no later than thirty (30) days after such Borrower first receives notice of an involuntary Lien, contest any such claim of involuntary Lien without cost or expense to Lender, but only upon posting, and concurrently supplying to Lender a certified copy of a statutory bond or other security sufficient under applicable law to fully protect any and all of the Property encumbered by such claim of involuntary Lien and otherwise sufficient in Lender’s
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sole opinion to protect Lender against any judgment in favor of the Lien claimant, provided that at no time shall the aggregate amount of all such Liens that have not been discharged by bonding and are being contested exceed $50,000.
5.28 Dissolution. No Borrower shall (a) engage in any dissolution, liquidation or consolidation, division (whether pursuant to Section 18-217 of the Delaware Act or otherwise) or merger with or into any one or more other business entities, (b) engage in any business activity not related to the ownership and operation of any Property, (c) modify, amend, waive or terminate its qualification and good standing in any jurisdiction, (d) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of the property or assets of such Borrower except to the extent expressly permitted by the Loan Documents or (e) cause, permit or suffer Sole Member to (i) dissolve, divide (whether pursuant to Section 18-217 of the Delaware Act or otherwise), wind up or liquidate or take any action, or omit to take any action, as a result of which Sole Member would be dissolved, divided (whether pursuant to Section 18-217 of the Delaware Act or otherwise), wound up or liquidated in whole or in part, or (ii) amend, modify, waive or terminate the certificate of formation or operating agreement of Sole Member, in each case without obtaining the prior consent of Lender.
5.29 Expenses.
(a) Borrowers shall pay or, if Borrowers fail to pay, reimburse Lender upon ten
(10) Business Days of receipt of notice from Lender for all out-of-pocket costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender or Servicer in connection with the Loan, including (i) the preparation, negotiation, execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby and all the costs of furnishing all opinions by counsel for Borrowers; (ii) Borrowers’ and Lender’s ongoing performance under and compliance with the Loan Documents, including (x) confirming compliance with environmental and insurance requirements, (y) administration of requests for disbursements from Subaccounts and (z) processing of any request for extension in accordance with Section 2.8 hereof; (iii) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications of or under any Loan Document and any other documents or matters requested by Lender or a Borrower; (iv) filing and recording of any Loan Documents; (v) title insurance, surveys, inspections and appraisals; (vi) the creation, perfection or protection of Lender’s Liens in the Properties and the Cash Management System Accounts (including fees and expenses for title and lien searches, intangibles Taxes, personal property Taxes, mortgage recording Taxes, due diligence expenses, travel expenses, accounting firm fees, costs of appraisals, environmental reports and Lender’s Consultant, surveys and engineering reports); (vii) enforcing or preserving any rights in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting one or more Borrowers, the Loan Documents, one or more of the Properties, or any other security given for the Loan; (viii) investigating, preparing, defending, settling, compromising, responding to, or enforcing or preserving any rights in response to any claim, action, suit, proceeding, investigation, prosecution, subpoena, or request for documents or other evidence under or affecting any Borrower, the Loan Documents, any Property, or any other security given for the Loan, whether or not in connection with an action in which any Borrower is the named party; (ix) fees charged by Servicer and, if a Securitization has occurred, the Rating Agencies in connection with the Loan or any modification thereof and (x) enforcing any
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obligations of or collecting any payments due from Borrowers under any Loan Document or with respect to any Property or in connection with any refinancing or restructuring of the Loan in the nature of a “work-out”, or any Insolvency Proceedings.
(b) In addition, in connection with any Rating Comfort Letter, Review Waiver or other Rating Agency consent, approval or review requested or required hereunder (other than the initial review of the Loan by the Rating Agencies in connection with a Securitization), Borrowers shall pay all of the reasonable costs and expenses of Lender and Servicer and the costs and expenses of each Rating Agency in connection therewith, and, if applicable, shall pay any fees imposed by any Rating Agency in connection therewith.
(c) Any costs and expenses due and payable by Borrowers hereunder which are not paid by Borrowers within ten (10) days after demand may be paid from any amounts in the Cash Management Account, with notice thereof to Borrowers. The obligations and liabilities of Borrowers under this Section 5.29 shall survive the Term and the exercise by Lender of any of its rights or remedies under the Loan Documents, including the acquisition of any Property by foreclosure or a conveyance in lieu of foreclosure.
5.30 Indemnity.
(a) Borrowers shall defend, indemnify and hold harmless Lender (and for purposes of this Section 5.30, Lender shall include LCC, its Affiliates, successors and assigns, and their respective officers and directors) and each of its Affiliates and their respective successors and assigns, including the directors, officers, partners, members, shareholders, participants, employees, professionals and agents of any of the foregoing (including any Servicer) and each other Person, if any, who Controls Lender, its Affiliates or any of the foregoing (each, an “Indemnified Party”), from and against any and all actual, out-of-pocket liabilities, obligations, losses, damages (other than consequential, punitive, special, speculative or indirect damages), penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for an Indemnified Party in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not Lender shall be designated a party thereto, court costs and costs of appeal at all appellate levels, investigation and laboratory fees, consultant fees and litigation expenses), that may be imposed on, incurred by, or asserted against any Indemnified Party (collectively, the “Indemnified Liabilities”) in any manner, relating to or arising out of or by reason of the Loan, including: (a) any breach by any Borrower of its obligations under, or any misrepresentation by any Borrower contained in, any Loan Document; (b) the use or intended use of the proceeds of the Loan; (c) any information provided by or on behalf of any Borrower, or contained in any documentation approved by any Borrower; (d) the ownership of any Mortgage, the Pledge Agreement, the Collateral, any Property or any interest therein, or receipt of any Rents; (e) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about any Property or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (f) any use, non-use or condition in, on or about any Property or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (g) performance of any labor or services or the furnishing of any materials or other property in respect of any Property; (h) the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release, or threatened release of any Hazardous Substance on, from or affecting any Property; (i) any personal
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injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Substance; (j) any lawsuit brought or threatened, settlement reached, or government order relating to such Hazardous Substance; (k) any violation of the Environmental Laws which is based upon or in any way related to such Hazardous Substance, including the costs and expenses of any Remedial Work; (l) any failure of any Property to comply with any Legal Requirement; (m) any claim by brokers, finders or similar persons claiming to be entitled to a commission in connection with any Lease or other transaction involving any Property or any part thereof, or any liability asserted against Lender with respect thereto; (n) the claims of any lessee of any portion of any Property or any Person acting through or under any lessee or otherwise arising under or as a consequence of any Lease; (o) any risk of loss or liability regarding amounts on deposit in any Cash Management Systems Account, (p) enforcing or preserving any rights in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting any Borrower, the Loan Documents, any Property, or any other security given for the Loan; and (q) investigating, preparing, defending, settling, compromising, responding to, or enforcing or preserving any rights in response to any claim, action, suit, proceeding, investigation, prosecution, subpoena, or request for documents or other evidence under or affecting any Borrower, the Loan Documents, any Property, or any other security given for the Loan, whether or not in connection with an action in which any Borrower is the named party; provided, however, that Borrowers shall not have any obligation to any Indemnified Party hereunder to the extent that it is finally judicially determined that such Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or willful misconduct of such Indemnified Party. Any amounts payable to any Indemnified Party by reason of the application of this Section 5.30(a) shall be payable within ten (10) Business Days of written demand. The obligations and liabilities of Borrowers under this Section 5.30(a) shall survive the Term and the exercise by Lender of any of its rights or remedies under the Loan Documents, including the acquisition of any Property by foreclosure or a conveyance in lieu of foreclosure.
(b) Notwithstanding anything contained in clause (a) above to the contrary, solely with respect to an event or condition specified in (x) clauses (h) through (k) above or (y) clause (l) above relating to the failure of the Property to comply with any Environmental Law, Borrowers’ obligation to indemnify the Indemnified Parties shall terminate three (3) years after the date on which the Debt has been paid in full (other than contingent liabilities for which a claim has been made), provided that at such time, all of the following conditions have been satisfied: (A) Borrowers, at their sole cost and expense, have delivered a then-current Phase I environmental assessment of the Properties prepared by a hydrogeologist or environmental engineer or other appropriate consultant reasonably approved by Lender, in general accordance with the ASTM standards, which indicates, discloses and concludes no actual or threatened (i) non-compliance with or violation of applicable Environmental Laws (or permits issued pursuant to Environmental Laws) in connection with the Properties or operations thereon, which has not been cured in accordance with applicable Environmental Laws, (ii) Liens related to any violation of Environmental Laws encumbering the Properties, (iii) administrative processes or proceedings or judicial proceedings concerning any environmental matter addressed in this Agreement that have not been dismissed or otherwise resolved, or (iv) unlawful presence or release of Hazardous Substances in, on, above or under the Properties that has not been fully remediated as required by applicable Environmental Laws, and (B) Borrowers have paid all reasonable out-of-pocket costs and expenses actually incurred by Lender in connection with Lender's assessment of the environmental condition of the Properties in connection with the delivery of such Phase I
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environmental assessment, including, without limitation, reasonable actual out-of-pocket attorneys' fees and costs.
5.31 Patriot Act Compliance.
(a) Borrowers will comply with the Patriot Act (as defined below) and all applicable requirements of Governmental Authorities having jurisdiction over Borrowers and/or the Properties, including those relating to money laundering and terrorism. Lender shall have the right, from time to time, to audit Borrowers’ compliance with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrowers and/or the Properties, including those relating to money laundering and terrorism. In the event that any Borrower fails to comply with the Patriot Act or any such requirements of Governmental Authorities, then Lender may, at its option, cause such Borrower to comply therewith and any and all reasonable costs and expenses incurred by Lender in connection therewith shall be secured by the Mortgages and the other Loan Documents and shall be immediately due and payable. For purposes of this Agreement, the term “Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, as the same was restored and amended by Uniting and Strengthening America by Fulfilling Rights and Ensuring Effective Discipline Over Monitoring Act (USA FREEDOM Act) of 2015 as the same may be further amended, extended, replaced or otherwise modified from time to time, and any corresponding provisions of future laws.
(b) At all times throughout the Term, including after giving effect to any Transfers permitted pursuant to the Loan Documents, (i) none of the funds or other assets of any Borrower or any Guarantor shall constitute property of, or shall be directly or indirectly Controlled, or beneficially owned, directly or indirectly, by any Person subject to trade restrictions under United States law, including the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder, with the result that the investment in such Borrower or any Guarantor, as applicable (whether directly or indirectly), would be prohibited by law (each, an “Embargoed Person”), or the Loan made by Lender would be in violation of law, (ii) no Embargoed Person shall have any interest of any nature whatsoever in any Borrower or any Guarantor, as applicable, with the result that the investment in such Borrower or any Guarantor, as applicable (whether directly or indirectly), would be prohibited by law or the Loan would be in violation of law, and (iii) none of the funds of any Borrower or any Guarantor, as applicable, shall be derived from any unlawful activity with the result that the investment in such Borrower or any Guarantor, as applicable (whether directly or indirectly), would be prohibited by law or the Loan would be in violation of law.
5.32 Approval of Major Contracts. No Borrower shall, without Lender’s prior consent, which consent shall not be unreasonably withheld, conditioned or delayed: (a) enter into, surrender or terminate any Major Contract to which it is a party or to which such Borrower or the Property owned by such Borrower is subject (unless the other party thereto is in material default and the termination of such agreement would be commercially reasonable), (b) increase or consent to the increase of the amount of any charges under any Major Contract to which it is a party or to which such Borrower or the Property owned by such Borrower is subject, except as provided therein or on an arm’s-length basis and commercially reasonable terms; or (c) otherwise modify,
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change, supplement, alter or amend, or waive or release any of its rights and remedies under any Major Contract to which it is a party or to which such Borrower or the Property owned by such Borrower is subject in any material respect, except on an arm’s-length basis and commercially reasonable terms.
5.33 Litigation. No Borrower shall initiate or settle any litigation, arbitration or mediation (or permit any other Person to settle any such litigation, arbitration or mediation) other than any non-material litigation in the ordinary course of business (e.g., tenant eviction proceeds or bodily injury litigation that is fully covered by insurance (other than with respect to any deductibles payable pursuant to Section 7.1 hereof) and has actually been tendered to and accepted in writing by Borrowers’ insurance company or any litigation for which the uninsured portion of any such claim does not exceed $100,000.00 or other litigation not having a Material Adverse Effect), without Lender’s prior written consent.
5.34 Limitation on Securities Issuances. No Borrower shall issue any membership interests or other securities other than those that have been issued as of the date hereof.
6. NOTICES AND REPORTING
6.1 Notices. All notices, consents, approvals and requests required or permitted hereunder or under any other Loan Document (a “Notice”) shall be given in writing (even if not specified herein) and shall only be effective for all purposes if either hand delivered with receipt acknowledged, or by a nationally recognized overnight delivery service (such as Federal Express), or by certified or registered United States mail, return receipt requested, postage prepaid, or by e-mail (with confirmation of delivery thereof) to the e-mail addresses to the extent set forth in this Section 6.1 with a subject line identifying the purpose of such Notice and the name of the applicable Properties; in each case addressed as follows (or to such other address or Person as a party shall designate from time to time by notice to the other party):
If to Lender:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Kimberly Lutterman
E-mail: xxxxx@loancore.com
with a copy to:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Notices
E-mail: xxxxx@loancore.com
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with a copy to:
Firsel Ross Gussis & Alexander
10 Parkway North Boulevard, Suite 110
Deerfield, Illinois 60015
Attention: Samuel P. Gussis, Esq.
Email: xxxxx@firselross.com
If to Borrowers:
Envy Development DE, LLC
Envy Recreational LLC
c/o Stewards, Inc.
4300 N. University Drive, Suite D105
Lauderhill, Florida 33351
Attention: Katy Murless, Chief Financial Officer
Email: xxxxx@stewards.com
with a copy to:
Cozen O’Connor One Liberty Place
1650 Market Street, Suite 2800
Philadelphia, Pennsylvania 19103
Attention: Howard Grossman, Esq.
E-mail: xxxxx@cozen.com
with a copy to:
Scott Doney, Esq.
3651 Lindell Rd Suite D121
Las Vegas, Nevada 89103
Email: xxxxx@doneylawfirm.com
A Notice shall be deemed to have been given: (a) in the case of hand delivery, at the time of delivery; (b) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; (c) in the case of overnight delivery, upon the first attempted delivery on a Business Day; or (d) in the case of e-mail, upon the confirmation of delivery of such e-mail.
6.2 Borrower Notices and Deliveries. Borrowers shall (a) give prompt written notice to Lender of: (i) any litigation, mediation, arbitration, governmental proceedings or claims or investigations pending or threatened against any Borrower, Sole Member or any Property which might materially adversely affect any Borrower’s or Sole Member’s condition (financial or otherwise) or business or any Property; (ii) any Material Adverse Effect, or of the occurrence of any Event of Default of which any Borrower has knowledge; and (b) furnish and provide to Lender: (i) any Securities and Exchange Commission or other public filings, if any, of any Borrower, Sole Member, Manager, or any Affiliate of any of the foregoing within two (2) Business Days of such filing and (ii) all instruments, documents, boundary surveys, footing or foundation surveys, certificates, plans and specifications, appraisals, title and other insurance reports and
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agreements, reasonably requested, from time to time, by Lender. In addition, after request by Lender (but no more frequently than twice in any year), Borrowers shall furnish to Lender (A) within ten (10) days, a certificate addressed to Lender, its successors and assigns reaffirming all representations and warranties of each Borrower set forth in the Loan Documents as of the date requested by Lender or, to the extent of any changes to any such representations and warranties, so stating such changes, and (B) within thirty (30) days, tenant estoppel certificates addressed to Lender, its successors and assigns from each tenant at each Property in form and substance reasonably satisfactory to Lender.
6.3 Financial Reporting.
6.3.1 Bookkeeping. Each Borrower shall keep on a calendar year basis, in accordance with GAAP, proper and accurate books, records and accounts reflecting all of the financial affairs of such Borrower and all items of income and expense and any services, Equipment or furnishings provided in connection with the operation of the Property owned by such Borrower, whether such income or expense is realized by such Borrower, Manager or any Affiliate of such Borrower. Lender shall have the right from time to time during normal business hours upon reasonable notice to examine such books, records and accounts at the office of such Borrower or other Person maintaining them, and to make such copies or extracts thereof as Lender shall desire. After an Event of Default, Borrowers shall pay any costs incurred by Lender to examine such books, records and accounts, as Lender shall determine to be necessary or appropriate in the protection of Lender’s interest.
6.3.2 Annual Reports. Each Borrower shall furnish to Lender annually, within 120 days after each calendar year, a complete copy of such Borrower’s annual financial statements prepared by such Borrower and accompanied by audited consolidated financial statements of Stewards for the applicable fiscal year, prepared by Stewards and audited by an independent PCAOB-registered auditor, which audited consolidated financial statements shall include each Borrower, together with a consolidating schedule or other reconciliation reasonably acceptable to Lender showing, in accordance with GAAP, balance sheets and statements of profit and loss for each Borrower and each Property on a combined basis as well as on an individual basis in such detail as Lender may request. Such financial statements (a) shall be in form and substance satisfactory to Lender, (b) shall set forth the financial condition and the income and expenses for the Property owned by such Borrower for the immediately preceding calendar year, including statements of annual net operating income and (c) shall be accompanied by an Officer’s Certificate (substantially in accordance with the form attached as Schedule 12-1 hereto) certifying (i) that such statement is true, correct, complete and accurate and presents fairly the financial condition of the Property owned by such Borrower and has been prepared in accordance with GAAP, (ii) whether there exists a Event of Default, and if so, the nature thereof, the period of time it has existed and the action then being taken to remedy it, (iii) that as of the date of such Officer’s Certificate, no litigation exists involving any Borrower or any Property in which the amount involved is $250,000 (in the aggregate) or more or in which all or substantially all of the potential liability is not covered by insurance, or, if so, specifying such litigation and the actions being taken in relation thereto and (iv) the amount by which operating expenses incurred by Borrowers for such period were greater than or less than the operating expenses reflected in the applicable Annual Budget. Lender acknowledges that Borrowers’ financial statements may be consolidated with another person; provided, however, that any such consolidated financial statement shall contain a
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note indicating that its separate assets and liabilities are neither available to pay the debts of the consolidated Person nor constitute obligations of the consolidated Person.
6.3.3 Monthly/Quarterly Reports. Each Borrower shall furnish to Lender within thirty (30) days after the end of each calendar month or within thirty (30) days after the end of each calendar quarter (as indicated below) the following items: (a) monthly and year-to-date operating statements, noting net operating income and other information necessary and sufficient under GAAP to fairly represent the financial position and results of operation of the Property owned by such Borrower during such calendar month, all in form reasonably satisfactory to Lender; (b) a balance sheet for such calendar month; (c) a comparison of the budgeted income and expenses and the actual income and expenses for each month and year-to-date for the Property owned by such Borrower, together with a detailed explanation of any variances of ten percent (10%) or more between budgeted and actual amounts for such period and year-to-date; (d) a statement of the actual Capital Expenses made by such Borrower during each calendar quarter as of the last day of such calendar quarter; (e) a statement that such Borrower has not incurred any indebtedness other than Permitted Indebtedness; (f) an aged receivables report and an aged payables report; and (g) rent rolls identifying the leased premises, names of all tenants, units leased, monthly rental and all other charges payable under each Lease, date to which paid, term of Lease, date of occupancy, date of expiration, and a delinquency report for the Property owned by such Borrower. Each such statement shall be accompanied by an Officer’s Certificate (substantially in accordance with the form attached as Schedule 12-2 hereto) certifying, to the signer’s knowledge, (i) that such items are true, correct, accurate, and complete and fairly present the financial condition and results of the operations of such Borrower and such Property in accordance with GAAP (subject to normal year-end adjustments), (ii) whether there exists a Event of Default, and if so, the nature thereof, the period of time it has existed and the action then being taken to remedy it, (iii) that as of the date of such Officer’s Certificate, no litigation exists involving any Borrower or any Property in which the amount involved is $250,000 (in the aggregate) or more or in which all or substantially all of the potential liability is not covered by insurance, or, if so, specifying such litigation and the actions being taken in relation thereto and (iv) the amount by which operating expenses incurred by Borrower for such period were greater than or less than the operating expenses reflected in the applicable Annual Budget. Such financial statements shall contain such other information as shall be reasonably requested by Lender for purposes of calculations to be made by Lender pursuant to the terms hereof.
6.3.4 Compliance Certificates. Each Borrower shall furnish to Lender (a) within thirty (30) days after the end of each calendar quarter, a quarterly calculation of the Debt Service Coverage Ratio and the Debt Yield for the immediately preceding two (2) calendar quarters as of the most recent Calculation Date (together with such back-up information as Lender shall require), prepared in the form attached hereto as Schedule 12-3 (or such other form as required by Lender), accompanied by an Officer’s Certificate certifying that such statement is true, correct, complete and accurate and (b) no later than thirty (30) days prior to the commencement of the Extension Period, a calculation of the Debt Service Coverage Ratio and the Debt Yield for the immediately preceding six months as of September 1, 2028, with respect to the Debt Service Coverage Ratio calculation and the Debt Yield calculation required pursuant to Section 2.8 hereof for the Extension Period.
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6.3.5 Other Reports. Each Borrower shall furnish to Lender, within ten (10) Business Days after request, such further detailed information with respect to the operation of the Property owned by such Borrower and the financial affairs of such Borrower, Sole Member or Manager as may be reasonably requested by Lender or, if a Securitization has occurred, any applicable Rating Agency.
6.3.6 Annual Budget.
(a) Borrowers shall prepare and submit (or shall cause Manager to prepare and submit) to Lender within thirty (30) days after a Cash Management Period has commenced and by November 30th of each year thereafter during the Term until such Cash Management Period has ended, for approval by Lender, which approval shall not be unreasonably withheld or delayed, a proposed pro forma budget for the Property owned by such Borrower for the succeeding calendar year (the “Annual Budget”, and each Annual Budget approved (or deemed approved pursuant to the terms of this Section 6.3.6) by Lender is referred to herein as the “Approved Annual Budget”), and, promptly after preparation thereof, any revisions to such Annual Budget. Lender’s failure to approve or disapprove any Annual Budget or revision within thirty (30) days after Lender’s receipt thereof shall be deemed to constitute Lender’s approval thereof. The Annual Budget shall consist of (i) an operating expense budget showing, on a month-by-month basis, in reasonable detail, each line item of such Borrower’s anticipated operating income and operating expenses (on a cash and accrual basis), including amounts required to establish, maintain and/or increase any monthly payments required hereunder (and once such Annual Budget has been approved (or deemed approved pursuant to the terms of this Section 6.3.6) by Lender, such operating expense budget shall be referred to herein as the “Approved Operating Budget”; the Approved Operating Budget in effect as of the date hereof is attached hereto as Schedule 10), and (ii) a Capital Expense budget showing, on a month-by-month basis, in reasonable detail, each line item of anticipated Capital Expenses (and once such Annual Budget has been approved (or deemed approved pursuant to the terms of this Section 6.3.6) by Lender, such Capital Expense budget shall be referred to herein as the “Approved Capital Expenses Budget”). Until such time that any Annual Budget has been approved (or deemed to have been approved) by Lender, the prior Approved Annual Budget shall apply for all purposes hereunder (with such adjustments as reasonably determined by Lender (including increases for any non-discretionary expenses), including taxes, insurance and other expenses not in the control of Borrower).
(b) Lender’s failure to deny any written request by Borrowers for Lender’s approval of the Annual Budget required under this Section 6.3.6 shall be deemed to constitute Lender’s consent to, and approval of, such Annual Budget provided Borrowers have sent written request to Lender as provided in the following sentence and Lender has failed to respond to each of the notices required therein in the time-frame specified therein. In order to comply with the foregoing notice requirements to obtain Lender’s deemed approval of the Annual Budget, Borrowers shall provide a copy of such Annual Budget together with a written notice sent in accordance with Section 6.1 hereof to Lender marked “PRIORITY” and shall conspicuously state in 14 point or larger bold type “CONSENT SOUGHT – FIRST NOTICE: PURSUANT TO SECTION 6.3.6 OF THE LOAN AGREEMENT, THIS IS BORROWER’S FIRST NOTICE OF REQUEST FOR APPROVAL OF THE ANNUAL BUDGET HEREIN PROVIDED. IF LENDER DOES NOT DECLINE APPROVAL IN WRITING OR REQUEST ADDITIONAL INFORMATION IN WRITING WITHIN TEN (10) DAYS OF ITS
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RECEIPT OF THIS LETTER THE ANNUAL BUDGET SHALL BE DEEMED APPROVED” and if Lender has failed to so respond by the tenth (10) day, Borrowers shall send a second notice also marked “PRIORITY” and conspicuously stating in 14 point or larger bold type “CONSENT SOUGHT – SECOND AND FINAL NOTICE: PURSUANT TO SECTION 6.3.6 OF THE LOAN AGREEMENT, THIS IS BORROWER’S SECOND AND FINAL NOTICE OF REQUEST FOR APPROVAL OF THE ANNUAL BUDGET HEREIN PROVIDED. IF LENDER DOES NOT DECLINE APPROVAL IN WRITING OR REQUEST ADDITIONAL INFORMATION IN WRITING WITHIN FIVE (5) DAYS OF ITS RECEIPT OF THIS LETTER THE ANNUAL BUDGET SHALL BE DEEMED APPROVED.”
6.3.7 Additional Operating Expenses.
(a) During a Cash Management Period, in the event that any Borrower incurs or will incur any operating expense that is not in the Approved Annual Budget in excess of $2,500 but is otherwise an Approved Operating Expense (each an “Additional Operating Expense”), then such Borrower shall promptly (but in no event shall such Borrower be required to do so more frequently than monthly) deliver to Lender a reasonably detailed explanation of such Additional Operating Expense(s) or, with respect to any such item that is subject to Lender’s approval, such proposed Additional Operating Expense. Any Additional Operating Expense submitted to Lender (and, if required, approved by Lender) in accordance with this Agreement, together with any Emergency Expenditures, are referred to herein as an “Approved Additional Operating Expense”. In no event shall management fees in excess of the Management Fee Cap be paid to Manager as part of the Approved Additional Operating Expense funds distributed to Borrowers pursuant to Section 3.15(a)(vii) hereof unless expressly approved by Lender in advance in its sole discretion.
(b) Any funds distributed to any Borrower for the payment of Approved Additional Operating Expenses (including any distribution to such Borrower pursuant to Section 3.15(a)(vii) hereof) shall be used by such Borrower only to pay for Approved Additional Operating Expenses or reimburse such Borrower for Approved Additional Operating Expenses, as applicable.
6.3.8 Intentionally Omitted.
6.3.9 Breach. If any Borrower fails to provide to Lender or its designee any of the financial statements, certificates, reports or information (the “Required Records”) required by this Article 6 within thirty (30) days after the date upon which such Required Record is due, Borrowers shall pay to Lender, at Lender’s option and in its discretion (and without limiting any other rights or remedies of Lender hereunder), an amount equal to $1,000 for each Required Record that is not delivered; provided Lender has given Borrowers at least fifteen (15) days prior notice of such failure. In addition, thirty (30) days after any Borrower’s failure to deliver any Required Records, Lender shall have the option (and without limiting any other rights or remedies of Lender hereunder), upon fifteen (15) days’ notice to Borrowers to gain access to such Borrower’s books and records and prepare or have prepared at Borrowers’ expense, any Required Records not delivered by such Borrower.
7. INSURANCE; CASUALTY; AND CONDEMNATION
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7.1 Insurance.
7.1.1 Coverage. Each Borrower, at its sole cost, for the mutual benefit of each Borrower and Lender, shall obtain and maintain, with each Borrower included as a Named Insured/Additional Named Insured, during the Term the following policies of insurance with respect to the Property or Properties owned by such Borrower:
(a) Property insurance insuring against loss or damage customarily included under so called “all risk” or “special form” policies including but not limited to fire, lightning, wind/windstorm/hail, named storm, vandalism, and malicious mischief, boiler and machinery/equipment breakdown and subject to Section 7.1.1(m) hereof, coverage for damage or destruction caused by the acts of “Terrorists”, both foreign and domestic, (or such policies shall have no exclusion from coverage with respect thereto) and such other insurable hazards as, under good insurance practices, from time to time are insured against for other property and buildings similar to the premises in nature, use, location, height, and type of construction. Such insurance policy shall also insure for ordinance of law coverage, coverage for loss to the undamaged portion of the building, costs of demolition and increased cost of construction in amounts satisfactory to Lender, as well as coverage for wind-driven precipitation with sublimits acceptable to Lender. Each such insurance policy shall (i) be in an amount equal to 100% of the then replacement cost of the Improvements without deduction for physical depreciation, (ii) have deductibles no greater than $25,000, except (x) for wind/hail which shall be no greater than $100,000 per occurrence and (y) for named storm and wind-driven precipitation the deductible shall not exceed five percent (5%) of the insurable value, subject to a $100,000 minimum, per occurrence, (iii) be paid annually in advance and (iv) be on a replacement cost basis and contain either no coinsurance or, if coinsurance, an agreed amount endorsement, and shall cover, without limitation, all tenant improvements and betterments that Borrower is required to insure on a replacement cost basis. Lender shall be named Mortgagee and Lender’s Loss Payable on a Standard Mortgagee Endorsement.
(b) Flood insurance if any part of the improvements on such Property is located in an area now or hereafter designated by the Federal Emergency Management Agency as a Special Flood Hazard Area, or such other Zone if Lender so requires. Such coverage shall (i) be in an amount equal to the maximum limit available through the National Flood Insurance Program, (ii) include such excess limits in an amount equal to (A) 100% of the full replacement cost of the Improvements on such Property (without any deduction for depreciation) or (B) such other amount as agreed to by Lender and (iii) have deductibles acceptable to Lender.
(c) Commercial general liability insurance, including coverage for personal injury, bodily injury, death, accident and property damage, and excess and/or umbrella liability coverage for personal injury, bodily injury, death, accident and property damage, such insurance providing in combination no less than containing minimum limits per occurrence of $1,000,000 and $2,000,000 in the aggregate (applying “per location” if the policy covers more than one location) for any policy year with no deductible or self-insured retention in excess of $10,000 per occurrence; together with at least $25,000,000 excess and/or umbrella liability insurance for any and all claims. Such excess and/or umbrella liability shall schedule the auto liability, liquor liability and/or employer’s liability policies, to the extent such coverages are required. The policies described in this subsection shall also include coverage for Terrorism, elevators,
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escalators, independent contractors, marina liability for docks, slips and piers, and contractual liability for insured contracts (covering, to the maximum extent permitted by law, Borrower’s obligation to indemnify Lender as required under this Agreement and the other Loan Documents).
(d) Rental loss and/or business interruption insurance, including terrorism, in an amount equal to 100% of the projected gross revenues and/or Rents (less any non-continuing expenses) for a period of at least 18 months or the Actual Loss Sustained with no time limitation. The period of indemnification shall include the initial period of restoration of at least twelve (12) months, which is the period of time required to rebuild such Property following a casualty, and an extended period of indemnity endorsement for a period of six (6) months, which provides that after the physical loss to such Property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or until the limit for such coverage as required above is exhausted, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period. The amount of such insurance shall be increased from time to time during the Term as and when the estimated or actual gross revenues and/or Rents increase.
(e) Comprehensive boiler and machinery/equipment breakdown insurance covering all mechanical and electrical equipment against physical damage, rent loss and improvements loss and covering, without limitation, all tenant improvements and betterments that Borrower is required to insure pursuant to the lease on a replacement cost basis and in an amount equal to the full replacement cost of the Improvements on such Property (without any deduction for depreciation) or such other amount acceptable to Lender.
(f) Worker’s compensation insurance with respect to any employees of Borrower, as required by any Legal Requirement and employer’s liability with minimum limits of $1,000,000 each accident, $1,000,000 each disease per employee, and $1,000,000 each disease policy limit (if applicable).
(g) During any period of repair or restoration, and only if the property and liability coverage forms do not otherwise apply, (i) commercial general liability and umbrella liability insurance covering claims related to the repairs or restoration at such Property that are not covered by or under the terms or provisions of the insurance provided for in Section 7.1.1(c) hereof and (ii) the insurance provided for in Section 7.1.1(a) hereof, which shall, in addition to the requirements set forth in such Section, (A) be written on a builder’s “all-risk” insurance on a completed value, non-reporting form, in an amount equal to not less than the full insurable value of such Property, against such risks (including fire and extended coverage and collapse of the Improvements to agreed limits) as Lender may request, in form and substance and with deductibles acceptable to Lender and against all risks insured against pursuant to clauses (a), (b), (d), (e), (h) and (m) of this Section 7.1.1 and (B) include permission to occupy such Property.
(h) If required by Lender, earthquake insurance (i) 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, (ii) having a deductible not in excess of 5% of the total insurable value of such Property, and (iii) if such Property is legally nonconforming under applicable zoning ordinances and codes, containing ordinance of law coverage in amounts as required by Lender.
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(if applicable);
(i) Insurance against employee dishonesty in an amount acceptable to Lender
(j) Commercial auto liability coverage for all owned, non-owned and hired autos containing minimum limits per occurrence of $1,000,000 (if applicable);
(k) Liquor liability coverage containing minimum limits of $1,000,000 or in such greater amount as may be required by applicable Legal Requirements (if applicable).
(l) Such other insurance or higher limits (including environmental liability insurance, earthquake insurance and mine subsidence insurance) as may from time to time be reasonably required by Lender in order to protect its interests.
(m) Notwithstanding anything in Section 7.1.1(a) hereof to the contrary, Borrowers shall be required to obtain and maintain coverage in its property insurance Policy (or by a separate Policy), its Loss of Rents/Business Interruption coverage, and its Liability policies against loss or damage by terrorist acts, both foreign and domestic, in an amount equal to 100% of the “Full Replacement Cost” of such Property plus the rental loss and/or business interruption insurance required in Section 7.1.1(d) hereof provided that such coverage is available. Borrowers shall obtain the coverage required under this Section 7.1.1(m) from a carrier which otherwise satisfies the rating criteria specified in Section 7.1.2 hereof (a “Qualified Carrier”) or in the event that such coverage is not available from a Qualified Carrier, Borrowers shall obtain such coverage from the highest rated insurance company providing such coverage. In the event that such coverage with respect to terrorist acts is not included as part of the “all risk” property policy required by Section 7.1.1(a) hereof, Borrowers shall, nevertheless be required to obtain coverage for terrorism (as standalone coverage) in an amount equal to 100% of the “Full Replacement Cost” of the Properties plus the rental loss and/or business interruption coverage under Section 7.1.1(d) hereof provided that such coverage is available.
7.1.2 Policies. All policies of insurance (the “Policies”) required pursuant to Section 7.1.1 hereof shall: (a) be issued by companies approved by Lender and authorized to do business in the State, with (X) a claims paying ability rating of “A” or better by S&P and “A2” or better by Moody’s (to the extent Moody’s rates the Securities and rates the applicable insurance company), and (Y) a rating of “A:X” or better in the current Best’s Insurance Reports (notwithstanding the foregoing, Lender has agreed that Borrowers shall be permitted to maintain a portion of the coverage required hereunder with insurance companies which do not meet the foregoing requirements in their current participation amounts and positions within the syndicate, provided that if the current AM Best rating of any such insurer is withdrawn or downgraded, Borrowers shall replace such carrier with an insurance company meeting the ratings requirements set forth hereinabove); (b) name Lender and its successors and/or assigns as their interest may appear as the mortgagee/lender’s loss payable (in the case of property insurance and business interruption/loss of rents coverage) and an additional insured (in the case of liability insurance); (c) contain (in the case of property insurance) a Non-Contributory Standard Mortgagee Clause/Lender’s Loss Payable Endorsement, or their equivalents, naming Lender as the person to which all payments made by such insurance company shall be paid; (d) with respect to property (including business interruption/loss of rents), commercial general liability and excess/umbrella liability policies, contain a waiver of subrogation in favor of Lender; (e) with respect to property
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policies (including business interruption/loss of rents), contain such provisions as Lender deems reasonably necessary or desirable to protect its interest, including (i) endorsements providing that neither Borrower, Lender nor any other party shall be a co-insurer under the Policies, (ii) that Lender shall receive at least thirty (30) days’ prior written notice of cancellation of any of the property Policies, except ten (10) days’ notice for cancellation due to non-payment of premium; provided that, with respect to liability Policies, such notice shall also be provided to the extent available; however, if not available, Borrowers shall provide the required notice to Lender, (iii) that such policy shall not contain any provision that would make the Lender liable for any premiums and commissions, provided that the policy need not waive the requirement that the premium be paid in order to effect continuation of coverage if the policy will be cancelled due to non-payment of premium and (iv) providing that Lender is permitted to make payments to effect the continuation of such policy upon notice of cancellation due to non-payment of premiums; (f) in the event any property insurance policy shall contain breach of warranty provisions, such policy shall provide that with respect to the interest of Lender, such insurance policy shall not be invalidated by and shall insure Lender regardless of (i) any act, failure to act or negligence of or violation of warranties, declarations or conditions contained in such policy by any named insured, (ii) the occupancy or use of the premises for purposes more hazardous than permitted by the terms thereof, or (iii) any foreclosure or other action or proceeding taken by Lender pursuant to any provision of the Loan Documents; and (g) be satisfactory in form and substance to Lender and approved by Lender as to amounts, form, risk coverage, deductibles, loss payees and insureds and complete copies thereof delivered to Lender. In the event of foreclosure or other transfer of title, Borrowers agree that all proceeds payable thereunder pertaining to such Borrower’s Property shall thereupon vest in the purchaser at such foreclosure or in Lender or other transferee in the event of such other transfer of title. Borrowers shall pay the premiums for such Policies (the “Insurance Premiums”) as the same become due and payable and furnish to Lender evidence of the renewal of each of the Policies together with (unless such Insurance Premiums have been paid by Lender pursuant to Section 3.4 hereof) receipts for or other evidence of the payment of the Insurance Premiums reasonably satisfactory to Lender. If Borrowers do not furnish such evidence and receipts at least thirty (30) days prior to the expiration of any expiring Policy, then Lender may, but shall not be obligated to, procure such insurance and pay the Insurance Premiums therefor, and Borrowers shall reimburse Lender for the cost of such Insurance Premiums promptly on demand, with interest accruing at the Default Rate. Borrowers shall deliver to Lender a complete copy of each Policy within thirty (30) days after its effective date. Within thirty (30) days after request by Lender, Borrowers 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, changes in prudent customs and practices, and the like. Lender agrees that the Policies may be in the form of a blanket policy provided that (A) such blanket policy otherwise meets the requirements set forth in this Section 7.1, (B) Lender shall be satisfied by evidence required by Lender that the blanket policy provides the same protection as would separate Policies insuring only the Properties in accordance with the terms of this Agreement and (C) Borrowers shall, upon written request of Lender, provide Lender with a complete schedule of locations and values for properties associated with such blanket policy (any such blanket policy that satisfies the foregoing conditions, an “Acceptable Blanket Policy”).
7.2 Casualty.
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7.2.1 Notice; Restoration. If any Property is damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrowers shall give prompt notice thereof to Lender. Following the occurrence of a Casualty, Borrowers, regardless of whether insurance proceeds are available, shall promptly proceed to restore, repair, replace or rebuild the affected Property in accordance with Legal Requirements to be of at least equal value and of substantially the same character as prior to such damage or destruction.
7.2.2 Settlement of Proceeds. If a Casualty covered by any of the Policies (an “Insured Casualty”) occurs where the loss does not exceed the Restoration Threshold, provided no Event of Default has occurred and is continuing, Borrowers may settle and adjust any claim without the prior consent of Lender provided that such adjustment is carried out in a competent and timely manner, and Borrowers are hereby authorized to collect and receipt for the insurance proceeds (the “Proceeds”), and promptly deposit same in the Casualty/Condemnation Subaccount. In the event of an Insured Casualty where the loss equals or exceeds the Restoration Threshold (a “Significant Casualty”), Lender may settle and adjust any claim without the consent of any Borrower and agree with the insurer(s) on the amount to be paid on the loss, and the Proceeds shall be due and payable solely to Lender and held by Lender in the Casualty/Condemnation Subaccount and disbursed in accordance herewith. If any Borrower or any party other than Lender is a payee on any check representing Proceeds with respect to a Significant Casualty, such Borrower shall immediately endorse, and cause all such third parties to endorse, such check payable to the order of Lender. Each Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an interest, to endorse such check payable to the order of Lender. The reasonable, out of pocket expenses incurred by Lender in the settlement, adjustment and collection of the Proceeds shall become part of the Debt and shall be reimbursed by Borrowers to Lender within ten (10) Business Days of written demand therefor. Notwithstanding anything to the contrary contained herein, if in connection with a Casualty any insurance carrier makes a payment under a property insurance Policy that Borrowers propose be treated as business or rental interruption insurance, then, notwithstanding any designation (or lack of designation) by the insurance carrier as to the purpose of such payment, as between Lender and Borrowers, such payment shall not be treated as business or rental interruption insurance proceeds unless Borrowers have demonstrated to Lender’s satisfaction that the remaining net Proceeds that will be received from the property insurance carriers are sufficient to pay 100% of the cost of fully restoring the Improvements or, if such net Proceeds are to be applied to repay the Debt in accordance with the terms of this Agreement, that such remaining net Proceeds will be sufficient to pay the Debt in full.
7.3 Condemnation.
7.3.1 Notice; Restoration. Borrowers shall promptly give Lender notice of the actual or threatened commencement of any condemnation or eminent domain proceeding affecting any Property (a “Condemnation”) and shall deliver to Lender copies of any and all papers served in connection with such Condemnation. Following the occurrence of a Condemnation, Borrowers, regardless of whether an Award is available, shall promptly proceed to restore, repair, replace or rebuild the affected Property in accordance with Legal Requirements to the extent practicable to be of at least equal value and of substantially the same character (and to have the same utility) as prior to such Condemnation.
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7.3.2 Collection of Award. Lender is hereby irrevocably appointed as each Borrower’s attorney-in-fact, coupled with an interest, with exclusive power to collect, receive and retain any award or payment in respect of a Condemnation (an “Award”) and to make any compromise, adjustment or settlement in connection with such Condemnation. Notwithstanding any Condemnation (or any transfer made in lieu of or in anticipation of such Condemnation), Borrowers shall continue to pay the Debt at the time and in the manner provided for in the Loan Documents, and the Debt shall not be reduced unless and until any Award shall have been actually received and applied by Lender to expenses of collecting the Award and to discharge of the Debt. Lender shall not be limited to the interest paid on the Award by the condemning authority but shall be entitled to receive out of the Award interest at the Interest Rate. If any Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of such Award, Lender shall have the right, whether or not a deficiency judgment on the Note shall be recoverable or shall have been sought, recovered or denied, to receive all or a portion of the Award sufficient to pay the Debt. Borrowers shall cause any Award that is payable to Borrower to be paid directly to Lender. Lender shall hold such Award in the Casualty/Condemnation Subaccount and disburse such Award in accordance with the terms hereof.
7.4 Application of Proceeds or Award.
7.4.1 Application to Restoration. If an Insured Casualty or a Condemnation
occurs where:
(a) the loss is in an aggregate amount less than twenty percent (20%) of the
Allocated Loan Amount for the affected Property;
(b) in the reasonable judgment of Lender, the affected Property can be restored within six (6) months, and prior to six (6) months before the then-scheduled Stated Maturity Date, and prior to the expiration of the rental or business interruption insurance with respect thereto, to the affected Property’s pre-existing condition and utility as existed immediately prior to such Insured Casualty or Condemnation, and to an economic unit not less valuable and not less useful than the same was immediately prior to the Insured Casualty or Condemnation, and after such Restoration will adequately secure the Debt;
(c) less than (i) thirty percent (30%), in the case of an Insured Casualty or (ii) fifteen percent (15%), in the case of a Condemnation, of the rentable area of the affected Improvements has been damaged, destroyed or rendered unusable as a result of such Insured Casualty or Condemnation;
(d) Leases demising in the aggregate at least sixty-five percent (65%) of the total rentable space in the applicable Property and in effect as of the date of the occurrence of such Insured Casualty or Condemnation remain in full force and effect during and after the completion of the Restoration (hereinafter defined);
(e) Lender shall be satisfied that the Restoration will be completed in accordance with all Legal Requirements and the applicable Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable Legal Requirements; and
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(f) no Event of Default shall have occurred and be then continuing,
then the Proceeds or the Award, as the case may be (after reimbursement of any expenses incurred by Lender), shall be applied to reimburse Borrowers for the cost of restoring, repairing, replacing or rebuilding the affected Property (the “Restoration”), in the manner set forth herein. Borrowers shall commence and diligently prosecute such Restoration. Notwithstanding the foregoing, in no event shall Lender be obligated to apply the Proceeds or Award to reimburse any Borrower for the cost of Restoration unless, in addition to satisfaction of the foregoing conditions, both (i) Borrowers shall pay (and if required by Lender, Borrowers shall deposit with Lender in advance) all costs of such Restoration in excess of the net amount of the Proceeds or the Award made available pursuant to the terms hereof; and (ii) Lender shall have received evidence reasonably satisfactory to it that during the period of the Restoration, the Rents for such Property will be at least equal to the sum of the operating expenses and Debt Service for such Property and other reserve payments required hereunder, as reasonably determined by Lender.
7.4.2 Application to Debt.
(a) Except as provided in Section 7.4.1 hereof, any Proceeds and/or Award may, at the option of Lender, be applied to the payment of (i) accrued but unpaid interest on the Note, (ii) the unpaid Principal and (iii) other charges due under the Note and/or any of the other Loan Documents, or applied to reimburse Borrowers for the cost of any Restoration, in the manner set forth in Section 7.4.3 hereof. Any prepayment of the Loan made pursuant to this Section 7.4.2 shall be subject to the Exit Fee, but shall otherwise be without any Spread Maintenance Premium, unless an Event of Default has occurred and is continuing at the time the Proceeds are received from the insurance company or the Award is received from the condemning authority, as the case may be, in which event Borrowers shall pay to Lender an additional amount equal to the Spread Maintenance Premium, if any, that may be required with respect to the amount of the Proceeds or Award applied to the unpaid Principal. In the event that Lender elects to apply any Proceeds and/or Award to the repayment of the Debt pursuant to this clause (a), Borrowers may, within ninety (90) days following such repayment of the Debt by Lender, prepay the full outstanding remaining balance of the Debt, which repayment shall be subject to the Exit Fee, but shall otherwise be without any Spread Maintenance Premium, unless an Event of Default has occurred and is continuing at the time such repayment is made, in which event Borrowers shall bay both the Spread Maintenance Premium and Exit Fee applicable to such repayment amount.
(b) Notwithstanding the foregoing provisions of this Section 7.4, if the Loan is included in a REMIC Trust and, immediately following a release of any portion of the Lien of a Mortgage following a Casualty or Condemnation (but taking into account any proposed Restoration of the remaining Property), the ratio of the unpaid principal balance of the Loan to the value of the remaining Properties are greater than 125% (such value to be determined by Lender by any commercially reasonable method permitted to a REMIC Trust; and which shall exclude the value of personal property or going concern value, if any), the principal balance of the Loan must be paid down by an amount equal to the least of the following amounts: (i) the net Award or net proceeds (after payment of Lender’s costs and expenses and any other fees and expenses that have been approved by Lender); (ii) the fair market value of the released property at the time of the release; or (iii) an amount such that the loan-to-value ratio of the Loan (as so determined by
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Lender) does not increase after the release, unless Lender receives an opinion of counsel that if such amount is not paid, the applicable Securitization will not fail to maintain its status as a REMIC Trust as a result of the related release of such portion of the Lien of the Mortgage. If and to the extent the preceding sentence applies, only such amount of the net Award, if any, in excess of the amount required to pay down the principal balance of the Loan may be released for purposes of Restoration or released to Borrowers as otherwise expressly provided in this Section 7.4. Additionally, throughout the term of the Loan if an Event of Default is continuing, then Borrowers shall pay to Lender, with respect to any payment of the Debt pursuant to this Section 7.4.2(b), an additional amount equal to the Spread Maintenance Premium and Exit Fee applicable thereto; provided, however, that if an Event of Default is not continuing, then the Spread Maintenance Premium and Exit Fee applicable thereto shall not be payable.
7.4.3 Procedure for Application to Restoration. If any Borrower is entitled to reimbursement out of the Proceeds or an Award held by Lender, such Proceeds or Award shall be disbursed from time to time from the Casualty/Condemnation Subaccount upon Lender being furnished with (a) evidence satisfactory to Lender of the estimated cost of completion of the Restoration, (b) a fixed price or guaranteed maximum cost construction contract for Restoration satisfactory to Lender, (c) prior to the commencement of Restoration, all immediately available funds in addition to the Proceeds or Award that in Lender’s judgment are required to complete the proposed Restoration, (d) such architect’s certificates, waivers of lien, contractor’s sworn statements, title insurance endorsements, bonds, plats of survey, permits, approvals, licenses and such other documents and items as Lender may reasonably require and approve, and (e) all plans and specifications for such Restoration, such plans and specifications to be approved by Lender prior to commencement of any work. Lender may, at Borrowers’ expense, retain a Construction Consultant to review and approve all requests for disbursements, which approval shall also be a condition precedent to any disbursement. No payment made prior to the final completion of the Restoration shall exceed ninety percent (90%) of the value of the work performed from time to time; funds other than the Proceeds or Award shall be disbursed prior to disbursement of such Proceeds or Award; and at all times, the undisbursed balance of such Proceeds or Award remaining in the hands of Lender, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Lender by or on behalf of Borrowers for that purpose, shall be at least sufficient in the reasonable judgment of Lender to pay for the cost of completion of the Restoration, free and clear of all Liens or claims for Lien. Provided no Event of Default then exists, any surplus that remains out of the Proceeds held by Lender after payment of such costs of Restoration shall be paid to Borrowers (unless a Cash Management Period is continuing, in which event, such surplus shall be deposited into the Cash Management Account as if Rents and disbursed pursuant to Section 3.15(a) hereof). Any surplus that remains out of the Award received by Lender after payment of such costs of Restoration shall, at the discretion of Lender, be retained by Lender and applied to payment of the Debt or returned to Borrowers.
7.5 Application of Business Interruption Insurance and/or Rent Loss Policies. With respect to any Proceeds paid on account of business interruption and/or rent loss policies, the same shall be deposited in the Cash Management Account and distributed in accordance with the provisions of Section 3.15 hereof; provided, however, that if such business interruption proceeds are disbursed in a lump sum, unless otherwise agreed to by Lender in its sole discretion, Lender shall hold such proceeds in the Casualty/Condemnation Subaccount, shall estimate the number of months required for Borrowers to restore the damage caused by the applicable Casualty, shall
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divide the applicable aggregate business interruption or rent loss proceeds by such number of months and shall disburse such monthly installment of such proceeds on each Payment Date in the Cash Management Account for disbursement in accordance with Section 3.15 hereof.
8. DEFAULTS
8.1 Events of Default. An “Event of Default” shall exist with respect to the Loan if any of the following shall occur:
(a) any portion of the Debt is not paid when due or Borrowers shall fail to pay when due any payment required under Sections 3.3, 3.4, 3.5, 3.8 3.10 or 3.11 hereof; provided, however, if adequate funds are available in the Cash Management Account for any payments pursuant to Section 3.15(a) hereof, or Sections 3.3, 3.4 or 3.5 hereof, and Lender is otherwise obligated to apply such amounts on deposit in the Cash Management Account to payment pursuant to Section 3.15(a) hereof or to the appropriate Subaccounts, the failure by Cash Management Bank to allocate such funds for such payment pursuant to Section 3.15(a) hereof or into the appropriate Subaccounts shall not constitute an Event of Default hereunder);
(b) any of the Property Taxes are not paid when due (unless, with respect to Real Estate Taxes, Lender is paying such Real Estate Taxes pursuant to Section 3.3 hereof, sufficient funds are in the Tax Subaccount to make such payment, Lender is otherwise obligated to (and has the right to) make such payments, and Lender has failed to make such payments), subject to Borrowers’ right to contest Property Taxes in accordance with Section 5.2 hereof;
(c) the Policies are (i) not kept in full force and effect (unless, with respect to Insurance Premiums, Lender is paying such Insurance Premiums pursuant to Section 3.4 hereof, sufficient funds are in the Insurance Subaccount to make such payment, Lender is otherwise obligated to (and has the right to) pay for such Insurance Premiums, and Lender has failed to make such payments) or (ii) not delivered to Lender upon request;
(d) a Transfer other than a Permitted Transfer occurs;
(e) any certification, representation or warranty made by any Borrower or any Guarantor herein or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished by any Borrower or any Guarantor in connection with any Loan Document, shall be false or misleading in any material respect as of the date the representation or warranty was made;
(f) any Borrower, Sole Member or any Guarantor shall make an assignment for the benefit of creditors, or shall generally not be paying its debts as they become due;
(g) a receiver, liquidator or trustee shall be appointed for any Borrower, Sole Member or any Guarantor; or any Borrower, Sole Member or any Guarantor shall be adjudicated a bankrupt or insolvent; or any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, any Borrower, Sole Member or any Guarantor, as the case may be; or any proceeding for the dissolution or liquidation of any Borrower, Sole Member or any Guarantor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was
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involuntary and not consented to by such Borrower, Sole Member or such Guarantor, as the case may be, only upon the same not being discharged, stayed or dismissed within sixty (60) days;
(h) any Borrower breaches any covenant contained in Sections 2.6.1(d), 5.12.1(i) through (v), 5.12.3, 5.13, 5.15, 5.22, 5.25, 5.27 or 5.28 hereof;
(i) except as expressly permitted hereunder, the actual alteration, improvement, demolition or removal of all or any portion of any of the Improvements without the prior written consent of Lender;
(j) an Event of Default as defined or described elsewhere in this Agreement or in any other Loan Document occurs; or any other event shall occur or condition shall exist, if the effect of such event or condition is to accelerate or to permit Lender to accelerate the maturity of any portion of the Debt;
(k) a default occurs under any term, covenant or provision set forth herein or in any other Loan Document which specifically contains a notice requirement or grace period and such notice has been given and such grace period has expired;
(l) any Loan Document shall fail to be in full force and effect to give Lender the Liens, rights, powers and privileges purported to be created thereby, or if any Borrower Party shall assert that any Loan Document is not in full force and effect or fails to give Lender the Liens, rights, powers and privileges purported to be created thereby;
(m) any of the assumptions contained in any substantive non-consolidation opinion, delivered to Lender by Borrowers’ counsel in connection with the Loan or otherwise hereunder, were not true, complete and correct as of the date of such opinion or thereafter became untrue or incorrect in any material respects;
(n) Guarantors breach any of the financial covenants set forth in Section 6 of the Guaranty; or
(o) a default shall be continuing under any of the other terms, covenants or conditions of this Agreement or any other Loan Document not otherwise specified in this Section 8.1, for ten (10) Business Days after notice to Borrowers (and Guarantors, if applicable) from Lender, in the case of any default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of any other default; provided, however, that if such non-monetary default is susceptible of cure but cannot reasonably be cured within such thirty (30)-day period, and Borrowers (or Guarantors, if applicable) shall have commenced to cure such default within such thirty (30)-day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30)-day period shall be extended for an additional period of time as is reasonably necessary for Borrowers (or Guarantors, if applicable) in the exercise of due diligence to cure such default, such additional period not to exceed ninety (90) days.
8.2 Remedies.
8.2.1 Acceleration. Upon the occurrence and during the continuance of an Event of Default (other than an Event of Default described in Sections 8.1(f) or (g) hereof) and at any
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time and from time to time thereafter, in addition to any other rights or remedies available to it pursuant to the Loan Documents or at law or in equity, Lender may take such action, without notice or demand (and each Borrower hereby expressly waives any such notice or demand), that Lender deems advisable to protect and enforce its rights against any or all Borrowers and in and to the Properties; including declaring the Debt to be immediately due and payable (including unpaid interest, Default Rate interest, Late Payment Charges, Spread Maintenance Premium, Exit Fees and any other amounts owing by Borrowers), without notice or demand; and upon any Event of Default described in Sections 8.1(f) or (g) hereof, the Debt (including unpaid interest, Default Rate interest, Late Payment Charges, Spread Maintenance Premium, Exit Fees and any other amounts owing by Borrowers) shall immediately and automatically become due and payable, without notice or demand, and each Borrower hereby expressly waives any such notice or demand, anything contained in any Loan Document to the contrary notwithstanding.
8.2.2 Remedies Cumulative. Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrowers under the Loan Documents or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Debt shall be declared, or be automatically, due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singularly, successively, together or otherwise, at such time and in such order as Lender may determine, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth in the Loan Documents. Without limiting the generality of the foregoing, each Borrower agrees that if an Event of Default is continuing, (a) to the extent permitted by applicable law, Lender is not subject to any “one action” or “election of remedies” law or rule, and (b) all Liens and other rights, remedies or privileges provided to Lender shall remain in full force and effect until Lender has exhausted all of its remedies against the Properties, the Mortgages have been foreclosed, the Properties have been sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full. To the extent permitted by applicable law, nothing contained in any Loan Document shall be construed as requiring Lender to resort to any particular Property or any portion of any Property for the satisfaction of the Debt in preference or priority to any other portion, and Lender may seek satisfaction out of all or less than all of the Properties or any part thereof.
8.2.3 Severance.
(a) During the continuance of an Event of Default, Lender shall have the right from time to time to partially foreclose any Mortgage and/or the Pledge Agreement (subject to the terms and conditions of the Mortgage and/or Pledge Agreement) in any manner and for any amounts secured by such Mortgage and/or the Pledge Agreement then due and payable as determined by Lender, including the following circumstances: (i) in the event any Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of Principal and interest, Lender may foreclose any Mortgage and/or the Pledge Agreement (subject to the terms and conditions of the Mortgage and/or Pledge Agreement) to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding Principal, Lender may foreclose any Mortgage and/or the Pledge Agreement to recover so much
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of the Principal as Lender may accelerate and such other sums secured by such Mortgage and/or the Pledge Agreement as Lender may elect (subject to the terms and conditions of the Mortgage and/or Pledge Agreement). Notwithstanding one or more partial foreclosures, the (x) Properties shall remain subject to the Mortgages to secure payment of the sums secured by the Mortgages and not previously recovered and (y) Collateral shall remain subject to the Pledge Agreement to secure payment of the sums secured by the Pledge Agreement and not previously recovered.
(b) During the continuance of an Event of Default, Lender shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, mortgages and other security documents in such denominations and priorities of payment and liens as Lender shall determine for purposes of evidencing and enforcing its rights and remedies provided hereunder. Each Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender. Each Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect such severance, each Borrower ratifying all that such attorney shall do by virtue thereof.
8.2.4 Delay. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default, or the granting of any indulgence or compromise by Lender shall impair any such remedy, right or power hereunder or 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 one 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 consequent thereon. Notwithstanding any other provision of this Agreement, Lender reserves the right to seek a deficiency judgment or preserve a deficiency claim in connection with the foreclosure of any Mortgage and/or the Pledge Agreement to the extent necessary to foreclose on all or any portion of any Property, the Rents, the Cash Management System Accounts or any other collateral.
8.2.5 Lender’s Right to Perform. If any Borrower fails to perform any covenant or obligation contained herein and such failure shall continue for a period of five (5) Business Days after Borrowers’ receipt of written notice thereof from Lender, without in any way limiting Lender’s right to exercise any of its rights, powers or remedies as provided hereunder, or under any of the other Loan Documents, Lender may, but shall have no obligation to, perform, or cause performance of, such covenant or obligation, and all costs, expenses, liabilities, penalties and fines of Lender incurred or paid in connection therewith shall be payable by Borrowers to Lender within ten (10) Business Days of written demand therefor and if not paid shall be added to the Debt (and to the extent permitted under applicable laws, secured by the Mortgages and other Loan Documents) and shall bear interest thereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to send notice to any Borrower of any such failure.
9. SECONDARY MARKET PROVISIONS
9.1 Sale of Note and Secondary Market Transaction.
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9.1.1 General; Borrower Cooperation. 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 (including any future funding obligation therein) 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 Mortgages (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, Borrowers shall, at Borrowers’ reasonable expense, use all reasonable efforts and cooperate fully and in good faith with Lender and otherwise reasonably 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 or by applicable Legal Requirements in connection with any such Secondary Market Transactions, including: (i) to (A) provide such financial and other information with respect to the Properties, Borrowers and their Affiliates, Guarantors, Manager and any tenants of the Properties, (B) provide business plans and budgets relating to the Properties 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 Properties, as may be reasonably requested from time to time by Lender or, if applicable, the Rating Agencies or as may be 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) at Borrowers’ expense, cause counsel to render opinions as to non-consolidation and any other opinion customary in securitization transactions with respect to the Properties, Borrowers and their 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 of any Secondary Market Transaction with respect to the Properties, Borrowers 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 (subject to changes resulting from the passage of time or other changes that do not cause an Event of Default hereunder); (iv) provide current certificates of good standing and qualification with respect to Borrowers and Sole Member from appropriate Governmental Authorities; and (v) execute such amendments to the Loan Documents and Borrowers’ organizational documents, as may be requested by Lender or required pursuant to applicable Legal Requirements 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 a decrease in any Borrowers’ or any Guarantors’ rights or an increase in any Borrowers’ or any Guarantors’ obligations or liabilities under the Loan Documents or otherwise in the transaction (other than to a de minimis extent). Borrowers shall pay all reasonable third party costs and expenses incurred by Lender in connection with a Secondary Market Transaction. Borrowers’ cooperation obligations set forth herein shall continue until the Loan has been paid in full.
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9.1.2 Use of Information. Borrowers understand that all or any portion of the Provided Information and 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, Borrowers shall reasonably cooperate with Lender in updating the Provided Information or Required Records for inclusion or summary in the Disclosure Document or for other use reasonably required in connection with a Secondary Market Transaction by providing all current information pertaining to Borrowers, Manager and the Properties necessary to keep the Disclosure Document accurate and complete in all material respects with respect to such matters.
9.1.3 Borrowers Obligations Regarding Disclosure Documents. In connection with a Disclosure Document, Borrowers shall: (a) if requested by Lender, certify in writing that Borrowers have carefully examined those portions of such Disclosure Document, pertaining to Borrowers, the Properties, Manager and the Loan, and that such portions do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and (b) indemnify (in a separate instrument of indemnity, if so requested by Lender)
(i) any underwriter, syndicate member or placement agent (collectively, the “Underwriters”) retained by Lender or its issuing company affiliate (the “Issuer”) in connection with a Secondary Market Transaction, (ii) Lender (and for purposes of this Section 9.1, Lender shall include LCC, its Affiliates, successors and assigns, and their respective officers and directors) and (iii) the Issuer that is named in the Disclosure Document or registration statement relating to a Secondary Market Transaction (the “Registration Statement”), and each of the Issuer’s directors, each of its officers who have signed the Registration Statement and each person or entity who controls the Issuer or the Lender within the meaning of Section 15 of the Securities Act or Section 30 of the Exchange Act (collectively within clause (iii), the “Lender Group”), and each of its directors and each person who controls each of the Underwriters, within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act (collectively, the “Underwriter Group”) for any losses, claims, damages or liabilities, but excluding consequential, special or punitive damages (the “Liabilities”) to which Lender, the Lender Group or the Underwriter Group may become subject (including reimbursing all of them for any legal or other expenses actually incurred in connection with investigating or defending the Liabilities) insofar as the Liabilities arise out of or are based upon any untrue statement of any material fact contained in any of the Provided Information or in any of the applicable portions of such sections of the Disclosure Document applicable to Borrowers, Manager, Guarantors, the Properties or the Loan, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated in the applicable portions of such sections or necessary in order to make the statements in the applicable portions of such sections in light of the circumstances under which they were made, not misleading; provided, however, that Borrowers shall not be required to indemnify Lender for any Liabilities relating to untrue statements or omissions which Borrowers identified to Lender in writing at the time of Borrowers’ examination of such Disclosure Document or for Lender’s mistakes in any Disclosure Document or Registration Statement.
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9.1.4 Borrower Indemnity Regarding Filings. In connection with filings under the Exchange Act, Borrowers shall indemnify Lender, the Lender Group and the Underwriter Group for any Liabilities to which Lender, the Lender Group or the Underwriter Group may become subject insofar as the Liabilities arise out of or are based upon the omission or alleged omission to state in the Provided Information a material fact required to be stated in the Provided Information in order to make the statements in the Provided Information, in light of the circumstances under which they were made not misleading.
9.1.5 Indemnification Procedure. Promptly after receipt by an indemnified party under Section 9.1.3 or Section 9.1.4 hereof of notice of the commencement of any action for which a claim for indemnification is to be made against Borrowers, such indemnified party shall notify Borrowers in writing of such commencement, but the omission to so notify Borrowers will not relieve Borrowers from any liability that they may have to any indemnified party hereunder except to the extent that failure to notify causes prejudice to Borrowers. If any action is brought against any indemnified party, and it notifies Borrowers of the commencement thereof, Borrowers will be entitled, jointly with any other indemnifying party, to participate therein and, to the extent that it (or they) may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice of commencement, to assume the defense thereof with counsel satisfactory to such indemnified party in its discretion. After notice from Borrowers to such indemnified party under this Section 9.1.5, Borrowers shall not be responsible for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, if the defendants in any such action include both Borrowers and an indemnified party, and any indemnified party shall have reasonably concluded that there are any legal defenses available to it and/or other indemnified parties that are different from or additional to those available to Borrowers, then the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Borrowers shall not be liable for the expenses of more than one separate counsel unless there are legal defenses available to it that are different from or additional to those available to another indemnified party. Without the prior written consent of Lender (which consent shall not be unreasonably withheld or delayed), no Borrower shall settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any Borrower is an actual or potential party to such claim, action, suit or proceeding) unless such Borrower shall have given Lender reasonable prior written notice thereof and shall have obtained an unconditional release of each indemnified party hereunder from all liability arising out of such claim, action, suit or proceedings.
9.1.6 Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 9.1.3 or Section 9.1.4 hereof is for any reason held to be unenforceable by an indemnified party in respect of any Liabilities (or action in respect thereof) referred to therein which would otherwise be indemnifiable under Section 9.1.3 or Section 9.1.4 hereof, Borrowers shall contribute to the amount paid or payable by the indemnified party as a result of such Liabilities (or action in respect thereof); provided, however, that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person not guilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respective parties are entitled, the following factors shall be considered: (a) the Lender Group’s
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and Borrowers’ relative knowledge and access to information concerning the matter with respect to which the claim was asserted; (b) the opportunity to correct and prevent any statement or omission; and (c) any other equitable considerations appropriate in the circumstances. Lender and Borrowers hereby agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation.
9.1.7 Survival. The liabilities and obligations of each Borrower and Lender under this Section 9.1 shall survive the termination of this Agreement and the satisfaction and discharge of the Debt.
9.2 Severance of Loan. 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), at Borrowers’ sole cost and expense, 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 Mortgages to be split into a first and second mortgage 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 and by a pledge of partnership or membership interests (directly or indirectly) in Borrowers (i.e., a 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. Notwithstanding the foregoing, no such amendment described above shall (i) modify or amend any material economic term of the Loan, or (ii) materially increase the obligations or liabilities, or decrease the rights, of any Borrower or any Guarantor under the Loan Documents (in each case, other than to a de minimis extent); provided, however, 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 Interest Rate immediately prior to such modification. If requested by Lender, Borrowers (and Borrowers’ constituent members, if applicable, and Guarantors) shall execute within five (5) 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. Lender shall have the right to modify the Note and/or Notes and any components in accordance with this Section 9.2 and, provided that such modification shall comply with the terms of this Section 9.2, it shall become immediately effective.
10. MISCELLANEOUS
10.1 Exculpation. Subject to the qualifications below, Lender shall not enforce the liability and obligation of any Borrower to perform and observe the obligations contained in the Loan Documents by any action or proceeding wherein a money judgment shall be sought against
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such 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 and rights under the Loan Documents, or in all or any of the Properties, the Rents 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 a Borrower only to the extent of such Borrower’s interest in the Properties, in the Rents and in any other collateral given to Lender. The provisions of this Section 10.1 shall not, however, (i) constitute a waiver, release or impairment of any obligation evidenced or secured by any Loan Document, (ii) impair the right of Lender to name one or more Borrowers as a party defendant in any action or suit for foreclosure and sale under any Mortgage and/or the Pledge 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 right of Lender to obtain the appointment of a receiver, (v) impair the enforcement of the Assignments of Leases and Rents, (vi) constitute a prohibition against Lender to commence any other appropriate action or proceeding in order for Lender to fully realize the security granted by any Mortgage and/or the Pledge Agreement or to exercise its remedies against all or any of the Properties or (vii) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrowers, by money judgment or otherwise, to the extent of any actual loss, damage, cost, expense, liability, claim or other obligation incurred by Lender (including reasonable attorneys’ fees and costs reasonably incurred, but excluding consequential, special or punitive damages) arising out of or in connection with the following (all such liability and obligation of Borrower for any or all of the following being referred to herein as “Borrowers’ Recourse Liabilities”):
(a) fraud, willful misconduct or misrepresentation by or on behalf of any Borrower Party in connection with the Loan, including by reason of any claim under the Racketeer Influenced and Corrupt Organizations Act (RICO);
(b) the forfeiture by any Borrower of any Property, or any portion thereof, or Sole Member of the Collateral, or any portion thereof, because of the conduct or purported conduct of criminal activity by or on behalf of any such Borrower Party;
(c) intentional material physical waste of any Property or any portion thereof, or, after an Event of Default, the removal or disposal of any portion of any Property, provided that the inability to maintain or repair the Property as a result of insufficient revenues therefrom shall not constitute intentional material physical waste of the Property;
(d) any Proceeds paid by reason of any Insured Casualty or any Award received in connection with a Condemnation or other sums or payments attributable to any Property not applied in accordance with the provisions of the Loan Documents (except to the extent that a Borrower did not have the legal right, because of a bankruptcy, receivership or similar judicial proceeding, to direct disbursement of such sums or payments);
(e) all Rents of any Property received or collected by or on behalf of any Borrower after an Event of Default and not applied to payment of Principal and interest due under the Note, and to the payment of actual and reasonable operating expenses of such Property, as they become due or payable (except to the extent that such application of such funds is prevented by
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bankruptcy, receivership, or similar judicial proceeding in which such Borrower is legally prevented from directing the disbursement of such sums);
(f) misappropriation, misapplication or conversion by or on behalf of any Borrower (including failure to turn over to Lender on demand following an Event of Default) of any gross revenues (including Rents, advance deposits, any other deposits, rents collected in advance, funds held by any Borrower for the benefit of another party and Lease Event Payments);
(g) the failure to pay Property Taxes (unless, with respect to Real Estate Taxes, Lender is paying such Real Estate Taxes pursuant to Section 3.3 hereof, sufficient funds are in the Tax Subaccount to make such payment, Lender is otherwise obligated to (and has the right to) make such payments, and Lender has failed to make such payments);
(h) the breach of any representation, warranty, covenant or indemnification in any Loan Document concerning Environmental Laws or Hazardous Substances, including Sections 4.21 and 5.8 hereof, and clauses (h) through (l) of Section 5.30 hereof;
(i) the failure to pay any charges for labor or materials or other charges that can create Liens on any portion of any of the Properties;
(j) any security deposits (including letters of credit), advance deposits or any other deposits collected by or on behalf of any Borrower with respect to any of the Properties which are not delivered to Lender in accordance with the provisions of the Loan Documents;
(k) the failure to obtain and maintain the fully paid for Policies in accordance with Section 7.1.1 hereof (unless, with respect to Insurance Premiums, Lender is paying such Insurance Premiums pursuant to Section 3.4 hereof, sufficient funds are in the Insurance Subaccount to make such payment, Lender is otherwise obligated to (and has the right to) pay for such Insurance Premiums, and Lender has failed to make such payments);
(l) if any Borrower Party, (A) causes any Borrower to opt out of Article 8 of the UCC or causes the Collateral to not be treated as “securities” governed by and within the meaning of Article 8, (B) causes any Borrower to amend or otherwise modify its organizational documents in order to amend or repeal its election to be governed by Article 8 of the UCC, or (C) causes any termination or cancellation of the limited liability company membership certificate evidencing Sole Member’s one hundred percent (100%) ownership interest in any Borrower;
(m) the breach of the covenants set forth in Sections 2.6.5 hereof or Section 2.6.6 hereof subject to any applicable notice and cure periods;
(n) except as expressly permitted hereunder, the demolition of all or any portion of any improvements without the prior written consent of Lender (excluding in connection with the removal or replacement of worn or obsolete Improvements or Equipment no longer needed or suitable for the operation of the Properties);
(o) the failure by Borrowers to deposit into the Shortfall Reserve Subaccount any amounts required pursuant to Section 3.11 hereof as and when due thereunder, such loss deemed to be equal to the aggregate amount Borrowers have been, at any time during the Term,
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or is then, required to so deposit into the Shortfall Reserve Subaccount during the Term plus aggregate amount of Lender’s enforcement costs and expenses incurred in connection with the same; and/or
(p) except as set forth in clause (ii) of the definition of “Springing Recourse Event” below, a breach of any of the representations set forth in the “Certificate Re ‘Recycled’ Special-Purpose Entity” delivered to Lender in connection with the Loan or a breach of the representation set forth in Section 4.1(b) hereof or a breach of the covenants set forth in Section 5.13 hereof.
Notwithstanding anything to the contrary in this Agreement or any of the Loan Documents, (A) 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 in accordance with the Loan Documents, and (B) Lender’s agreement not to pursue personal liability of Borrowers 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 Borrowers in the event that one or more of the following occurs (each, a “Springing Recourse Event”):
(i) an Event of Default described in Section 8.1(d) hereof shall have
occurred;
(ii) a breach of any of the representations set forth in the “Certificate Re
‘Recycled’ Special-Purpose Entity” delivered to Lender in connection with the Loan or a breach of the representation set forth in Section 4.1(b) hereof or a breach of the covenants set forth in Section 5.13 hereof, if such breach is cited by a bankruptcy court as the basis for the substantive consolidation of Borrower with another Person;
(iii) any Borrower or Sole Member files a voluntary petition under any Insolvency Law;
(iv) the filing of an involuntary petition against any Borrower and/or Sole Member under any Insolvency Law by any other Person if (x) any such Borrower Party or any officer, director or representative which, directly or indirectly, Controls such Borrower and/or Sole Member colludes with or otherwise assists such Person, and/or (y) any such Borrower Party or any officer, director or representative which, directly or indirectly, Controls any Borrower and/or Sole Member solicits or causes to be solicited petitioning creditors for any involuntary petition against any Borrower and/or Sole Member by any Person;
(v) any Borrower Party files an answer consenting to, or otherwise acquiescing in, or joining in, any involuntary petition filed against any Borrower and/or Sole Member by any other Person under any Insolvency Law;
(vi) any Borrower Party consents to, or acquiesces in, or joins in, an application for the appointment of a custodian, receiver, liquidator, trustee or examiner for any Borrower, Sole Member or any portion of any Property unless the appointment of a
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custodian, receiver, liquidator, trustee or examiner is made at the request of Lender or Servicer;
(vii) any Borrower or Sole Member makes an assignment for the benefit of creditors or admits, in writing in any legal proceeding, its insolvency or inability to pay its debts as they become due;
(viii) if any Borrower Party, in connection with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender under or in connection with the Note, the Mortgages or any other Loan Document (including Lender’s seeking an appointment of a receiver), seeks a defense, judicial intervention or injunctive or other equitable relief of any kind or asserts in a pleading filed in connection with a judicial proceeding any defense against Lender or any right in connection with any security for the Loan if there is a final, non-appealable court judgment that such action was brought in bad faith solely to delay or frustrate Lender’s exercise of its rights; and/or
(ix) any Borrower Party taking an affirmative wrongful act with the intention to impair the enforcement of the Pledge Agreement as a result of Lender also being the mortgagee under the Mortgage and failing, promptly after receipt of written notice from the Lender referring to this section, to refrain from or revoke such action to the extent necessary to prevent such impairment therefrom in which there is a final, non-appealable court judgment that such act was in bath faith and taken solely to delay or frustrate Lender’s exercise of its rights to enforce the Pledge Agreement.
10.2 Brokers and Financial Advisors.
(a) Each Borrower and Lender hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the Loan other than Baybridge Real Estate Capital (“Broker”) whose fees shall be paid by Borrowers pursuant to a separate agreement. Borrowers shall indemnify and hold Lender harmless from and against any and all claims, liabilities, costs and expenses (including attorneys’ fees, whether incurred in connection with enforcing this indemnity or defending claims of third parties) of any kind in any way relating to or arising from a claim by any Person (including Broker) that such Person acted on behalf of Borrowers in connection with the transactions contemplated herein. The provisions of this Section 10.2 shall survive the expiration and termination of this Agreement and the repayment of the Debt.
(b) Notwithstanding anything in Section 10.2(a) hereof to the contrary, each Borrower hereby acknowledges that (i) at Lender’s sole discretion, Broker may receive further consideration from Lender relating to the Loan or any other matter for which Lender may elect to compensate Broker pursuant to a separate agreement between Lender and Broker and (ii) Lender shall have no obligation to disclose to any Borrower the existence of any such agreement or the amount of any such additional consideration paid or to be paid to Broker whether in connection with the Loan or otherwise.
10.3 Retention of Servicer.
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(a) At the option of Lender, the Loan may be serviced by the Servicer, and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between Lender and the Servicer. Borrowers shall not be responsible for any set-up fees or any other initial costs relating to or arising under the Servicing Agreement. Borrowers shall not be responsible for payment of the regular ongoing master servicing fee due to the Servicer under the Servicing Agreement.
(b) Borrowers shall pay any fees and expenses of the Servicer or Lender and any customary third-party fees and expenses in connection with a prepayment, release of any Property, approvals under the Loan Documents requested by Borrowers, assumption of Borrowers’ obligations or modification of the Loan, as well as any fees and expenses in connection with the special servicing or work-out of the Loan or enforcement of the Loan Documents, including, special servicing fees, operating or trust advisor fees (if the Loan is a specially serviced loan or in connection with a workout), work-out fees, liquidation fees, attorney’s fees and expenses and other fees and expenses in connection with the modification or restructuring of the Loan.
10.4 Survival; Successors and Assigns. This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as any of the Debt is unpaid or such longer period if expressly set forth in this Agreement. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the legal representatives, successors and assigns of such party. All of Borrowers’ covenants and agreements in this Agreement shall inure to the benefit of the respective legal representatives, successors and assigns of Lender.
10.5 Lender’s Discretion; Rating Agency Review Waiver.
(a) Whenever pursuant to this Agreement or any other Loan Document, Lender exercises any right given to it to request, approve or disapprove, or consent or withhold consent, or any arrangement or term is to be satisfactory to Lender or is to be in Lender’s discretion, the decision of Lender to request, approve or disapprove, to consent or withhold consent, or to decide whether arrangements or terms are satisfactory or not satisfactory, or acceptable or unacceptable or in Lender’s discretion shall (except as is otherwise specifically herein provided) be in the sole and absolute discretion of Lender and shall be final and conclusive. Additionally, whenever in this Agreement or any other Loan Document, Lender exercises any right given to it to approve or disapprove, or consent or withhold consent, or any arrangement or term is to be satisfactory to Lender in Lender’s reasonable discretion, or Lender agrees to not withhold, condition or delay its consent, the decision of Lender to approve or disapprove, to consent, condition, delay or withhold consent, or to decide whether arrangements or terms are satisfactory or not satisfactory, or acceptable or unacceptable or in Lender’s discretion shall (except as is otherwise specifically herein provided) be in the sole and absolute discretion of Lender while an Event of Default is continuing unless otherwise specifically herein provided.
(b) Whenever, pursuant to this Agreement or any other Loan Documents, a Rating Comfort Letter is required from each applicable Rating Agency, in the event that any
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applicable Rating Agency “declines review”, “waives review” or otherwise indicates in writing or otherwise to Lender’s or Servicer’s satisfaction that no Rating Comfort Letter will or needs to be issued with respect to the matter in question (each, a “Review Waiver”), then the Rating Comfort Letter requirement with respect to such Rating Agency shall be deemed to be satisfied with respect to such matter. It is expressly agreed and understood, however, that receipt of a Review Waiver (i) from any one Rating Agency shall not be binding or apply with respect to any other Rating Agency and (ii) with respect to one matter shall not apply or be deemed to apply to any subsequent matter for which Rating Comfort Letter is required. For the avoidance of doubt, a Rating Comfort Letter shall only be required with respect to a matter under this Agreement or any other Loan Document if such Rating Comfort Letter is expressly required pursuant to the applicable Pooling and Servicing Agreement.
(c) Prior to a Securitization or in the event that there is a Review Waiver or in the event that a Rating Comfort Letter is not required under the applicable Pooling and Servicing Agreement, if Lender does not have a separate and independent approval right with respect to the matter in question, then the term Rating Comfort Letter shall be deemed instead to require the prior written consent of Lender.
10.6 Governing Law.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY LENDER AND ACCEPTED BY BORROWERS IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED ACCORDING TO, THE LAW OF THE STATE, COMMONWEALTH OR DISTRICT, AS APPLICABLE, IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, COMMONWEALTH OR DISTRICT, AS APPLICABLE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWERS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK AND EACH BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH BORROWER DOES HEREBY DESIGNATE AND APPOINT COZEN O’CONNOR, ATTENTION: WILLIAM F. DAVIS, ESQ., HAVING AN ADDRESS AT 3 WTC, 175 GREENWICH STREET, 55TH FLOOR, NEW YORK, NEW YORK 10007, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND EACH BORROWER AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF SUCH BORROWER MAILED OR DELIVERED TO SUCH BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH BORROWER (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH BORROWER (i) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR. NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO INSTITUTE ANY LEGAL SUIT, ACTION OR PROCEEDING FOR THE ENFORCEMENT OR FORECLOSURE OF ANY LIEN ON ANY COLLATERAL FOR THE LOAN IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION(S) THAT LENDER MAY ELECT IN ITS SOLE AND ABSOLUTE DISCRETION, AND EACH BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
10.7 Modification, Waiver in Writing. No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement or of any other Loan Document, nor consent to any departure by any Borrower therefrom, shall in any event be effective unless the same shall be (x) in a writing signed by the party or parties against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given or (y) as a result of Benchmark Conforming Changes. Except as otherwise expressly provided herein, no notice to or demand on any Borrower shall entitle any Borrower to any other or future notice or demand in the same, similar or other circumstances. Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under any other Loan Document, shall operate as or constitute a waiver thereof, nor
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shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under any Loan Document, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under the Loan Documents, or to declare an Event of Default for failure to effect prompt payment of any such other amount. Lender shall have the right to waive or reduce any time periods that Lender is entitled to under the Loan Documents in its sole and absolute discretion.
10.8 Trial by Jury. EACH BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH 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 EACH BORROWER 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. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER.
10.9 Headings/Schedules. The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. The Schedules attached hereto, are hereby incorporated by reference as a part of this Agreement with the same force and effect as if set forth in the body hereof.
10.10 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
10.11 Preferences. Upon the occurrence and continuance of an Event of Default, Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrowers to any portion of the Debt. To the extent Borrowers make a payment to Lender, or Lender receives proceeds of any collateral, which is in whole or part 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 Debt or part thereof 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. This provision shall survive the expiration or termination of this Agreement and the repayment of the Debt.
10.12 Waiver of Notice. No Borrower shall be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or any other Loan Document specifically and expressly requires the giving of notice by Lender to such Borrower and except with respect to matters for which such Borrower is not, pursuant to applicable
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Legal Requirements, permitted to waive the giving of notice. Each Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which no Loan Document specifically and expressly requires the giving of notice by Lender to such Borrower.
10.13 Remedies of Borrower. If a claim or adjudication is made that Lender or any of its agents, including Servicer, has acted unreasonably or unreasonably delayed acting in any case where by law or under any Loan Document, Lender or any such agent, as the case may be, has an obligation to act reasonably or promptly, Borrowers agree that neither Lender nor its agents, including Servicer, shall be liable for any monetary damages, and Borrowers’ sole remedy shall be to commence an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment. Each Borrower specifically waives any claim against Lender and its agents, including Servicer, with respect to actions taken by Lender or its agents on Borrowers’ behalf. Additionally, and without limiting any of the other provisions contained herein, each Borrower hereby unconditionally and irrevocably waives, to the maximum extent permitted by applicable law, any rights it may have to claim or recover against Lender in any legal action or proceeding any special, exemplary, punitive or consequential damages.
10.14 Prior Agreements. This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements, understandings and negotiations among or between such parties, whether oral or written, are superseded by the terms of this Agreement and the other Loan Documents.
10.15 Offsets, Counterclaims and Defenses. Each Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against one or more Borrowers by Lender or its agents, including Servicer, or otherwise offset any obligations to make payments required under the Loan Documents. Any assignee of Lender’s interest in and to the Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which one or more Borrowers may otherwise have against any assignor of such documents, and no such offset, counterclaim or defense shall be interposed or asserted by one or more Borrowers in any action or proceeding brought by any such assignee upon such documents, and any such right to interpose or assert any such offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrowers.
10.16 Publicity. All news releases, publicity or advertising by any Borrower or its Affiliates or Lender or its Affiliates through any media intended to reach the general public, which refers to any party to this Agreement or any of their Affiliates, the Loan Documents, the Loan, a Loan purchaser, the Servicer or the trustee in a Secondary Market Transaction, shall be subject to the prior written approval of the other party to this Agreement, not to be unreasonably withheld, conditioned or delayed. Lender shall have the right to publicly release tombstone or similar advertisements with respect to the Loan containing the amount, type and purpose of the Loan, the name, location and type of the Properties, a photograph or rendering of the Property, as well as provide the foregoing information to commercial database providers.
10.17 No Usury. Borrowers and Lender intend at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Lender to contract
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for, charge, take, reserve or receive a greater amount of interest than under state law) and that this Section 10.17 shall control every other agreement in the Loan Documents. If the applicable law (state or federal) is ever judicially interpreted so as to render usurious any amount called for under the Note or any other Loan Document, or contracted for, charged, taken, reserved or received with respect to the Debt, or if Lender’s exercise of the option to accelerate the maturity of the Loan or any prepayment by Borrowers results in Borrowers having paid any interest in excess of that permitted by applicable law, then it is Borrowers’ and Lender’s express intent that all excess amounts theretofore collected by Lender shall be credited against the unpaid Principal and all other Debt (or, if the Debt has been or would thereby be paid in full, refunded to Borrowers), and the provisions of the Loan Documents immediately be deemed reformed and the amounts thereafter collectible thereunder reduced, without the necessity of the execution of any new document, so as to comply with applicable law, but so as to permit the recovery of the fullest amount otherwise called for thereunder. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the Loan shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate from time to time in effect and applicable to the Debt for so long as the Debt is outstanding. Notwithstanding anything to the contrary contained in any Loan Document, it is not the intention of Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.
10.18 Conflict; Construction of Documents; Reliance. In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that each is represented by separate counsel in connection with the negotiation, drafting, execution and delivery of the Loan Documents and that the Loan Documents shall not be subject to the principle of construing their meaning against the party that drafted them. Each Borrower acknowledges that, with respect to the Loan, such Borrower shall rely solely on its own judgment and advisors in entering into the Loan, without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or affiliate of Lender of any equity interest any of them may acquire in Borrowers, and each Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies. Each Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrowers or its Affiliates.
10.19 No Joint Venture or Partnership; No Third Party Beneficiaries.
(a) Borrowers and Lender intend that the relationships created under the Loan Documents be solely that of borrowers and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common or joint tenancy relationship between Borrowers and Lender nor to grant Lender any interest in any of the Properties other than that of mortgagee, beneficiary or lender.
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(b) The Loan Documents are solely for the benefit of Lender and Borrowers and nothing contained in any Loan Document shall be deemed to confer upon anyone other than Lender and Borrowers any right to insist upon or to enforce the performance or observance of any of the obligations contained therein.
10.20 Spread Maintenance Premium. Borrowers acknowledge and agree that
(a) Lender is making the Loan in consideration of the receipt by Lender of all interest and other benefits intended to be conferred by the Loan Documents and (b) if payments of Principal become due and owing to Lender prior to the then-scheduled Stated Maturity Date (including any payments due under the Guaranty, the Envy Recreational Guaranty or Payment Guaranty, to the extent applicable), for any reason whatsoever, whether voluntary or involuntary, including as a result of any acceleration of the Loan pursuant to the terms of this Agreement, by operation of law or otherwise or after an Event of Default, Lender will not receive all such interest and other benefits and may, in addition, incur costs. For these reasons, and to induce Lender to make the Loan, Borrowers agree that, except as expressly provided in Section 2.3.2 or Article 7 hereof, any payments of Principal and accrued interest and other sums due under the Loan Documents, including without limitation during the continuance of an Event of Default and/or at any time from and after the acceleration of the Debt by the terms of this Agreement, operation of law or otherwise, shall include the Spread Maintenance Premium applicable to such Principal; provided, however, that the foregoing shall not be deemed to imply that the Loan may be voluntarily prepaid in any manner or under any circumstance other than as expressly set forth in this Agreement. Such Spread Maintenance Premium shall be required together with such repayment of Principal whether payment is made by Borrowers, by Guarantors (if applicable pursuant to the terms of the Guaranty), by Envy Recreational (if applicable pursuant to the terms of the Envy Recreational Guaranty, Sole Member (if applicable pursuant to the terms of the Payment Guaranty) or any other Person on behalf of Borrowers or Guarantors or Sole Member, or by the purchaser at any foreclosure sale, and may be included in any bid by Lender at such sale. Each Borrower further acknowledges that: (i) it is a knowledgeable real estate developer and/or investor; (ii) it fully understands the effect of the provisions of this Section 10.20, as well as the other provisions of the Loan Documents; (iii) the making of the Loan by Lender at the Interest Rate and other terms set forth in the Loan Documents are sufficient consideration for Borrowers’ obligation to pay a Spread Maintenance Premium (if required); and (iv) Lender would not make the Loan on the terms set forth herein without the inclusion of such provisions. Borrowers also acknowledge that the provisions of this Agreement limiting the right of prepayment and providing for the payment of the Spread Maintenance Premium and other charges specified herein were independently negotiated and bargained for, and constitute a specific material part of the consideration given by Borrowers to Lender for the making of the Loan except as expressly permitted hereunder.
10.21 Assignments and Participations. In addition to any other rights of Lender hereunder, the Loan, the Note, the Loan Documents and/or Lender’s rights, title, obligations and interests therein may be sold, assigned, participated or otherwise transferred by Lender and any of its successors and assigns to any Person at any time in its sole and absolute discretion, in whole or in part, whether by operation of law (pursuant to a merger or other successor in interest) or otherwise without notice to or consent from Borrowers or any other Person. Upon such assignment, all references to Lender in this Agreement and in any Loan Document shall be deemed to refer to such assignee or successor in interest and such assignee or successor in interest shall thereafter stand in the place of Lender in all respects, in each such case with respect to the portion
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of the Loan so assigned. Except as expressly permitted herein, no Borrower may assign its rights, title, interests or obligations under this Agreement or under any of the Loan Documents.
10.22 Intentionally Omitted.
10.23 Waiver of Marshalling of Assets. To the fullest extent permitted by law, each Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of such Borrower, such Borrower’s members or partners, as applicable, and others with interests in such Borrower, and of the Property owned by such Borrower, and shall not assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Property owned by such Borrower for the collection of the Debt without any prior or different resort for collection, or of the right of Lender to the payment of the Debt out of the net proceeds of the Property owned by such Borrower in preference to every other claimant whatsoever.
10.24 Joint and Several Liability. If more than one Person has executed this Agreement as “Borrower,” the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several. Each of the Borrowers shall be jointly and severally liable for payment of the Debt and performance of all other obligations of Borrowers (or any of them) under this Agreement or any other Loan Document.
10.25 Creation of Security Interest. Notwithstanding any other provision set forth in this Agreement, the Note, the Mortgages or any of the other Loan Documents, Lender may at any time create a security interest in all or any portion of its rights under this Agreement, the Note, the Mortgages and any other Loan Document (including the advances owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.
10.26 Cross Default; Cross Collateralization. Each Borrower acknowledges that Lender has made the Loan to Borrowers upon the security of its collective interest in the Properties and in reliance upon the aggregate of the Properties taken together being of greater value as collateral security than the sum of the Properties taken separately. Each Borrower agrees that the Mortgages are and will be cross-collateralized and cross-defaulted with each other so that (i) an Event of Default under any of the Mortgages shall constitute an Event of Default under each of the other Mortgages which secure the Note; (ii) an Event of Default under the Note or this Agreement shall constitute an Event of Default under each Mortgage; and (iii) each Mortgage shall constitute security for the Note as if a single blanket lien were placed on all of the Properties as security for the Note.
10.27 Contribution Among Borrowers. Notwithstanding that Borrowers are jointly and severally liable to Lender for payment of the Loan, as among Borrowers, each shall be liable only for such Borrower’s Allocated Amount (as hereinafter defined) and, accordingly, each Borrower whose Property or other assets are, from time to time, utilized to satisfy a portion of the Debt in excess of such Borrower’s Allocated Loan Amount, shall be entitled, commencing 95 days after payment in full of the Debt, to contribution from each of the other Borrowers pro-rata in accordance with their respective liabilities in accordance with this Agreement. The “Allocated
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Amount” for each Borrower shall equal the Allocated Loan Amount for the Property or Properties owned by such Borrower.
10.28 Certain Additional Rights of Lender. Notwithstanding anything to the contrary which may be contained in this Agreement, Lender shall have:
(a) the right to routinely consult with Borrowers’ management regarding the significant business activities and business and financial developments of Borrowers, provided, however, that such consultations shall not include discussions of environmental compliance programs or disposal of Hazardous Substances. Consultation meetings should occur on a regular basis (no less frequently than quarterly) with Lender having the right to call special meetings at any reasonable times;
(b) the right, in accordance with the terms of this Agreement, to examine the books and records of each Borrower at any time upon reasonable notice;
(c) the right, in accordance with the terms of this Agreement, to receive monthly, quarterly and year-end financial reports, including balance sheets, statements of income, shareholders’ equity and cash flow, a management report and schedules of outstanding indebtedness;
(d) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to restrict financing to be obtained with respect to the Properties so long as any portion of the Debt remains outstanding;
(e) the right, without restricting any other right of Lender under this Agreement or the other Loan Documents (including any similar right), to restrict, upon the occurrence of an Event of Default, Borrowers’ payments of management, consulting, director or similar fees to Affiliates of Borrowers from the Rents;
(f) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to approve any acquisition by any Borrower of any other significant property (other than personal property required for the day to day operation of the Property owned by such Borrower); and
(g) the right, without restricting any other rights of Lender under this Agreement (including any similar right), to restrict the transfer of interests in any Borrower held by its members, and the right to restrict the transfer of interests in such member, except for any transfer that is a Permitted Transfer.
The rights described above may be exercised directly or indirectly by any Person that owns substantially all of the ownership interests in Lender. The provisions of this Section are intended to satisfy the requirement of management rights for purposes of the Department of Labor “plan assets” regulation 29 C.F.R., Section 2510.3-101.
10.29 Set-Off. In addition to any rights and remedies of Lender provided by this Agreement and by law, Lender shall have the right in its sole discretion, without prior notice to any Borrower, any such notice being expressly waived by each Borrower to the extent permitted
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by applicable law, upon any amount becoming due and payable by any Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Lender or any Affiliate thereof to or for the credit or the account of Borrowers. Lender agrees promptly to notify Borrowers after any such set-off and application made by Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.
10.30 Intentionally Omitted.
10.31 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.
10.32 Negation of Implied Right to Cure Events of Default. Notwithstanding anything contained in this Agreement or any of the other Loan Documents providing that certain rights, remedies or privileges are only available to Lender during the “continuance” of an Event of Default (or words of similar import), each Borrower expressly acknowledges and agrees that it does not have the right to cure an Event of Default once the same has occurred under this Agreement or any other Loan Document and Lender has delivered Borrowers written notice of such Event of Default, in each case without the consent of Lender, which consent may be withheld, delayed or denied by Lender in its sole and absolute discretion.
10.33 Acknowledgement and Consent to Bail-In of Affected Financial Institutions.
(a) Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among the respective parties thereto, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(i) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(ii) the effects of any Bail-in Action on any such liability, including, if
applicable:
(A) a reduction in full or in part or cancellation of any such liability;
(B) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it
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in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(C) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.
(b) As used in this Section 10.33 the following terms have the following meanings ascribed thereto:
(i) “Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
(ii) “Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
(iii) “Bail-In Legislation” shall mean, (A) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule, and (B) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation, rule, or requirement applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
(iv) “EEA Financial Institution” shall mean (A) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority; (B) any entity established in an EEA Member Country which is a parent of an institution described in clause (A) of this definition, or (C) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (A) or (B) of this definition and is subject to consolidated supervision with its parent.
(v) “EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
(vi) “EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
(vii) “EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
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(viii) “UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
(ix) “UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
(x) “Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
10.34 Registered Obligations.
(a) Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, the Note is, and any other promissory notes issued under the Loan Documents shall be, registered as to both principal and any stated interest.
(b) If Lender sells a participation interest in the Loan, Lender shall, acting solely for this purpose as a non-fiduciary agent of Borrowers, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loan or other obligations under the Loan Documents (the “Participant Register”); provided that Lender shall not have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.
(c) Lender or its designee, acting for this purpose solely as a non-fiduciary agent of Borrowers, shall maintain a register (the “Register”) for the recordation of the name and address of each Lender, the outstanding Principal, accrued and unpaid interest and other fees due
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it hereunder (any such amount a “Borrower Obligation”) and whether such Lender is the original Lender or an assignee pursuant to an assignment under Section 10.21. The Register shall be made available for inspection by Borrowers or Lender at any reasonable time and from time to time upon reasonable prior notice. The entries in the Register shall be conclusive, absent manifest error, and Borrowers and Lender shall treat the Person whose name is recorded in the Register pursuant to the terms hereof as the owner of any Borrower Obligation held by such holder, as indicated in the Register, for all purposes of this Agreement.
10.35 Waiver Respecting Benchmark and Benchmark Replacement. Lender shall not have any liability with respect to, and Borrowers hereby irrevocably waive and release Lender from, and covenants and agrees not to assert any claim against Lender, with respect to (i) the administration of, submission of, calculation of or any other matter related to the Term SOFR Reference Rate or other rates in the definition of “Term SOFR” or with respect to any alternative, comparable or successor rate thereto, or replacement rate thereof (including any then-current Benchmark or any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement reference rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 2.2.3, regardless of whether Term SOFR or any Benchmark Replacement is or will produce similar or dissimilar value or economic equivalence of Term SOFR or any other Benchmark, or have the same volume or liquidity as did the London interbank offered rate or any other Benchmark prior to or after any conversion to a Benchmark Replacement or other rate of interest pursuant to Section 2.2.3, or (ii) the effect, implementation or composition of any Benchmark Conforming Changes.
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.
BORROWERS:
ENVY DEVELOPMENT DE, LLC,
a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
ENVY RECREATIONAL LLC,
a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
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LENDER:
LOANCORE CAPITAL CREDIT REIT LLC,
a Delaware limited liability company
By: /s/ Jason Mergen
Name: Jason Mergen
Title: Managing Director
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This instrument prepared by or under the
direction of and upon recording is to be returned to:
Firsel Ross Gussis & Alexander LLC
10 Parkway North Blvd, Suite 110
Deerfield, IL 60015
Attention: Samuel P. Gussis, Esq.
Space Above This Line For Recorder’s Use
(This space is reserved for Clerk)
NOTICE TO RECORDER: THIS AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (THIS “MORTGAGE”) IS AN AMENDMENT AND RESTATEMENT OF THAT CERTAIN AMENDED AND RESTATED REAL ESTATE MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT DATED AUGUST 29, 2024 MADE BY ENVY DEVELOPMENT DE, LLC (“MORTGAGOR”) IN FAVOR OF FC ENVY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“FC ENVY LENDER”), AND RECORDED ON SEPTEMBER 5, 2024 AS INSTRUMENT NO. 119780564 OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA (THE “PUBLIC RECORDS”), AS ASSIGNED FROM FC ENVY LENDER TO AMERANT BANK, N.A. (“AMERANT”) PURSUANT TO THAT CERTAIN ASSIGNMENT OF NOTE, MORTGAGE AND SECURITY AGREEMENT AND FIXTURE FILING AND OTHER DOCUMENTS DATED SEPTEMBER 27, 2024, AS SUBSEQUENTLY ASSIGNED FROM AMERANT TO FORMAN OPERATING COMPANY LLC, A DELAWARE LIMITED LIABILITY COMPANY (“FORMAN LENDER”) PURSUANT TO THAT CERTAIN ASSIGNMENT OF NOTE, MORTGAGE AND SECURITY AGREEMENT AND FIXTURE FILING AND OTHER DOCUMENTS RECORDED ON JULY 1, 2026 AS INSTRUMENT NO. 120957306 OF THE PUBLIC RECORDS, AND AS SUBSEQUENTLY ASSIGNED FROM FORMAN LENDER TO FC POMPANO A NOTE BH, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“EXISTING LENDER”) PURSUANT TO THAT CERTAIN ASSIGNMENT OF AMENDED AND RESTATED REAL ESTATE MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT RECORDED ON JULY 13, 2026 AS INSTRUMENT NO. 120978497 OF THE PUBLIC RECORDS (COLLECTIVELY, THE “EXISTING MORTGAGE”).
PRIOR TO THE DATE HEREOF, THE EXISTING MORTGAGE SECURED AN AMENDED AND RESTATED PROMISSORY NOTE DATED AUGUST 29, 2024, IN THE ORIGINAL PRINCIPAL AMOUNT OF $55,219,985.00, EXECUTED BY MORTGAGOR IN FAVOR OF FC ENVY LENDER, AS ASSIGNED FROM FC ENVY LENDER TO AMERANT PURSUANT TO THAT CERTAIN ALLONGE DATED SEPTEMBER 27, 2024, AS SUBSEQUENTLY ASSIGNED FROM AMERANT TO FORMAN LENDER PURSUANT TO THAT CERTAIN ALLONGE DATED JUNE 30, 2026, AND AS SUBSEQUENTLY ASSIGNED FROM TO FORMAN LENDER TO EXISTING LENDER PURSUANT TO THAT CERTAIN ALLONGE DATED JULY 10, 2026 (COLLECTIVELY, THE “EXISTING NOTE”). ALL REQUIRED FLORIDA DOCUMENTARY STAMP TAXES AND INTANGIBLE TAXES PAYABLE WITH RESPECT TO THE EXISTING NOTE WERE PAID, AND EVIDENCE OF SUCH PAYMENTS WAS NOTED, ON THE EXISTING MORTGAGE UPON RECORDATION THEREOF IN THE PUBLIC RECORDS.
AS OF EVEN DATE HEREWITH, THE EXISTING MORTGAGE HAS BEEN ASSIGNED FROM EXISTING LENDER TO LOANCORE CAPITAL CREDIT REIT LLC, A DELAWARE LIMITED LIABILITY COMPANY (“MORTGAGEE”) PURSUANT TO AN ASSIGNMENT OF MORTGAGE TO BE RECORDED IN THE PUBLIC RECORDS IMMEDIATELY PRIOR TO THE RECORDING OF THIS MORTGAGE AND THE EXISTING NOTE HAS BEEN ASSIGNED FROM EXISTING LENDER TO MORTGAGEE PURSUANT TO AN ALLONGE DATED AS OF EVEN DATE HEREWITH.
ON THE DATE HEREOF, MORTGAGOR HAS EXECUTED IN FAVOR OF MORTGAGEE (I) THAT CERTAIN AMENDED AND RESTATED RENEWAL PROMISSORY NOTE, DATED THE DATE HEREOF, MADE BY MORTGAGOR TO MORTGAGEE IN THE PRINCIPAL AMOUNT OF $47,700,000.00 (AS THE SAME MAY BE AMENDED, MODIFIED, RESTATED, SEVERED, CONSOLIDATED, RENEWED, REPLACED, OR
SUPPLEMENTED FROM TIME TO TIME, THE “NOTE”), EVIDENCING THE RENEWAL, AMENDMENT AND RESTATEMENT OF THE EXISTING NOTE AND THE CONSOLIDATION OF (I) THE $44,557,435.93 OUTSTANDING PRINCIPAL BALANCE OF THE EXISTING NOTE, PLUS (II) A FUTURE ADVANCE TO BE MADE TO MORTGAGOR IN THE PRINCIPAL AMOUNT OF $3,142,564.07 (THE “FUTURE ADVANCE”). THE NOTE IS SECURED BY, INTER ALIA, THIS MORTGAGE.
FLORIDA DOCUMENTARY STAMP TAX IN THE AMOUNT OF $10,999.10 AND INTANGIBLE TAX IN THE AMOUNT OF $6,285.13, DUE IN CONNECTION WITH THE FUTURE ADVANCE, ARE BEING PAID AT THE TIME OF THE RECORDING OF THIS MORTGAGE IN THE PUBLIC RECORDS, PURSUANT TO FLORIDA STATUTES SECTION 201.09 AND FLORIDA STATUTES SECTION 199.145(4(B)).
ENVY DEVELOPMENT DE, LLC
(Mortgagor)
to
LOANCORE CAPITAL CREDIT REIT LLC
(Mortgagee)
AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
Dated: As of September 23, 2026
Property Location: 425-475 E. Atlantic Blvd., Pompano Beach, Broward County, Florida 33060
NOTE TO CLERK: THIS AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING IS TO BE FILED AND INDEXED AS A FIXTURE FILING UNDER THE FLORIDA UNIFORM COMMERCIAL CODE IN THE REAL ESTATE RECORDS AND IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS UNDER THE NAMES OF MORTGAGOR, AS “DEBTOR”, AND MORTGAGEE, AS “SECURED PARTY”.
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This AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this“Mortgage”), made as of September 23, 2026, by ENVY DEVELOPMENT DE, LLC , a Delaware limited liability company, having an office at 4350 NW 8th Court, Suite A, Plantation, Florida 33317 (“Mortgagor”), to LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company (together with its successors and assigns, hereinafter referred to as “Mortgagee”), having an address c/o LoanCore Capital, 55 Railroad Avenue, Suite 100, Greenwich, Connecticut 06830.
WHEREAS, Mortgagor, Envy Recreational LLC, a Delaware limited liability company (“Envy Recreational”), and Mortgagee have entered into a Loan Agreement dated as of the date hereof (as amended, modified, restated, consolidated or supplemented from time to time, the “Loan Agreement”) pursuant to which Mortgagee is making a secured loan to Mortgagor and Envy Recreational in the original principal amount of FORTY-SEVEN MILLION SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS ($47,700,000.00) (the “Loan”), which initially matures on October 9, 2028, subject to extension rights contained in the Loan Agreement. Capitalized terms used herein without definition are used as defined in the Loan Agreement.
WHEREAS, FC Envy, LLC, a Delaware limited liability company (“Original Mortgagee”), made a mortgage loan to Mortgagor, which loan was evidenced by that certain Amended and Restated Promissory Note dated August 29, 2024, in the original principal amount of $55,219,985.00 (the “Prior Note”), which mortgage loan was thereafter assigned (through one or more assignments) by Original Mortgagee to FC Pompano A Note BH, LLC, a Delaware limited liability company (“Existing Lender”).
WHEREAS, the Prior Note is secured by, inter alia, that certain Amended and Restated Real Estate Mortgage, Assignment of Leases and Rents and Security Agreement from Mortgagor in favor of Original Lender, recorded under Instrument No.119780564, of the Public Records of Broward County, Florida, as subsequently assigned (through one or more assignments) to Existing Lender (the “Prior Mortgage”).
WHEREAS, the principal balance outstanding under the Prior Note is $44,557,435.93.
WHEREAS, contemporaneously herewith, Existing Lender has assigned the Prior Note and the Prior Mortgage to Mortgagee, pursuant to (a) that certain Allonge made by Existing Lender in favor of Mortgagee and (b) that certain Assignment of Mortgage, made by Existing Lender to Mortgagee, recorded immediately prior to the recordation of this Mortgage, with the recorder’s office in Broward County, Florida.
WHEREAS, contemporaneously herewith, Mortgagor has executed and delivered to Mortgagee that certain Amended and Restated Promissory Note dated of even date herewith in the original principal amount of FORTY-SEVEN MILLION SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS ($47,700,000.00) (hereinafter, together with any and all extensions, renewals, modifications, replacements, substitutions, and any and all other certificates or evidence of indebtedness evidenced by said Amended and Restated Renewal Promissory Note, referred to as the “Note”, which Note has an initial maturity date of October 9, 2028 (as the same may be
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extended or changed pursuant to the Loan Agreement). The Note is by reference made a part thereof. The Note is given, in part, to renew the Prior Note.
WHEREAS, Mortgagor and Mortgagee now desire to amend, restate and renew the Prior Mortgage in its entirety so the Prior Mortgage, as amended and restated herein, shall secure the Loan outstanding from time to time under the Note and the observance and performance by Mortgagor of the terms and conditions and covenants and agreements of Mortgagor in the Loan Documents (as hereinafter defined).
NOW, THEREFORE, in consideration of the grants, agreements, provisions and covenants herein contained, Mortgagee (by its acceptance hereof) and Mortgagor agree to amend, restate and renew the Prior Mortgage, in its entirety, as follows:
GRANTING CLAUSE
In order to secure the payment of the Note and all sums which may or shall become due thereunder or under any of the other documents evidencing, securing or executed in connection with the Loan (the Note, this Mortgage, the Loan Agreement and such other documents, as any of the same may, from time to time, be modified, amended or supplemented, being hereinafter collectively referred to as the “Loan Documents”), including (i) the payment of interest and other amounts which would accrue and become due but for the filing of a petition in bankruptcy (whether or not a claim is allowed against Mortgagor for such interest or other amounts in any such bankruptcy proceeding) or the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code (the “Bankruptcy Code”), and (ii) the costs and expenses of enforcing any provision of any Loan Document (all such sums being hereinafter collectively referred to as the “Debt”), Mortgagor hereby irrevocably mortgages, grants, bargains, sells, conveys, transfers, pledges, sets over and assigns, and grants a security interest, to and in favor of Mortgagee, all of Mortgagor’s right, title and interest in and to (i) the land described in Exhibit A (the “Premises”), and (ii) the buildings, structures, fixtures and other improvements now or hereafter located thereon (the “Improvements”);
TOGETHER WITH: all right, title, interest and estate of Mortgagor now owned, or hereafter acquired, in and to the following property, rights, interests and estates (the Premises, the Improvements, and the property, rights, interests and estates hereinafter described are collectively referred to herein as the “Mortgaged Property”):
(a) all easements, rights-of-way, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, rights to oil, gas, minerals, coal and other substances of any kind or character, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to the Premises and the Improvements; the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road, highway, alley or avenue, opened, vacated or proposed, in front of or adjoining the Premises, to the center line thereof; and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Mortgagor of, in and to the Premises and the Improvements and every part and parcel thereof, with the appurtenances thereto;
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(b) all machinery, furniture, furnishings, equipment, computer software and hardware, fixtures (including all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), inventory, materials, supplies and other articles of personal property and accessions thereof, renewals and replacements thereof and substitutions therefor, and other property of every kind and nature, tangible or intangible, owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter located upon the Premises or the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Premises and the Improvements (hereinafter collectively referred to as the “Equipment”), including any leases of, deposits in connection with, and proceeds of any sale or transfer of any of the foregoing, and the right, title and interest of Mortgagor in and to any of the Equipment that may be subject to any “security interest” as defined in the Uniform Commercial Code, as in effect in the State where the Mortgaged Property is located (the “UCC”), superior in lien to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, that may heretofore or hereafter be made with respect to the Premises or the Improvements, whether from the exercise of the right of eminent domain or condemnation (including any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Premises or Improvements, subject to the terms of the Loan Agreement;
(d) to the maximum extent assignable, all leases, subleases and other agreements or arrangements heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the Premises or the Improvements, including any extensions, renewals, modifications or amendments thereof (hereinafter collectively referred to as the “Leases”) and all rents, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a Bankruptcy Proceeding or in lieu of rent or rent equivalents), royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Mortgagor or its agents or employees from any and all sources arising from or attributable to the Premises and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Premises or the Improvements, or rendering of services by Mortgagor or any of its agents or employees, and proceeds, if any, from business interruption or other loss of income insurance (hereinafter collectively referred to as the “Rents”), together with all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt;
(e) all proceeds of and any unearned premiums on any insurance policies covering the Mortgaged Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Mortgaged Property, subject to the terms of the Loan Agreement;
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(f) the right, in the name and on behalf of Mortgagor, to appear in and defend any action or proceeding brought with respect to the Mortgaged Property and to commence any action or proceeding to protect the interest of Mortgagee in the Mortgaged Property;
(g) any interest rate protection arrangement to which Mortgagor is a party and all agreements, instruments, documents and contracts now or hereafter entered into by Mortgagor with respect to any such interest rate protection arrangement;
(h) all accounts (including reserve accounts), escrows, documents, instruments, chattel paper, claims, deposits and general intangibles, as the foregoing terms are defined in the UCC, and all franchises, trade names, trademarks, symbols, service marks, books, records, plans, specifications, designs, drawings, surveys, title insurance policies, permits, certificates of use and occupancy (or their equivalent), consents, licenses, management agreements, leasing agreements, contract rights (including any contract with any architect or engineer or with any other provider of goods or services for or in connection with any construction, repair or other work upon the Mortgaged Property), approvals, actions, refunds of real estate taxes and assessments (and any other governmental impositions related to the Mortgaged Property) and causes of action that now or hereafter relate to, are derived from or are used in connection with the Mortgaged Property, or the construction, use, operation, maintenance, occupancy or enjoyment thereof or the conduct of any business or activities thereon (hereinafter collectively referred to as the “Intangibles”);
(i) all reciprocal easement or operating agreements, declarations, development agreements, developer’s or utility agreements, and any similar such agreements or declarations now or hereafter affecting the Mortgaged Property or any part thereof; and
(j) all proceeds, products, offspring, rents and profits from any of the foregoing, including those from sale, exchange, transfer, collection, loss, damage, disposition, substitution or replacement of any of the foregoing.
Without limiting the generality of any of the foregoing, in the event that a case under the Bankruptcy Code is commenced by or against Mortgagor, pursuant to Section 552(b)(2) of the Bankruptcy Code, the security interest granted by this Mortgage shall automatically extend to all Rents acquired by the Mortgagor after the commencement of the case and shall constitute cash collateral under Section 363(a) of the Bankruptcy Code.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in the manner provided in the Loan Documents and shall well and truly abide by and comply with each and every covenant and condition set forth in the Loan Documents in a timely manner, these presents and the estate hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and covenants and agrees with Mortgagee as follows:
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PART I - GENERAL PROVISIONS
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements. Mortgagor shall pay the Debt at the time and in the manner provided in the Loan Documents. All the covenants, conditions and agreements contained in the Loan Documents are hereby made a part of this Mortgage to the same extent and with the same force as if fully set forth herein. Without limiting the generality of the foregoing, Mortgagor (i) agrees to insure, repair, maintain and restore damage to the Mortgaged Property, pay Taxes and Other Charges, and comply with Legal Requirements, in accordance with the Loan Agreement, and (ii) agrees that the Proceeds of Insurance and Awards for Condemnation shall be settled, held and applied in accordance with the Loan Agreement.
2. Leases and Rents.
(a) Mortgagor does hereby absolutely and unconditionally assign to Mortgagee all of Mortgagor’s right, title and interest in all current and future Leases and Rents, it being intended by Mortgagor that this assignment constitutes a present, absolute assignment, and not an assignment for additional security only. Such assignment shall not be construed to bind Mortgagee to the performance of any of the covenants or provisions contained in any Lease or otherwise impose any obligation upon Mortgagee. Nevertheless, subject to the terms of this paragraph, Mortgagee grants to Mortgagor a revocable license to operate and manage the Mortgaged Property and to collect, receive, use and enjoy the Rents and otherwise act as owner under the Agreements in respect of the Property, the Rents subject to the requirements of the Loan Agreement (including the deposit of Rents into the Clearing Account). During the existence of an Event of Default, without the need for notice or demand, the license granted to Mortgagor herein shall automatically be revoked, and Mortgagee shall immediately be entitled to possession of all Rents in the Clearing Account, the Cash Management Account (including all Subaccounts thereof) and all Rents collected thereafter (including Rents past due and unpaid), whether or not Mortgagee enters upon or takes control of the Mortgaged Property. Mortgagor hereby grants and assigns to Mortgagee the right, at its option, upon revocation of the license granted herein, to enter upon the Mortgaged Property in person, by agent or by court-appointed receiver to collect the Rents. Any Rents collected after the revocation of such license may be applied toward payment of the Debt in such priority and proportions as Mortgagee in its sole discretion shall deem proper. If any such Event of Default is cured by Mortgagor and Mortgagee accepts such cure in writing, the license set forth in this Section 2(a) shall be automatically reinstated and the rights granted to Mortgagee due to such Event of Default shall automatically terminate without the execution of any further instrument or document. The assignment of rents contained in this Mortgage is intended to and does constitute an assignment of rents as contemplated in Florida Statutes Section 697.07.
(b) Mortgagor shall not enter into, modify, amend, cancel, terminate or renew any Lease except as provided in Section 5.10 of the Loan Agreement.
3. Use of Mortgaged Property. Mortgagor shall not initiate, join in or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Mortgaged Property. If under applicable zoning provisions the use of the Mortgaged Property is or shall become a nonconforming use, Mortgagor shall not cause or permit such nonconforming use to be discontinued or abandoned
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without the consent of Mortgagee. Mortgagor shall not (i) change the use of the Mortgaged Property, (ii) permit or suffer to occur any waste on or to the Mortgaged Property or (iii) take any steps to convert the Mortgaged Property to a condominium or cooperative form of ownership.
4. Transfer or Encumbrance of the Mortgaged Property.
(a) Mortgagor acknowledges that (i) Mortgagee has examined and relied on the creditworthiness and experience of the principals of Mortgagor in owning and operating properties such as the Mortgaged Property in agreeing to make the Loan, (ii) Mortgagee will continue to rely on Mortgagor’s ownership of the Mortgaged Property as a means of maintaining the value of the Mortgaged Property as security for the Debt, and (iii) Mortgagee has a valid interest in maintaining the value of the Mortgaged Property so as to ensure that, should Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt by a sale of the Mortgaged Property. Mortgagor shall not sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the Mortgaged Property or any part thereof, or suffer or permit any Transfer to occur, other than a Permitted Transfer.
(b) Mortgagee shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon Transfer in violation of this Paragraph 4. This provision shall apply to every sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property (and every other Transfer) regardless of whether voluntary or not. Any Transfer made in contravention of this Paragraph 4 shall be null and void and of no force and effect. Mortgagor agrees to bear and shall pay or reimburse Mortgagee on demand for all reasonable expenses (including reasonable attorneys’ fees and disbursements, title search costs and title insurance endorsement premiums) incurred by Mortgagee in connection with the review, approval and documentation of any Permitted Transfer.
5. Changes in Laws Regarding Taxation. If any law is enacted or adopted or amended after the date of this Mortgage which deducts the Debt from the value of the Mortgaged Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Mortgagee’s interest in the Mortgaged Property, Mortgagor will pay such tax, with interest and penalties thereon, if any. If Mortgagee is advised by its counsel that the payment of such tax or interest and penalties by Mortgagor would be unlawful, taxable to Mortgagee or unenforceable, or would provide the basis for a defense of usury, then Mortgagee shall have the option, by notice of not less than 90 days, to declare the Debt immediately due and payable.
6. No Credits on Account of the Debt. Mortgagor shall not claim or demand or be entitled to any credit on account of the Debt for any part of the Taxes or Other Charges assessed against the Mortgaged Property, and no deduction shall otherwise be made or claimed from the assessed value of the Mortgaged Property for real estate tax purposes by reason of this Mortgage or the Debt. If such claim, credit or deduction shall be required by law, Mortgagee shall have the option, by notice of not less than 90 days, to declare the Debt immediately due and payable.
7. Further Acts, Etc. Mortgagor shall, at its sole cost, perform, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as Mortgagee shall, from time to time,
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require, for the better assuring, conveying, assigning, transferring, and confirming unto Mortgagee the property and rights hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated or intended now or hereafter so to be, or which Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee, or for carrying out the intention or facilitating the performance of the terms of this Mortgage, or for filing, registering or recording this Mortgage or for facilitating the sale and transfer of the Loan (or any portion thereof) and the Loan Documents in connection with a “Secondary Market Transaction” as described in Section 9.1 of the Loan Agreement. Upon foreclosure, the appointment of a receiver or any other relevant action, Mortgagor shall, at its sole cost, cooperate fully and completely to effect the assignment or transfer of any license, permit, agreement or any other right necessary or useful to the operation of the Mortgaged Property. Upon the occurrence and during the continuance of an Event of Default, then Mortgagor shall be deemed to grant Mortgagee an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Mortgagee at law and in equity, including such rights and remedies available to Mortgagee pursuant to this paragraph. Notwithstanding anything to the contrary in the immediately preceding sentence, Mortgagee shall not execute any document as attorney-in-fact of Mortgagor unless (x) Mortgagor shall have failed or refused to execute the same within five (5) Business Days after Mortgagee’s request therefor, or (y) in Mortgagee’s good faith determination it would be materially prejudiced by the delay involved in making such a request. Mortgagee shall give prompt notice to Mortgagor of any exercise of the power of attorney as provided for in this Paragraph 7, along with copies of all documents executed in connection therewith.
8. Recording of Mortgage, Etc. Mortgagor forthwith upon the execution and delivery of this Mortgage and thereafter, from time to time, shall cause this Mortgage, and any security instrument creating a lien or security interest or evidencing the lien hereof upon the Mortgaged 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 fully to protect the lien or security interest hereof upon, and the interest of Mortgagee in, the Mortgaged Property. Mortgagor shall pay all filing, registration or recording fees, all expenses incident to the preparation, execution and acknowledgment of and all federal, state, county and municipal, taxes, duties, imposts, documentary stamps, assessments and charges arising out of or in connection with the execution and delivery of, this Mortgage, any Mortgage supplemental hereto, any security instrument with respect to the Mortgaged Property or any instrument of further assurance, except where prohibited by law so to do. Mortgagor shall hold harmless and indemnify Mortgagee, its successors and assigns, against any liability incurred by reason of the imposition of any tax on the making or recording of this Mortgage.
9. Right to Cure Defaults. Upon the occurrence and during the continuance of any Event of Default, Mortgagee may, but without any obligation to do so and without notice to or demand on Mortgagor and without releasing Mortgagor from any obligation hereunder, perform the obligations in Default in such manner and to such extent as Mortgagee may deem necessary to protect the security hereof. Mortgagee is authorized to enter upon the Mortgaged Property for such purposes or appear in, defend or bring any action or proceeding to protect its interest in the Mortgaged Property or to foreclose this Mortgage or collect the Debt, and the out-of-pocket cost and expense thereof (including reasonable attorneys’ fees and disbursements to the extent permitted by law), with interest thereon at the Default Rate for the period after notice from
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Mortgagee that such cost or expense was incurred to the date of payment to Mortgagee, shall constitute a portion of the Debt, shall be secured by this Mortgage and the other Loan Documents and shall be due and payable to Mortgagee upon written demand.
10. Remedies.
(a) Upon the occurrence and during the continuance of any Event of Default, Mortgagee may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Mortgagor and in and to the Mortgaged Property, by Mortgagee itself or otherwise, including the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Mortgagee may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Mortgagee:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute a proceeding or proceedings, judicial or nonjudicial, to the extent permitted by law, by advertisement or otherwise, for the complete foreclosure of this Mortgage, in which case the Mortgaged Property may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;
(iii) with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Mortgage for the portion of the Debt then due and payable, subject to the continuing lien of this Mortgage for the balance of the Debt not then due;
(iv) sell for cash or upon credit the Mortgaged Property and all estate, claim, demand, right, title and interest of Mortgagor therein and rights of redemption thereof, pursuant to the power of sale, to the extent permitted by applicable law, or otherwise, at one or more sales, as an entirety or in parcels constituting single tax parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law;
(v) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein or in any other Loan Document;
(vi) recover judgment on the Note either before, during or after any proceeding for the enforcement of this Mortgage;
(vii) apply for the appointment of a trustee, receiver, liquidator or conservator of the Mortgaged Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of the Mortgagor or of any person, firm or other entity liable for the payment of the Debt;
(viii) enforce Mortgagee’s interest in the Leases and Rents and enter into or upon the Mortgaged Property, either personally or by its agents, nominees or attorneys and dispossess Mortgagor and its agents and employees therefrom, and thereupon Mortgagee may (A) use, operate, manage, control, insure, maintain, repair, restore and
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otherwise deal with the Mortgaged Property and conduct the business thereat; (B) complete any construction on the Mortgaged Property in such manner and form as Mortgagee deems advisable; (C) make alterations, additions, renewals, replacements and improvements to or on the Mortgaged Property; (D) exercise all rights and powers of Mortgagor with respect to the Mortgaged Property, whether in the name of Mortgagor or otherwise, including the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive Rents; and (E) apply the receipts from the Mortgaged Property to the payment of the Debt, after deducting therefrom all expenses (including reasonable attorneys’ fees and disbursements) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, insurance and other charges in connection with the Mortgaged Property, as well as just and reasonable compensation for the services of Mortgagee, and its counsel, agents and employees;
(ix) require Mortgagor to pay monthly in advance to Mortgagee, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of any portion of the Mortgaged Property occupied by Mortgagor, and require Mortgagor to vacate and surrender possession of the Mortgaged Property to Mortgagee or to such receiver, and, in default thereof, evict Mortgagor by summary proceedings or otherwise; or
(x) pursue such other rights and remedies as may be available at law or in equity or under the UCC, including the right to receive and/or establish a lock box for all Rents and proceeds from the Intangibles and any other receivables or rights to payments of Mortgagor relating to the Mortgaged Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the Mortgaged Property, this Mortgage shall continue as a lien on the remaining portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this Paragraph 10, together with any other sums which then may be held by Mortgagee under this Mortgage, whether under the provisions of this paragraph or otherwise, shall be applied by Mortgagee to the payment of the Debt in such priority and proportion as Mortgagee in its sole discretion shall deem proper.
(c) Mortgagee may adjourn from time to time any sale by it to be made under or by virtue of this Mortgage by announcement at the time and place appointed for such sale or for such adjourned sale or sales; and, except as otherwise provided by any applicable law, Mortgagee, without further notice or publication, may make such sale at the time and place to which the same shall be so adjourned.
(d) Upon the completion of any sale or sales pursuant hereto, Mortgagee, or an officer of any court empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient instrument, or good and sufficient instruments, conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold. Mortgagee is hereby irrevocably appointed the true and lawful attorney of Mortgagor, in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the Mortgaged Property and rights so sold and for that purpose Mortgagee may execute all necessary instruments of conveyance, assignment and transfer, and may substitute one or more persons with
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like power, Mortgagor hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof. Any sale or sales made under or by virtue of this Paragraph 10, whether made under the power of sale herein granted (to the extent permitted by applicable law) or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of Mortgagor in and to the properties and rights so sold, and shall be a perpetual bar both at law and in equity against Mortgagor and against any and all persons claiming or who may claim the same, or any part thereof, from, through or under Mortgagor.
(e) Upon any sale made under or by virtue of this Paragraph 10, whether made under a power of sale (to the extent permitted by applicable law) or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Debt the net sales price after deducting therefrom the expenses of the sale and costs of the action and any other sums which Mortgagee is authorized to deduct under this Mortgage or any other Loan Document.
(f) No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Mortgaged Property or upon any other property of Mortgagor shall affect in any manner or to any extent the lien of this Mortgage upon the Mortgaged Property or any part thereof, or any liens, rights, powers or remedies of Mortgagee hereunder, but such liens, rights, powers and remedies of Mortgagee shall continue unimpaired as before.
(g) Mortgagee may terminate or rescind any proceeding or other action brought in connection with its exercise of the remedies provided in this Paragraph 10 at any time before the conclusion thereof, as determined in Mortgagee’s sole discretion and without prejudice to Mortgagee.
(h) Mortgagee may resort to any remedies and the security given by this Mortgage or in any other Loan Document in whole or in part, and in such portions and in such order as determined by Mortgagee’s sole discretion. No such action shall in any way be considered a waiver of any rights, benefits or remedies evidenced or provided by any Loan Document. The failure of Mortgagee to exercise any right, remedy or option provided in any Loan Document shall not be deemed a waiver of such right, remedy or option or of any covenant or obligation secured by any Loan Document. No acceptance by Mortgagee of any payment after the occurrence of any Event of Default and no payment by Mortgagee of any obligation for which Mortgagor is liable hereunder shall be deemed to waive or cure any Event of Default, or Mortgagor’s liability to pay such obligation. No sale of all or any portion of the Mortgaged Property, no forbearance on the part of Mortgagee, and no extension of time for the payment of the whole or any portion of the Debt or any other indulgence given by Mortgagee to Mortgagor, shall operate to release or in any manner affect the interest of Mortgagee in the remaining Mortgaged Property or the liability of Mortgagor to pay the Debt. No waiver by Mortgagee shall be effective unless it is in writing and then only to the extent specifically stated. All costs and expenses of Mortgagee in exercising its rights and remedies under this Paragraph 10 (including reasonable attorneys’ fees and disbursements to the extent permitted by law), shall be paid by Mortgagor immediately upon notice from Mortgagee, with interest at the Default Rate for the period after notice from Mortgagee, and
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such costs and expenses shall constitute a portion of the Debt and shall be secured by this Mortgage.
(i) The interests and rights of Mortgagee under the Loan Documents shall not be impaired by any indulgence, including (x) any renewal, extension or modification which Mortgagee may grant with respect to any of the Debt, (y) any surrender, compromise, release, renewal, extension, exchange or substitution which Mortgagee may grant with respect to the Mortgaged Property or any portion thereof or (z) any release or indulgence granted to any maker, endorser, guarantor or surety of any of the Debt.
11. Right of Entry. In addition to any other rights or remedies granted under this Mortgage, Mortgagee and its agents shall have the right to enter upon reasonable prior notice to Mortgagor (so long as no Event of Default is continuing) and inspect the Mortgaged Property during business hours on Business Days, subject to the rights of Tenants under Leases during the term of this Mortgage. The actual out-of-pocket cost of such inspections or audits shall be borne by Mortgagor should Mortgagee determine that an Event of Default exists, including the cost of all follow up or additional investigations or inquiries deemed reasonably necessary by Mortgagee. The cost of such inspections, if not paid for by Mortgagor following ten (10) Business Days written demand, may be added to the principal balance of the sums due under the Note and this Mortgage and shall bear interest thereafter until paid at the Default Rate.
12. Security Agreement. This Mortgage is both a real property mortgage and a “security agreement” within the meaning of the UCC. The Mortgaged Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Mortgagor in the Mortgaged Property. Mortgagor by executing and delivering this Mortgage has granted and hereby grants to Mortgagee, as security for the Debt, a security interest in the Mortgaged Property to the full extent that the Mortgaged Property may be subject to the UCC (such portion of the Mortgaged Property so subject to the UCC being called in this paragraph the “Collateral”). The foregoing sentence is intended to grant in favor of Mortgagee a first priority continuing lien and security interest in all of Mortgagor’s assets. Mortgagor authorizes Mortgagee and its counsel to file UCC financing statements in form and substance satisfactory to Mortgagee, describing the collateral as “all assets of Mortgagor, whether now owned or existing or hereafter acquired or arising and wheresoever located, and all proceeds and products thereof, including, without limitation, all fixtures on the Premises” or words to that effect, and any limitations on such collateral description, notwithstanding that such collateral description may be broader in scope than the Collateral described in this Mortgage. This Mortgage shall also constitute a “fixture filing” for the purposes of the UCC. As such, this Mortgage covers all items of the Collateral that are or are to become fixtures. Information concerning the security interest herein granted may be obtained from the parties at the addresses of the parties set forth in the first paragraph of this Mortgage. If an Event of Default shall occur, Mortgagee, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the UCC, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such other measures as Mortgagee may deem necessary for the care, protection and preservation of the Collateral. Upon request or demand of Mortgagee, Mortgagor shall at its expense assemble the Collateral and make it available to Mortgagee at a convenient place acceptable to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all
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expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Mortgagee in protecting the interest in the Collateral and in enforcing the rights hereunder with respect to the Collateral. Any notice of sale, disposition or other intended action by Mortgagee with respect to the Collateral, sent to Mortgagor in accordance with the provisions hereof at least ten days prior to such action, shall constitute commercially reasonable notice to Mortgagor. The proceeds of any disposition of the Collateral, or any part thereof, may be applied by Mortgagee to the payment of the Debt in such priority and proportions as Mortgagee in its sole discretion shall deem proper. In the event of any change in name, identity or structure of Mortgagor, Mortgagor shall notify Mortgagee thereof and promptly after request shall execute, file and record such UCC forms as are necessary to maintain the priority of Mortgagee’s lien upon and security interest in the Collateral, and shall pay all expenses and fees in connection with the filing and recording thereof. If Mortgagee shall require the filing or recording of additional UCC forms or continuation statements, Mortgagor shall, promptly after request, execute, file and record such UCC forms or continuation statements as Mortgagee shall deem necessary, and shall pay all expenses and fees in connection with the filing and recording thereof, it being understood and agreed, however, that no such additional documents shall increase Mortgagor’s obligations under the Loan Documents.
13. Actions and Proceedings. Mortgagee has the right to appear in and defend any action or proceeding brought with respect to the Mortgaged Property and to bring any action or proceeding, in the name and on behalf of Mortgagor, which Mortgagee, in its sole discretion, decides should be brought to protect its or their interest in the Mortgaged Property. Mortgagee shall, at its option, be subrogated to the lien of any mortgage or other security instrument discharged in whole or in part by the Debt, and any such subrogation rights shall constitute additional security for the payment of the Debt.
14. Marshalling and Other Matters. Mortgagor hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Mortgaged Property or any part thereof or any interest therein. Further, Mortgagor hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Mortgage on behalf of Mortgagor, and on behalf of each and every person acquiring any interest in or title to the Mortgaged Property subsequent to the date of this Mortgage and on behalf of all persons to the extent permitted by applicable law. The lien of this Mortgage shall be absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever of Mortgagee and, without limiting the generality of the foregoing, the lien hereof shall not be impaired by (i) any acceptance by Mortgagee of any other security for any portion of the Debt, (ii) any failure, neglect or omission on the part of Mortgagee to realize upon or protect any portion of the Debt or any collateral security therefor or (iii) any release (except as to the property released), sale, pledge, surrender, compromise, settlement, renewal, extension, indulgence, alteration, changing, modification or disposition of any portion of the Debt or of any of the collateral security therefor; and Mortgagee may foreclose, or exercise any other remedy available to Mortgagee under other Loan Documents without first exercising or enforcing any of its remedies under this Mortgage, and any exercise of the rights and remedies of Mortgagee hereunder shall not in any manner impair the Debt or the liens of any other Loan Document or any of Mortgagee’s rights and remedies thereunder.
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15. Notices. All notices, consents, approvals and requests required or permitted hereunder shall be in writing, and shall be sent, and shall be deemed effective, as provided in the Loan Agreement.
16. Inapplicable Provisions. If any term, covenant or condition of this Mortgage is held to be invalid, illegal or unenforceable in any respect, this Mortgage shall be construed without such provision.
17. Headings. The paragraph headings in this Mortgage 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. This Mortgage may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original.
19. Definitions. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Mortgage may be used interchangeably in singular or plural form; and the word “Mortgagor” shall mean “each Mortgagor and any subsequent owner or owners of the Mortgaged Property or any part thereof or any interest therein,” the word “Mortgagee” shall mean “Mortgagee and any subsequent holder of the Note,” the words “Mortgaged Property” shall include any portion of the Mortgaged Property and any interest therein, the word “including” means “including but not limited to” and the words “attorneys’ fees” shall include any and all attorneys’ fees, paralegal and law clerk fees, including fees at the pre-trial, trial and appellate levels incurred or paid by Mortgagee in protecting its interest in the Mortgaged Property and Collateral and enforcing its rights hereunder.
20. Homestead. Mortgagor hereby waives and renounces all homestead and exemption rights provided by the Constitution and the laws of the United States and of any state, in and to the Mortgaged Property as against the collection of the Debt, or any part thereof.
21. Assignments. Mortgagee shall have the right to assign or transfer its rights under this Mortgage without limitation pursuant to the terms of the Loan Agreement. Any assignee or transferee shall be entitled to all the benefits afforded Mortgagee under this Mortgage.
22. Waiver of Jury Trial. MORTGAGOR (AND MORTGAGEE BY ACCEPTANCE HEREOF) 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 MORTGAGE 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 MORTGAGOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. MORTGAGEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY MORTGAGOR.
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23. Consents. Any consent or approval by Mortgagee in any single instance shall not be deemed or construed to be Mortgagee’s consent or approval in any like matter arising at a subsequent date, and the failure of Mortgagee to promptly exercise any right, power, remedy, consent or approval provided herein or at law or in equity shall not constitute or be construed as a waiver of the same nor shall Mortgagee be estopped from exercising such right, power, remedy, consent or approval at a later date. Any consent or approval requested of and granted by Mortgagee pursuant hereto shall be narrowly construed to be applicable only to Mortgagor and the matter identified in such consent or approval and no third party shall claim any benefit by reason thereof, and any such consent or approval shall not be deemed to constitute Mortgagee a venturer or partner with Mortgagor nor shall privity of contract be presumed to have been established with any such third party. If Mortgagee deems it to be in its best interest to retain assistance of persons, firms or corporations (including attorneys, title insurance companies, appraisers, engineers and surveyors) with respect to a request for consent or approval, Mortgagor shall reimburse Mortgagee for all costs reasonably incurred in connection with the employment of such persons, firms or corporations.
24. Loan Repayment. Provided no Event of Default exists, this Mortgage will be satisfied and discharged of record by Mortgagee prior to the Maturity Date only in accordance with the terms and provisions set forth in the Loan Agreement.
25. Other Mortgages; No Election of Remedies.
(a) The Debt is now or may hereafter be secured by one or more other mortgages, deeds of trust and other security agreements (collectively, as the same may be amended and in effect from time to time, are herein collectively called the “Other Mortgages”), which cover or will hereafter cover other properties that are or may be located in various states (the “Other Collateral”). The Other Mortgages will secure the Debt and the performance of the other covenants and agreements of Mortgagor set forth in the Loan Documents. Upon the occurrence of an Event of Default, Mortgagee may proceed under this Mortgage and/or any or all the Other Mortgages against either the Mortgaged Property and/or any or all the Other Collateral in one or more parcels and in such manner and order as Mortgagee shall elect. Mortgagor hereby irrevocably waives and releases, to the extent permitted by law, and whether now or hereafter in force, any right to have the Mortgaged Property and/or the Other Collateral marshaled upon any foreclosure of this Mortgage or any Other Mortgage.
(b) Without limiting the generality of the foregoing, and without limitation as to any other right or remedy provided to Mortgagee in this Mortgage or the other Loan Documents, in the case of an Event of Default (i) Mortgagee shall have the right to pursue all of its rights and remedies under this Mortgage and the Loan Documents, at law and/or in equity, in one proceeding, or separately and independently in separate proceedings from time to time, as Mortgagee, in its sole and absolute discretion, shall determine from time to time, (ii) Mortgagee shall not be required to either marshall assets, sell the Mortgaged Property and/or any Other Collateral in any particular order of alienation (and may sell the same simultaneously and together or separately), or be subject to any “one action” or “election of remedies” law or rule with respect to the Mortgaged Property and/or any Other Collateral, (iii) the exercise by Mortgagee of any remedies against any one item of Mortgaged Property and/or any Other Collateral will not impede Mortgagee from subsequently or simultaneously exercising remedies against any other item of Mortgaged Property and/or Other
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Collateral, (iv) all liens and other rights, remedies or privileges provided to Mortgagee herein shall remain in full force and effect until Mortgagee has exhausted all of its remedies against the Mortgaged Property and all Mortgaged Property has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt, and (v) Mortgagee may resort for the payment of the Debt to any security held by Mortgagee in such order and manner as Mortgagee, in its discretion, may elect and Mortgagee may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Mortgagee thereafter to foreclose this Mortgage.
(c) Without notice to or consent of Mortgagor and without impairment of the lien and rights created by this Mortgage, Mortgagee may, at any time (in its sole and absolute discretion, but Mortgagee shall have no obligation to), execute and deliver to Mortgagor a written instrument releasing all or a portion of the lien of this Mortgage as security for any or all of the obligations of Mortgagor now existing or hereafter arising under or in respect of the Note, the Loan Agreement and each of the other Loan Documents, whereupon following the execution and delivery by Mortgagee to Mortgagor of any such written instrument of release, this Mortgage shall no longer secure such obligations of Mortgagor so released.
26. Governing Law. WITH RESPECT TO MATTERS RELATING TO THE CREATION, PERFECTION AND PROCEDURES RELATING TO THE ENFORCEMENT OF THIS MORTGAGE OR THE LIEN HEREOF, THIS MORTGAGE SHALL BE GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, EXCEPT AS EXPRESSLY SET FORTH ABOVE IN THIS PARAGRAPH AND TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES SHALL GOVERN ALL MATTERS RELATING TO THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. EXCEPT AS EXPRESSLY SET FORTH ABOVE IN THIS PARAGRAPH AND TO THE FULLEST EXTENT PERMITTED BY THE LAW OF THE STATE OF FLORIDA, ALL PROVISIONS OF THE LOAN AGREEMENT INCORPORATED HEREIN BY REFERENCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, AS SET FORTH IN THE GOVERNING LAW PROVISION OF THE LOAN AGREEMENT.
27. Exculpation. The liability of Mortgagor hereunder is limited pursuant to Section 10.1 of the Loan Agreement.
28. Variable Interest Rate. The Loan secured by this Mortgage is a variable interest rate loan, as more particularly set forth in the Loan Agreement.
29. Maturity Date. The Debt initially matures on October 9, 2028, as the same may be extended or changed pursuant to the Loan Agreement.
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30. Interest Rate Protection Agreement. Mortgagor is or may be a party to an Interest Rate Protection Agreement, a default beyond the expiration of any applicable grace period under which shall also constitute an Event of Default under the Loan Agreement and this Mortgage. Any such Interest Rate Protection Agreement provides or shall provide that an Event of Default under this Mortgage shall constitute a default under such an Interest Rate Protection Agreement. Mortgagor’s rights under any Interest Rate Protection Agreement have been assigned to Mortgagee pursuant to this Mortgage and that certain Collateral Assignment of Interest Rate Protection Agreement of even date herewith as additional security for the Note. Mortgagor acknowledges and agrees that Mortgagor’s obligations under any Interest Rate Protection Agreement and all sums payable by Mortgagor to Mortgagee in connection therewith shall be secured by this Mortgage.
PART II
STATE-SPECIFIC PROVISIONS
31. Conflicts With Part I. In the event of any conflict between the provisions of this Part II and any provision of Part I, then the provisions of this Part II shall control.
32. Future Advances. It is agreed that this Mortgage shall also secure such future or additional advances as may be made by the Mortgagee at its option to the Mortgagor, or its successor in title, for any purpose, provided that all those advances are to be made within twenty (20) years from the date of this Mortgage, or within such lesser period of time as may be provided hereafter by law as a prerequisite for the sufficiency of actual notice or record notice of the optional future or additional advances as against the rights of creditors or subsequent purchasers for valuable consideration. The initial amount of indebtedness secured by this Mortgage is equal to Forty-Seven Million Seven Hundred Thousand and No/100 Dollars ($47,700,000.00). The total amount of indebtedness secured by this Mortgage may decrease or increase from time to time, but the total unpaid principal balance so secured at any one time shall not exceed two hundred percent (200%) of the original principal amount of the Note, plus interest, and any disbursements made for the payment of taxes, levies or insurance on the Property with interest on those disbursements. If, pursuant to Florida Statutes Section 697.04, Mortgagor files a notice specifying the dollar limit beyond which future advances made pursuant to this Mortgage will not be secured by this Mortgage, then Mortgagor shall, within one day of filing such notice, notify Mortgagee and its counsel by certified mail. In addition, such a filing shall constitute a default hereunder.
33. Maximum Principal Amount. Mortgagor covenants that it has not executed or delivered any documentation or made any promises or covenants to limit the maximum principal amount that may be secured by the Mortgage as authorized by F.S. §697.04.
34. Florida Documentary Stamp and Intangible Taxes. If at any time the State of Florida shall determine that the intangible tax paid in connection with this Mortgage is insufficient or that the documentary stamps affixed to or paid in connection with this Mortgage are insufficient, and that additional intangible tax should be paid or that additional documentary stamp tax should be paid, then Mortgagor shall pay the same, together with any interest, penalties, costs and attorneys’ fees imposed or incurred in connection with such determination. In addition to, and without limiting the generality of, the foregoing, Mortgagor hereby agrees to defend,
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indemnify and hold Mortgagee harmless from and against any and all liability for documentary stamp taxes and intangible taxes, together with all interest, penalties, costs and attorneys’ fees incurred in connection therewith, that at any time may be levied, assessed or imposed by the State of Florida or any other governmental authority upon this Mortgage, the Note or any of the other Loan Documents, or any amendment, extension, renewal, restatement, increase or modification of any of the foregoing, or upon Mortgagee by virtue of owning or holding any of the foregoing instruments or documents, all of which shall be secured by the lien and security interest of the Loan Documents.
35. Time of the Essence. TIME IS OF THE ESSENCE of this Mortgage. No waiver of any obligation hereunder or of any obligation secured hereby shall at any time thereafter be held to be a waiver of the terms hereof or of the terms of the Note secured hereby.
36. Florida Release. Mortgagor hereby releases and forever discharges the law firm Firsel Ross Gussis & Alexander LLC and all of such firm’s attorneys and employees, from any and all loss, costs, expense, damage or claim, whether or not valid, including, without limitation, reasonable out of pocket attorneys’ fees and disbursements, arising under or in any way connected with Section 697.10, Florida Statutes, or any similar law. Mortgagor hereby verifies and confirms, to Mortgagor’s knowledge, all factual information in this Mortgage, including the accuracy and correctness of the legal description set forth herein (based solely on the title commitment issued in connection with the issuance of the Loan). In the event any factual errors are found in this Mortgage or in the legal description, Mortgagor and Mortgagee shall, at Mortgagor’s sole cost and expense, promptly correct or cause to be corrected subsequent to the date hereof any and all such error. Notwithstanding the foregoing, all rights of Mortgagor and Mortgagee are preserved against their respective title insurers, the surveyor, the engineer, if any, and the appraiser, if any, and after payment is made by Mortgagor, Mortgagor shall be subrogated to such rights.
37. No Novation. Neither this Mortgage 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 Mortgage 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 Mortgage 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 Mortgagee, Mortgagee may treat such provisions as void and of no force or effect and enforce the provisions of the Prior Mortgage as modified by this Mortgage excluding such provisions, or at the sole option of Mortgagee, Mortgagee may enforce the Prior Mortgage pursuant to the terms therein contained, independent of this Mortgage 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 Mortgage; provided however, that in any case Mortgagee may not enforce the provisions of the Prior Mortgage against Mortgagor. However, if Mortgagee elects either such option, the parties hereto, as between themselves, shall in all events be bound by all the terms and conditions of this Mortgage and the Note until all Secured Obligations owing from Mortgagor to Mortgagee shall have been paid in full.
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38. Cooperation with Future Assignment of Mortgage. At the written request of Mortgagor that it wishes to have Mortgagee assign this Mortgage and endorse the Note secured hereby to another lender in connection with any renewal of the Note and this Mortgage permitted under the Loan Documents (as may then be permissible under applicable Florida law), Mortgagee (at no cost to Mortgagee) shall cooperate with Mortgagor to promptly provide such assignment documentation (on commercially reasonable customary forms) to assignee lender or Mortgagor. Mortgagee acknowledges that if such assignment is effectuated, this Mortgage and the Note will not be released of record or discharged upon payment in full to Mortgagee of all amounts then due under the Loan as set forth in Mortgagee’s payoff letter. Mortgagor shall pay all costs and expenses of the Mortgagee 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.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, Mortgagor has executed this instrument as of the day and year first above written.
MORTGAGOR:
ENVY DEVELOPMENT DE, LLC,
A Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
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[Amended and Restated Mortgage - Signature Page]
This instrument prepared by or under the
direction of and upon recording is to be returned to:
Firsel Ross Gussis & Alexander LLC
10 Parkway North Blvd, Suite 110
Deerfield, IL 60015
Attention: Samuel P. Gussis, Esq.
Space Above This Line For Recorder’s Use
(This space is reserved for Clerk)
NOTICE TO RECORDER: THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (THIS “MORTGAGE”) MADE BY ENVY RECREATIONAL LLC, A DELAWARE LIMITED LIABILITY COMPANY (“MORTGAGOR”) IN FAVOR OF LOANCORE CAPITAL CREDIT REIT LLC, A DELAWARE LIMITED LIABILITY COMPANY (“MORTGAGEE”), TOGETHER WITH THAT CERTAIN AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING OF EVEN DATE HEREWITH MADE BY ENVY DEVELOPMENT DE, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“OTHER MORTGAGOR”) IN FAVOR OF MORTGAGEE (THE “OTHER MORTGAGE”), SECURES THAT CERTAIN AMENDED AND RESTATED RENEWAL PROMISSORY NOTE, DATED THE DATE HEREOF, MADE BY OTHER MORTGAGOR TO MORTGAGEE, IN THE PRINCIPAL AMOUNT OF $47,700,000.00 (AS THE SAME MAY BE AMENDED, MODIFIED, RESTATED, SEVERED, CONSOLIDATED, RENEWED, REPLACED, OR SUPPLEMENTED FROM TIME TO TIME, THE “NOTE”). THE OTHER MORTGAGE IS TO BE RECORDED IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA (THE “PUBLIC RECORDS”) IMMEDIATELY PRIOR TO THE RECORDING OF THIS MORTGAGE AND ALL REQUIRED FLORIDA DOCUMENTARY STAMP TAX AND INTANGIBLE TAX DUE IN CONNECTION WITH THE NOTE AND THE INDEBTEDNESS RESPRESENTED THEREUNDER ARE BEING PAID AT THE TIME OF THE RECORDING OF THE OTHER MORTGAGE. THEREFORE, NO ADDITIONAL DOCUMENTARY STAMP TAX AND INTANGIBLE TAX IS DUE IN CONNECTION WITH THIS MORTGAGE.
ENVY RECREATIONAL LLC
(Mortgagor)
to
LOANCORE CAPITAL CREDIT REIT LLC
(Mortgagee)
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
Dated: As of September 23, 2026
Property Location: 425-475 E. Atlantic Blvd., Pompano Beach, Broward County, Florida 33060
NOTE TO CLERK: THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING IS TO BE FILED AND INDEXED AS A FIXTURE FILING UNDER THE FLORIDA UNIFORM COMMERCIAL CODE IN THE REAL ESTATE RECORDS AND IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS UNDER THE NAMES OF MORTGAGOR, AS “DEBTOR”, AND MORTGAGEE, AS “SECURED PARTY”.
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This MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING (this “Mortgage”), made as of September 23, 2026, by ENVY RECREATIONAL LLC, a Delaware limited liability company, having an address at 4300 North University Drive, Suite D105, Lauderhill, Florida 33351 (“Mortgagor”), to LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company (together with its successors and assigns, hereinafter referred to as “Mortgagee”), having an address c/o LoanCore Capital, 55 Railroad Avenue, Suite 100, Greenwich, Connecticut 06830.
Mortgagor, Envy Development DE, LLC, a Delaware limited liability company (“Envy Development”), and Mortgagee have entered into a Loan Agreement dated as of the date hereof (as amended, modified, restated, consolidated or supplemented from time to time, the “Loan Agreement”) pursuant to which Mortgagee is making a secured loan to Mortgagor and Envy Development in the original principal amount of FORTY-SEVEN MILLION SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS ($47,700,000.00) (the “Loan”), which initially matures on October 9, 2028, subject to extension rights contained in the Loan Agreement. Capitalized terms used herein without definition are used as defined in the Loan Agreement. The Loan is evidenced by an Amended and Restated Renewal Promissory Note dated the date hereof made by Envy Development to Mortgagee in such principal amount (as the same may be amended, modified, restated, severed, consolidated, renewed, replaced, or supplemented from time to time, the “Note”), and which Note is subject to that certain Payment Guaranty executed by Mortgagor in favor of Mortgagee, dated of even date herewith.
To secure the payment of the Note and all sums which may or shall become due thereunder or under any of the other documents evidencing, securing or executed in connection with the Loan (the Note, this Mortgage, the Loan Agreement and such other documents, as any of the same may, from time to time, be modified, amended or supplemented, being hereinafter collectively referred to as the “Loan Documents”), including (i) the payment of interest and other amounts which would accrue and become due but for the filing of a petition in bankruptcy (whether or not a claim is allowed against Mortgagor for such interest or other amounts in any such bankruptcy proceeding) or the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code (the “Bankruptcy Code”), and (ii) the costs and expenses of enforcing any provision of any Loan Document (all such sums being hereinafter collectively referred to as the “Debt”), Mortgagor hereby irrevocably mortgages, grants, bargains, sells, conveys, transfers, pledges, sets over and assigns, and grants a security interest, to and in favor of Mortgagee, all of Mortgagor’s right, title and interest in and to (i) the land described in Exhibit A (the “Premises”), and (ii) the buildings, structures, fixtures and other improvements now or hereafter located thereon (the “Improvements”);
TOGETHER WITH: all right, title, interest and estate of Mortgagor now owned, or hereafter acquired, in and to the following property, rights, interests and estates (the Premises, the Improvements, and the property, rights, interests and estates hereinafter described are collectively referred to herein as the “Mortgaged Property”):
(a) all easements, rights-of-way, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, rights to oil, gas, minerals, coal and other substances of any kind or character, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances of any
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nature whatsoever, in any way belonging, relating or pertaining to the Premises and the Improvements; the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road, highway, alley or avenue, opened, vacated or proposed, in front of or adjoining the Premises, to the center line thereof; and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Mortgagor of, in and to the Premises and the Improvements and every part and parcel thereof, with the appurtenances thereto;
(b) all machinery, furniture, furnishings, equipment, computer software and hardware, fixtures (including all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), inventory, materials, supplies and other articles of personal property and accessions thereof, renewals and replacements thereof and substitutions therefor, and other property of every kind and nature, tangible or intangible, owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter located upon the Premises or the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Premises and the Improvements (hereinafter collectively referred to as the “Equipment”), including any leases of, deposits in connection with, and proceeds of any sale or transfer of any of the foregoing, and the right, title and interest of Mortgagor in and to any of the Equipment that may be subject to any “security interest” as defined in the Uniform Commercial Code, as in effect in the State where the Mortgaged Property is located (the “UCC”), superior in lien to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, that may heretofore or hereafter be made with respect to the Premises or the Improvements, whether from the exercise of the right of eminent domain or condemnation (including any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Premises or Improvements, subject to the terms of the Loan Agreement;
(d) to the extent assignable, all leases, subleases and other agreements or arrangements heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the Premises or the Improvements, including any extensions, renewals, modifications or amendments thereof (hereinafter collectively referred to as the “Leases”) and all rents, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a Bankruptcy Proceeding or in lieu of rent or rent equivalents), royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Mortgagor or its agents or employees from any and all sources arising from or attributable to the Premises and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Premises or the Improvements, or rendering of services by Mortgagor or any of its agents or employees, and proceeds, if any, from business interruption or other loss of income insurance (hereinafter collectively referred to as the “Rents”), together with all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt;
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(e) all proceeds of and any unearned premiums on any insurance policies covering the Mortgaged Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Mortgaged Property, subject to the terms of the Loan Agreement;
(f) the right, in the name and on behalf of Mortgagor, to appear in and defend any action or proceeding brought with respect to the Mortgaged Property and to commence any action or proceeding to protect the interest of Mortgagee in the Mortgaged Property;
(g) any interest rate protection arrangement to which Mortgagor is a party and all agreements, instruments, documents and contracts now or hereafter entered into by Mortgagor with respect to any such interest rate protection arrangement;
(h) all accounts (including reserve accounts), escrows, documents, instruments, chattel paper, claims, deposits and general intangibles, as the foregoing terms are defined in the UCC, and all franchises, trade names, trademarks, symbols, service marks, books, records, plans, specifications, designs, drawings, surveys, title insurance policies, permits, certificates of use and occupancy (or their equivalent), consents, licenses, management agreements, leasing agreements, contract rights (including any contract with any architect or engineer or with any other provider of goods or services for or in connection with any construction, repair or other work upon the Mortgaged Property), approvals, actions, refunds of real estate taxes and assessments (and any other governmental impositions related to the Mortgaged Property) and causes of action that now or hereafter relate to, are derived from or are used in connection with the Mortgaged Property, or the construction, use, operation, maintenance, occupancy or enjoyment thereof or the conduct of any business or activities thereon (hereinafter collectively referred to as the “Intangibles”);
(i) all reciprocal easement or operating agreements, declarations, development agreements, developer’s or utility agreements, and any similar such agreements or declarations now or hereafter affecting the Mortgaged Property or any part thereof; and
(j) all proceeds, products, offspring, rents and profits from any of the foregoing, including those from sale, exchange, transfer, collection, loss, damage, disposition, substitution or replacement of any of the foregoing.
Without limiting the generality of any of the foregoing, in the event that a case under the Bankruptcy Code is commenced by or against Mortgagor, pursuant to Section 552(b)(2) of the Bankruptcy Code, the security interest granted by this Mortgage shall automatically extend to all Rents acquired by the Mortgagor after the commencement of the case and shall constitute cash collateral under Section 363(a) of the Bankruptcy Code.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in the manner provided in the Loan Documents and shall well and truly abide by and comply with each and every covenant and condition set forth in the Loan Documents in a timely manner, these presents and the estate hereby granted shall cease, terminate and be void;
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AND Mortgagor represents and warrants to and covenants and agrees with Mortgagee as follows:
PART I - GENERAL PROVISIONS
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements. Mortgagor shall pay the Debt at the time and in the manner provided in the Loan Documents. All the covenants, conditions and agreements contained in the Loan Documents are hereby made a part of this Mortgage to the same extent and with the same force as if fully set forth herein. Without limiting the generality of the foregoing, Mortgagor (i) agrees to insure, repair, maintain and restore damage to the Mortgaged Property, pay Taxes and Other Charges, and comply with Legal Requirements, in accordance with the Loan Agreement, and (ii) agrees that the Proceeds of Insurance and Awards for Condemnation shall be settled, held and applied in accordance with the Loan Agreement.
2. Leases and Rents.
(a) Mortgagor does hereby absolutely and unconditionally assign to Mortgagee all of Mortgagor’s right, title and interest in all current and future Leases and Rents, it being intended by Mortgagor that this assignment constitutes a present, absolute assignment, and not an assignment for additional security only. Such assignment shall not be construed to bind Mortgagee to the performance of any of the covenants or provisions contained in any Lease or otherwise impose any obligation upon Mortgagee. Nevertheless, subject to the terms of this paragraph, Mortgagee grants to Mortgagor a revocable license to operate and manage the Mortgaged Property and to collect, receive, use and enjoy the Rents and otherwise act as owner under the Agreements in respect of the Property, the Rents subject to the requirements of the Loan Agreement (including the deposit of Rents into the Clearing Account). During the existence of an Event of Default, without the need for notice or demand, the license granted to Mortgagor herein shall automatically be revoked, and Mortgagee shall immediately be entitled to possession of all Rents in the Clearing Account, the Cash Management Account (including all Subaccounts thereof) and all Rents collected thereafter (including Rents past due and unpaid), whether or not Mortgagee enters upon or takes control of the Mortgaged Property. Mortgagor hereby grants and assigns to Mortgagee the right, at its option, upon revocation of the license granted herein, to enter upon the Mortgaged Property in person, by agent or by court-appointed receiver to collect the Rents. Any Rents collected after the revocation of such license may be applied toward payment of the Debt in such priority and proportions as Mortgagee in its sole discretion shall deem proper. If any such Event of Default is cured by Mortgagor and Mortgagee accepts such cure in writing, the license set forth in this Section 2(a) shall be automatically reinstated and the rights granted to Mortgagee due to such Event of Default shall automatically terminate without the execution of any further instrument or document. The assignment of rents contained in this Mortgage is intended to and does constitute an assignment of rents as contemplated in Florida Statutes Section 697.07.
(b) Mortgagor shall not enter into, modify, amend, cancel, terminate or renew any Lease except as provided in Section 5.10 of the Loan Agreement.
3. Use of Mortgaged Property. Mortgagor shall not initiate, join in or consent to any change in any private restrictive covenant, zoning law or other public or private
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restriction, limiting or defining the uses which may be made of the Mortgaged Property. If under applicable zoning provisions the use of the Mortgaged Property is or shall become a nonconforming use, Mortgagor shall not cause or permit such nonconforming use to be discontinued or abandoned without the consent of Mortgagee. Mortgagor shall not (i) change the use of the Mortgaged Property, (ii) permit or suffer to occur any waste on or to the Mortgaged Property or (iii) take any steps to convert the Mortgaged Property to a condominium or cooperative form of ownership.
4. Transfer or Encumbrance of the Mortgaged Property.
(a) Mortgagor acknowledges that (i) Mortgagee has examined and relied on the creditworthiness and experience of the principals of Mortgagor in owning and operating properties such as the Mortgaged Property in agreeing to make the Loan, (ii) Mortgagee will continue to rely on Mortgagor’s ownership of the Mortgaged Property as a means of maintaining the value of the Mortgaged Property as security for the Debt, and (iii) Mortgagee has a valid interest in maintaining the value of the Mortgaged Property so as to ensure that, should Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt by a sale of the Mortgaged Property. Mortgagor shall not sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the Mortgaged Property or any part thereof, or suffer or permit any Transfer to occur, other than a Permitted Transfer.
(b) Mortgagee shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon Transfer in violation of this Paragraph 4. This provision shall apply to every sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property (and every other Transfer) regardless of whether voluntary or not. Any Transfer made in contravention of this Paragraph 4 shall be null and void and of no force and effect. Mortgagor agrees to bear and shall pay or reimburse Mortgagee on demand for all reasonable expenses (including reasonable attorneys’ fees and disbursements, title search costs and title insurance endorsement premiums) incurred by Mortgagee in connection with the review, approval and documentation of any Permitted Transfer.
5. Changes in Laws Regarding Taxation. If any law is enacted or adopted or amended after the date of this Mortgage which deducts the Debt from the value of the Mortgaged Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Mortgagee’s interest in the Mortgaged Property, Mortgagor will pay such tax, with interest and penalties thereon, if any. If Mortgagee is advised by its counsel that the payment of such tax or interest and penalties by Mortgagor would be unlawful, taxable to Mortgagee or unenforceable, or would provide the basis for a defense of usury, then Mortgagee shall have the option, by notice of not less than 90 days, to declare the Debt immediately due and payable.
6. No Credits on Account of the Debt. Mortgagor shall not claim or demand or be entitled to any credit on account of the Debt for any part of the Taxes or Other Charges assessed against the Mortgaged Property, and no deduction shall otherwise be made or claimed from the assessed value of the Mortgaged Property for real estate tax purposes by reason of this Mortgage or the Debt. If such claim, credit or deduction shall be required by law, Mortgagee shall
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have the option, by notice of not less than 90 days, to declare the Debt immediately due and payable.
7. Further Acts, Etc. Mortgagor shall, at its sole cost, perform, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as Mortgagee shall, from time to time, require, for the better assuring, conveying, assigning, transferring, and confirming unto Mortgagee the property and rights hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated or intended now or hereafter so to be, or which Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee, or for carrying out the intention or facilitating the performance of the terms of this Mortgage, or for filing, registering or recording this Mortgage or for facilitating the sale and transfer of the Loan (or any portion thereof) and the Loan Documents in connection with a “Secondary Market Transaction” as described in Section 9.1 of the Loan Agreement. Upon foreclosure, the appointment of a receiver or any other relevant action, Mortgagor shall, at its sole cost, cooperate fully and completely to effect the assignment or transfer of any license, permit, agreement or any other right necessary or useful to the operation of the Mortgaged Property. Upon the occurrence and during the continuance of an Event of Default, then Mortgagor shall be deemed to grant Mortgagee an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Mortgagee at law and in equity, including such rights and remedies available to Mortgagee pursuant to this paragraph. Notwithstanding anything to the contrary in the immediately preceding sentence, Mortgagee shall not execute any document as attorney-in-fact of Mortgagor unless (x) Mortgagor shall have failed or refused to execute the same within five (5) Business Days after Mortgagee’s request therefor, or (y) in Mortgagee’s good faith determination it would be materially prejudiced by the delay involved in making such a request. Mortgagee shall give prompt notice to Mortgagor of any exercise of the power of attorney as provided for in this Paragraph 7, along with copies of all documents executed in connection therewith.
8. Recording of Mortgage, Etc. Mortgagor forthwith upon the execution and delivery of this Mortgage and thereafter, from time to time, shall cause this Mortgage, and any security instrument creating a lien or security interest or evidencing the lien hereof upon the Mortgaged 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 fully to protect the lien or security interest hereof upon, and the interest of Mortgagee in, the Mortgaged Property. Mortgagor shall pay all filing, registration or recording fees, all expenses incident to the preparation, execution and acknowledgment of and all federal, state, county and municipal, taxes, duties, imposts, documentary stamps, assessments and charges arising out of or in connection with the execution and delivery of, this Mortgage, any Mortgage supplemental hereto, any security instrument with respect to the Mortgaged Property or any instrument of further assurance, except where prohibited by law so to do. Mortgagor shall hold harmless and indemnify Mortgagee, its successors and assigns, against any liability incurred by reason of the imposition of any tax on the making or recording of this Mortgage.
9. Right to Cure Defaults. Upon the occurrence and during the continuance of any Event of Default, Mortgagee may, but without any obligation to do so and without notice to or demand on Mortgagor and without releasing Mortgagor from any obligation hereunder,
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perform the obligations in Default in such manner and to such extent as Mortgagee may deem necessary to protect the security hereof. Mortgagee is authorized to enter upon the Mortgaged Property for such purposes or appear in, defend or bring any action or proceeding to protect its interest in the Mortgaged Property or to foreclose this Mortgage or collect the Debt, and the out-of-pocket cost and expense thereof (including reasonable attorneys’ fees and disbursements to the extent permitted by law), with interest thereon at the Default Rate for the period after notice from Mortgagee that such cost or expense was incurred to the date of payment to Mortgagee, shall constitute a portion of the Debt, shall be secured by this Mortgage and the other Loan Documents and shall be due and payable to Mortgagee upon written demand.
10. Remedies.
(a) Upon the occurrence and during the continuance of any Event of Default, Mortgagee may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Mortgagor and in and to the Mortgaged Property, by Mortgagee itself or otherwise, including the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Mortgagee may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Mortgagee:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute a proceeding or proceedings, judicial or nonjudicial, to the extent permitted by law, by advertisement or otherwise, for the complete foreclosure of this Mortgage, in which case the Mortgaged Property may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;
(iii) with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Mortgage for the portion of the Debt then due and payable, subject to the continuing lien of this Mortgage for the balance of the Debt not then due;
(iv) sell for cash or upon credit the Mortgaged Property and all estate, claim, demand, right, title and interest of Mortgagor therein and rights of redemption thereof, pursuant to the power of sale, to the extent permitted by applicable law, or otherwise, at one or more sales, as an entirety or in parcels constituting single tax parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law;
(v) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein or in any other Loan Document;
(vi) recover judgment on the Note either before, during or after any proceeding for the enforcement of this Mortgage;
(vii) apply for the appointment of a trustee, receiver, liquidator or conservator of the Mortgaged Property, without notice and without regard for the adequacy
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of the security for the Debt and without regard for the solvency of the Mortgagor or of any person, firm or other entity liable for the payment of the Debt;
(viii) enforce Mortgagee’s interest in the Leases and Rents and enter into or upon the Mortgaged Property, either personally or by its agents, nominees or attorneys and dispossess Mortgagor and its agents and employees therefrom, and thereupon Mortgagee may (A) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with the Mortgaged Property and conduct the business thereat; (B) complete any construction on the Mortgaged Property in such manner and form as Mortgagee deems advisable; (C) make alterations, additions, renewals, replacements and improvements to or on the Mortgaged Property; (D) exercise all rights and powers of Mortgagor with respect to the Mortgaged Property, whether in the name of Mortgagor or otherwise, including the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive Rents; and (E) apply the receipts from the Mortgaged Property to the payment of the Debt, after deducting therefrom all expenses (including reasonable attorneys’ fees and disbursements) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, insurance and other charges in connection with the Mortgaged Property, as well as just and reasonable compensation for the services of Mortgagee, and its counsel, agents and employees;
(ix) require Mortgagor to pay monthly in advance to Mortgagee, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of any portion of the Mortgaged Property occupied by Mortgagor, and require Mortgagor to vacate and surrender possession of the Mortgaged Property to Mortgagee or to such receiver, and, in default thereof, evict Mortgagor by summary proceedings or otherwise; or
(x) pursue such other rights and remedies as may be available at law or in equity or under the UCC, including the right to receive and/or establish a lock box for all Rents and proceeds from the Intangibles and any other receivables or rights to payments of Mortgagor relating to the Mortgaged Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the Mortgaged Property, this Mortgage shall continue as a lien on the remaining portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this Paragraph 10, together with any other sums which then may be held by Mortgagee under this Mortgage, whether under the provisions of this paragraph or otherwise, shall be applied by Mortgagee to the payment of the Debt in such priority and proportion as Mortgagee in its sole discretion shall deem proper.
(c) Mortgagee may adjourn from time to time any sale by it to be made under or by virtue of this Mortgage by announcement at the time and place appointed for such sale or for such adjourned sale or sales; and, except as otherwise provided by any applicable law, Mortgagee, without further notice or publication, may make such sale at the time and place to which the same shall be so adjourned.
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(d) Upon the completion of any sale or sales pursuant hereto, Mortgagee, or an officer of any court empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient instrument, or good and sufficient instruments, conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold. Mortgagee is hereby irrevocably appointed the true and lawful attorney of Mortgagor, in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the Mortgaged Property and rights so sold and for that purpose Mortgagee may execute all necessary instruments of conveyance, assignment and transfer, and may substitute one or more persons with like power, Mortgagor hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof. Any sale or sales made under or by virtue of this Paragraph 10, whether made under the power of sale herein granted (to the extent permitted by applicable law) or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of Mortgagor in and to the properties and rights so sold, and shall be a perpetual bar both at law and in equity against Mortgagor and against any and all persons claiming or who may claim the same, or any part thereof, from, through or under Mortgagor.
(e) Upon any sale made under or by virtue of this Paragraph 10, whether made under a power of sale (to the extent permitted by applicable law) or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Debt the net sales price after deducting therefrom the expenses of the sale and costs of the action and any other sums which Mortgagee is authorized to deduct under this Mortgage or any other Loan Document.
(f) No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Mortgaged Property or upon any other property of Mortgagor shall affect in any manner or to any extent the lien of this Mortgage upon the Mortgaged Property or any part thereof, or any liens, rights, powers or remedies of Mortgagee hereunder, but such liens, rights, powers and remedies of Mortgagee shall continue unimpaired as before.
(g) Mortgagee may terminate or rescind any proceeding or other action brought in connection with its exercise of the remedies provided in this Paragraph 10 at any time before the conclusion thereof, as determined in Mortgagee’s sole discretion and without prejudice to Mortgagee.
(h) Mortgagee may resort to any remedies and the security given by this Mortgage or in any other Loan Document in whole or in part, and in such portions and in such order as determined by Mortgagee’s sole discretion. No such action shall in any way be considered a waiver of any rights, benefits or remedies evidenced or provided by any Loan Document. The failure of Mortgagee to exercise any right, remedy or option provided in any Loan Document shall not be deemed a waiver of such right, remedy or option or of any covenant or obligation secured by any Loan Document. No acceptance by Mortgagee of any payment after the occurrence of any Event of Default and no payment by Mortgagee of any obligation for which Mortgagor is liable hereunder shall be deemed to waive or cure any Event of Default, or Mortgagor’s liability to pay such obligation. No sale of all or any portion of the Mortgaged Property, no forbearance on the
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part of Mortgagee, and no extension of time for the payment of the whole or any portion of the Debt or any other indulgence given by Mortgagee to Mortgagor, shall operate to release or in any manner affect the interest of Mortgagee in the remaining Mortgaged Property or the liability of Mortgagor to pay the Debt. No waiver by Mortgagee shall be effective unless it is in writing and then only to the extent specifically stated. All costs and expenses of Mortgagee in exercising its rights and remedies under this Paragraph 10 (including reasonable attorneys’ fees and disbursements to the extent permitted by law), shall be paid by Mortgagor immediately upon notice from Mortgagee, with interest at the Default Rate for the period after notice from Mortgagee, and such costs and expenses shall constitute a portion of the Debt and shall be secured by this Mortgage.
(i) The interests and rights of Mortgagee under the Loan Documents shall not be impaired by any indulgence, including (x) any renewal, extension or modification which Mortgagee may grant with respect to any of the Debt, (y) any surrender, compromise, release, renewal, extension, exchange or substitution which Mortgagee may grant with respect to the Mortgaged Property or any portion thereof or (z) any release or indulgence granted to any maker, endorser, guarantor or surety of any of the Debt.
11. Right of Entry. In addition to any other rights or remedies granted under this Mortgage, Mortgagee and its agents shall have the right to enter upon reasonable prior notice to Mortgagor (so long as no Event of Default is continuing) and inspect the Mortgaged Property during business hours on Business Days, subject to the rights of Tenants under Leases during the term of this Mortgage. The actual out-of-pocket cost of such inspections or audits shall be borne by Mortgagor should Mortgagee determine that an Event of Default exists, including the cost of all follow up or additional investigations or inquiries deemed reasonably necessary by Mortgagee. The cost of such inspections, if not paid for by Mortgagor following ten (10) Business Days written demand, may be added to the principal balance of the sums due under the Note and this Mortgage and shall bear interest thereafter until paid at the Default Rate.
12. Security Agreement. This Mortgage is both a real property mortgage and a “security agreement” within the meaning of the UCC. The Mortgaged Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Mortgagor in the Mortgaged Property. Mortgagor by executing and delivering this Mortgage has granted and hereby grants to Mortgagee, as security for the Debt, a security interest in the Mortgaged Property to the full extent that the Mortgaged Property may be subject to the UCC (such portion of the Mortgaged Property so subject to the UCC being called in this paragraph the “Collateral”). The foregoing sentence is intended to grant in favor of Mortgagee a first priority continuing lien and security interest in all of Mortgagor’s assets. Mortgagor authorizes Mortgagee and its counsel to file UCC financing statements in form and substance satisfactory to Mortgagee, describing the collateral as “all assets of Mortgagor, whether now owned or existing or hereafter acquired or arising and wheresoever located, and all proceeds and products thereof, including, without limitation, all fixtures on the Premises” or words to that effect, and any limitations on such collateral description, notwithstanding that such collateral description may be broader in scope than the Collateral described in this Mortgage. This Mortgage shall also constitute a “fixture filing” for the purposes of the UCC. As such, this Mortgage covers all items of the Collateral that are or are to become fixtures. Information concerning the security interest herein granted may be obtained from the parties at the addresses of the parties set forth in the first paragraph of this
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Mortgage. If an Event of Default shall occur, Mortgagee, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the UCC, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such other measures as Mortgagee may deem necessary for the care, protection and preservation of the Collateral. Upon request or demand of Mortgagee, Mortgagor shall at its expense assemble the Collateral and make it available to Mortgagee at a convenient place acceptable to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Mortgagee in protecting the interest in the Collateral and in enforcing the rights hereunder with respect to the Collateral. Any notice of sale, disposition or other intended action by Mortgagee with respect to the Collateral, sent to Mortgagor in accordance with the provisions hereof at least ten days prior to such action, shall constitute commercially reasonable notice to Mortgagor. The proceeds of any disposition of the Collateral, or any part thereof, may be applied by Mortgagee to the payment of the Debt in such priority and proportions as Mortgagee in its sole discretion shall deem proper. In the event of any change in name, identity or structure of Mortgagor, Mortgagor shall notify Mortgagee thereof and promptly after request shall execute, file and record such UCC forms as are necessary to maintain the priority of Mortgagee’s lien upon and security interest in the Collateral, and shall pay all expenses and fees in connection with the filing and recording thereof. If Mortgagee shall require the filing or recording of additional UCC forms or continuation statements, Mortgagor shall, promptly after request, execute, file and record such UCC forms or continuation statements as Mortgagee shall deem necessary, and shall pay all expenses and fees in connection with the filing and recording thereof, it being understood and agreed, however, that no such additional documents shall increase Mortgagor’s obligations under the Loan Documents.
13. Actions and Proceedings. Mortgagee has the right to appear in and defend any action or proceeding brought with respect to the Mortgaged Property and to bring any action or proceeding, in the name and on behalf of Mortgagor, which Mortgagee, in its sole discretion, decides should be brought to protect its or their interest in the Mortgaged Property. Mortgagee shall, at its option, be subrogated to the lien of any mortgage or other security instrument discharged in whole or in part by the Debt, and any such subrogation rights shall constitute additional security for the payment of the Debt.
14. Marshalling and Other Matters. Mortgagor hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Mortgaged Property or any part thereof or any interest therein. Further, Mortgagor hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Mortgage on behalf of Mortgagor, and on behalf of each and every person acquiring any interest in or title to the Mortgaged Property subsequent to the date of this Mortgage and on behalf of all persons to the extent permitted by applicable law. The lien of this Mortgage shall be absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever of Mortgagee and, without limiting the generality of the foregoing, the lien hereof shall not be impaired by (i) any acceptance by Mortgagee of any other security for any portion of the Debt, (ii) any failure, neglect or omission on the part of Mortgagee to realize upon or protect any portion of the Debt or any collateral security therefor or (iii) any release (except as to the property released), sale, pledge, surrender, compromise, settlement,
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renewal, extension, indulgence, alteration, changing, modification or disposition of any portion of the Debt or of any of the collateral security therefor; and Mortgagee may foreclose, or exercise any other remedy available to Mortgagee under other Loan Documents without first exercising or enforcing any of its remedies under this Mortgage, and any exercise of the rights and remedies of Mortgagee hereunder shall not in any manner impair the Debt or the liens of any other Loan Document or any of Mortgagee’s rights and remedies thereunder.
15. Notices. All notices, consents, approvals and requests required or permitted hereunder shall be in writing, and shall be sent, and shall be deemed effective, as provided in the Loan Agreement.
16. Inapplicable Provisions. If any term, covenant or condition of this Mortgage is held to be invalid, illegal or unenforceable in any respect, this Mortgage shall be construed without such provision.
17. Headings. The paragraph headings in this Mortgage 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. This Mortgage may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original.
19. Definitions. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Mortgage may be used interchangeably in singular or plural form; and the word “Mortgagor” shall mean “each Mortgagor and any subsequent owner or owners of the Mortgaged Property or any part thereof or any interest therein,” the word “Mortgagee” shall mean “Mortgagee and any subsequent holder of the Note,” the words “Mortgaged Property” shall include any portion of the Mortgaged Property and any interest therein, the word “including” means “including but not limited to” and the words “attorneys’ fees” shall include any and all attorneys’ fees, paralegal and law clerk fees, including fees at the pre-trial, trial and appellate levels incurred or paid by Mortgagee in protecting its interest in the Mortgaged Property and Collateral and enforcing its rights hereunder.
20. Homestead. Mortgagor hereby waives and renounces all homestead and exemption rights provided by the Constitution and the laws of the United States and of any state, in and to the Mortgaged Property as against the collection of the Debt, or any part thereof.
21. Assignments. Mortgagee shall have the right to assign or transfer its rights under this Mortgage without limitation pursuant to the terms of the Loan Agreement. Any assignee or transferee shall be entitled to all the benefits afforded Mortgagee under this Mortgage.
22. Waiver of Jury Trial. MORTGAGOR (AND MORTGAGEE BY ACCEPTANCE HEREOF) 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 MORTGAGE 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
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AND VOLUNTARILY BY MORTGAGOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. MORTGAGEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY MORTGAGOR.
23. Consents. Any consent or approval by Mortgagee in any single instance shall not be deemed or construed to be Mortgagee’s consent or approval in any like matter arising at a subsequent date, and the failure of Mortgagee to promptly exercise any right, power, remedy, consent or approval provided herein or at law or in equity shall not constitute or be construed as a waiver of the same nor shall Mortgagee be estopped from exercising such right, power, remedy, consent or approval at a later date. Any consent or approval requested of and granted by Mortgagee pursuant hereto shall be narrowly construed to be applicable only to Mortgagor and the matter identified in such consent or approval and no third party shall claim any benefit by reason thereof, and any such consent or approval shall not be deemed to constitute Mortgagee a venturer or partner with Mortgagor nor shall privity of contract be presumed to have been established with any such third party. If Mortgagee deems it to be in its best interest to retain assistance of persons, firms or corporations (including attorneys, title insurance companies, appraisers, engineers and surveyors) with respect to a request for consent or approval, Mortgagor shall reimburse Mortgagee for all costs reasonably incurred in connection with the employment of such persons, firms or corporations.
24. Loan Repayment. Provided no Event of Default exists, this Mortgage will be satisfied and discharged of record by Mortgagee prior to the Maturity Date only in accordance with the terms and provisions set forth in the Loan Agreement.
25. Other Mortgages; No Election of Remedies.
(a) The Debt is now or may hereafter be secured by one or more other mortgages, deeds of trust and other security agreements (collectively, as the same may be amended and in effect from time to time, are herein collectively called the “Other Mortgages”), which cover or will hereafter cover other properties that are or may be located in various states (the “Other Collateral”). The Other Mortgages will secure the Debt and the performance of the other covenants and agreements of Mortgagor set forth in the Loan Documents. Upon the occurrence of an Event of Default, Mortgagee may proceed under this Mortgage and/or any or all the Other Mortgages against either the Mortgaged Property and/or any or all the Other Collateral in one or more parcels and in such manner and order as Mortgagee shall elect. Mortgagor hereby irrevocably waives and releases, to the extent permitted by law, and whether now or hereafter in force, any right to have the Mortgaged Property and/or the Other Collateral marshaled upon any foreclosure of this Mortgage or any Other Mortgage.
(b) Without limiting the generality of the foregoing, and without limitation as to any other right or remedy provided to Mortgagee in this Mortgage or the other Loan Documents, in the case of an Event of Default (i) Mortgagee shall have the right to pursue all of its rights and remedies under this Mortgage and the Loan Documents, at law and/or in equity, in one proceeding, or separately and independently in separate proceedings from time to time, as Mortgagee, in its sole and absolute discretion, shall determine from time to time, (ii) Mortgagee shall not be required
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to either marshall assets, sell the Mortgaged Property and/or any Other Collateral in any particular order of alienation (and may sell the same simultaneously and together or separately), or be subject to any “one action” or “election of remedies” law or rule with respect to the Mortgaged Property and/or any Other Collateral, (iii) the exercise by Mortgagee of any remedies against any one item of Mortgaged Property and/or any Other Collateral will not impede Mortgagee from subsequently or simultaneously exercising remedies against any other item of Mortgaged Property and/or Other Collateral, (iv) all liens and other rights, remedies or privileges provided to Mortgagee herein shall remain in full force and effect until Mortgagee has exhausted all of its remedies against the Mortgaged Property and all Mortgaged Property has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt, and (v) Mortgagee may resort for the payment of the Debt to any security held by Mortgagee in such order and manner as Mortgagee, in its discretion, may elect and Mortgagee may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Mortgagee thereafter to foreclose this Mortgage.
(c) Without notice to or consent of Mortgagor and without impairment of the lien and rights created by this Mortgage, Mortgagee may, at any time (in its sole and absolute discretion, but Mortgagee shall have no obligation to), execute and deliver to Mortgagor a written instrument releasing all or a portion of the lien of this Mortgage as security for any or all of the obligations of Mortgagor now existing or hereafter arising under or in respect of the Note, the Loan Agreement and each of the other Loan Documents, whereupon following the execution and delivery by Mortgagee to Mortgagor of any such written instrument of release, this Mortgage shall no longer secure such obligations of Mortgagor so released.
26. Governing Law. WITH RESPECT TO MATTERS RELATING TO THE CREATION, PERFECTION AND PROCEDURES RELATING TO THE ENFORCEMENT OF THIS MORTGAGE OR THE LIEN HEREOF, THIS MORTGAGE SHALL BE GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, EXCEPT AS EXPRESSLY SET FORTH ABOVE IN THIS PARAGRAPH AND TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES SHALL GOVERN ALL MATTERS RELATING TO THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. EXCEPT AS EXPRESSLY SET FORTH ABOVE IN THIS PARAGRAPH AND TO THE FULLEST EXTENT PERMITTED BY THE LAW OF THE STATE OF FLORIDA, ALL PROVISIONS OF THE LOAN AGREEMENT INCORPORATED HEREIN BY REFERENCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, AS SET FORTH IN THE GOVERNING LAW PROVISION OF THE LOAN AGREEMENT.
27. Exculpation. The liability of Mortgagor hereunder is limited pursuant to Section 10.1 of the Loan Agreement.
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28. Variable Interest Rate. The Loan secured by this Mortgage is a variable interest rate loan, as more particularly set forth in the Loan Agreement.
29. Maturity Date. The Debt initially matures on October 9, 2028, as the same may be extended or changed pursuant to the Loan Agreement.
30. Interest Rate Protection Agreement. Mortgagor is or may be a party to an Interest Rate Protection Agreement, a default beyond the expiration of any applicable grace period under which shall also constitute an Event of Default under the Loan Agreement and this Mortgage. Any such Interest Rate Protection Agreement provides or shall provide that an Event of Default under this Mortgage shall constitute a default under such an Interest Rate Protection Agreement. Mortgagor’s rights under any Interest Rate Protection Agreement have been assigned to Mortgagee pursuant to this Mortgage and that certain Collateral Assignment of Interest Rate Protection Agreement of even date herewith as additional security for the Note. Mortgagor acknowledges and agrees that Mortgagor’s obligations under any Interest Rate Protection Agreement and all sums payable by Mortgagor to Mortgagee in connection therewith shall be secured by this Mortgage.
PART II
STATE-SPECIFIC PROVISIONS
31. Conflicts With Part I. In the event of any conflict between the provisions of this Part II and any provision of Part I, then the provisions of this Part II shall control.
32. Future Advances. It is agreed that this Mortgage shall also secure such future or additional advances as may be made by the Mortgagee at its option to the Mortgagor, or its successor in title, for any purpose, provided that all those advances are to be made within twenty (20) years from the date of this Mortgage, or within such lesser period of time as may be provided hereafter by law as a prerequisite for the sufficiency of actual notice or record notice of the optional future or additional advances as against the rights of creditors or subsequent purchasers for valuable consideration. The initial amount of indebtedness secured by this Mortgage is equal to Forty-Seven Million Seven Hundred Thousand and No/100 Dollars ($47,700,000.00). The total amount of indebtedness secured by this Mortgage may decrease or increase from time to time, but the total unpaid principal balance so secured at any one time shall not exceed two hundred percent (200%) of the original principal amount of the Note, plus interest, and any disbursements made for the payment of taxes, levies or insurance on the Property with interest on those disbursements. If, pursuant to Florida Statutes Section 697.04, Mortgagor files a notice specifying the dollar limit beyond which future advances made pursuant to this Mortgage will not be secured by this Mortgage, then Mortgagor shall, within one day of filing such notice, notify Mortgagee and its counsel by certified mail. In addition, such a filing shall constitute a default hereunder.
33. Maximum Principal Amount. Mortgagor covenants that it has not executed or delivered any documentation or made any promises or covenants to limit the maximum principal amount that may be secured by the Mortgage as authorized by F.S. §697.04.
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34. Florida Documentary Stamp and Intangible Taxes. If at any time the State of Florida shall determine that the intangible tax paid in connection with this Mortgage is insufficient or that the documentary stamps affixed to or paid in connection with this Mortgage are insufficient, and that additional intangible tax should be paid or that additional documentary stamp tax should be paid, then Mortgagor shall pay the same, together with any interest, penalties, costs and attorneys’ fees imposed or incurred in connection with such determination. In addition to, and without limiting the generality of, the foregoing, Mortgagor hereby agrees to defend, indemnify and hold Mortgagee harmless from and against any and all liability for documentary stamp taxes and intangible taxes, together with all interest, penalties, costs and attorneys’ fees incurred in connection therewith, that at any time may be levied, assessed or imposed by the State of Florida or any other governmental authority upon this Mortgage, the Note or any of the other Loan Documents, or any amendment, extension, renewal, restatement, increase or modification of any of the foregoing, or upon Mortgagee by virtue of owning or holding any of the foregoing instruments or documents, all of which shall be secured by the lien and security interest of the Loan Documents.
35. Time of the Essence. TIME IS OF THE ESSENCE of this Mortgage. No waiver of any obligation hereunder or of any obligation secured hereby shall at any time thereafter be held to be a waiver of the terms hereof or of the terms of the Note secured hereby.
36. Florida Release. Mortgagor hereby releases and forever discharges the law firm Firsel Ross Gussis & Alexander LLC and all of such firm’s attorneys and employees, from any and all loss, costs, expense, damage or claim, whether or not valid, including, without limitation, reasonable out of pocket attorneys’ fees and disbursements, arising under or in any way connected with Section 697.10, Florida Statutes, or any similar law. Mortgagor hereby verifies and confirms, to Mortgagor’s knowledge, all factual information in this Mortgage, including the accuracy and correctness of the legal description set forth herein (based solely on the title commitment issued in connection with the issuance of the Loan). In the event any factual errors are found in this Mortgage or in the legal description, Mortgagor and Mortgagee shall, at Mortgagor’s sole cost and expense, promptly correct or cause to be corrected subsequent to the date hereof any and all such error. Notwithstanding the foregoing, all rights of Mortgagor and Mortgagee are preserved against their respective title insurers, the surveyor, the engineer, if any, and the appraiser, if any, and after payment is made by Mortgagor, Mortgagor shall be subrogated to such rights.
37. Cooperation with Future Assignment of Mortgage. At the written request of Mortgagor that it wishes to have Mortgagee assign this Mortgage and endorse the Note secured hereby to another lender in connection with any renewal of the Note and this Mortgage permitted under the Loan Documents (as may then be permissible under applicable Florida law), Mortgagee (at no cost to Mortgagee) shall cooperate with Mortgagor to promptly provide such assignment documentation (on commercially reasonable customary forms) to assignee lender or Mortgagor. Mortgagee acknowledges that if such assignment is effectuated, this Mortgage and the Note will not be released of record or discharged upon payment in full to Mortgagee of all amounts then due under the Loan as set forth in Mortgagee’s payoff letter. Mortgagor shall pay all costs and expenses of the Mortgagee associated with such assignment and any request for such
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assignment, including, without limitation, reasonable attorneys’ fees and the costs and expenses of the preparation of assignments and any other document, instrument or agreement.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, Mortgagor has executed this instrument as of the day and year first above written.
MORTGAGOR:
ENVY RECREATIONAL LLC,
a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
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GUARANTY OF RECOURSE OBLIGATIONS
made by
BERNARD HSIAO
MICHAEL HSIAO
SHAUN QUIN
GLEN STEWARD, and
STEWARDS, INC.,
as guarantors,
in favor of
LOANCORE CAPITAL CREDIT REIT LLC
Dated as of September 23, 2026
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GUARANTY OF RECOURSE AND OTHER OBLIGATIONS
This GUARANTY OF RECOURSE AND OTHER OBLIGATIONS (this
“Guaranty”), dated as of September 23, 2026, made by BERNARD HSIAO, an individual having an address at 350 NW 8th Court, Suite A, Plantation, Florida 33317 (“B. Hsiao”), MICHAEL HSIAO, an individual having an address at 350 NW 8th Court, Suite A, Plantation, Florida 33317 (“M. Hsiao”), SHAUN QUIN, an individual having an address at 4300 N. University Drive, Suite D105, Lauderhill, Florida 33351 (“Quin”), GLEN STEWARD, an individual having an address at 4300 N. University Drive, Suite D105, Lauderhill, Florida 33351 (“Steward”, and together with B. Hsiao, M. Hsiao and Quin, jointly and severally, each an “Individual Guarantor”), and STEWARDS, INC., a Nevada corporation having an office at 4300 N. University Drive, Suite D105, Lauderhill, Florida 33351 (“Entity Guarantor”, Entity Guarantor and each Individual Guarantor is a “Guarantor” and collectively, “Guarantors”), in favor of LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company (together with its successors and assigns, hereinafter referred to as “Lender”), having an address c/o LoanCore Capital, 55 Railroad Avenue, Suite 100, Greenwich, Connecticut 06830.
R E C I T A L S:
A. Pursuant to that certain Loan Agreement dated as of the date hereof (as the same may be amended, modified, supplemented, restated or replaced from time to time, the “Loan Agreement”) between Envy Recreational LLC, a Delaware limited liability company (together with its permitted successors and assigns, “Envy Recreational”), and Envy Development DE, LLC, a Delaware limited liability company (together with its permitted successors and assigns, “Envy Development”; Envy Recreational and Envy Development, individually or collectively as the context may require, jointly and severally, “Borrower”) and Lender, Lender has agreed to make a loan (the “Loan”) to Borrower in the original principal amount of Forty-Seven Million Seven Hundred Thousand and No/100 Dollars ($47,700,000.00), subject to the terms and conditions of the Loan Agreement;
B. As a condition to Lender’s making the Loan, Lender is requiring that Guarantors execute and deliver to Lender this Guaranty; and
C. Each Guarantor hereby acknowledges that it is the owner of direct or indirect interests in Borrower, and, accordingly, that it will materially benefit from Lender agreeing to make the Loan;
NOW, THEREFORE, in consideration of the premises set forth herein and as an inducement for and in consideration of the agreement of Lender to make the Loan pursuant to the Loan Agreement, each Guarantor hereby agrees, covenants, represents and warrants to Lender as follows:
1. Definitions.
(a) All capitalized terms used and not defined herein shall have the respective meanings given such terms in the Loan Agreement.
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(b) The term “Guaranteed Obligations” means (i) Borrowers’ Recourse Liabilities, (ii) from and after the date that any Springing Recourse Event occurs, payment of all the Debt as and when the same is due in accordance with the Loan Documents (and whether accrued prior to, on or after such date) and (iii) the payment when due of all (A) scheduled monthly Debt Service payments when due pursuant to the Loan Agreement and (B) all operating expenses of the Property, including, without limitation, Taxes, Insurance Premiums, maintenance costs, utilities, common charges, and management fees, due and owing from time to time in connection with the Property; provided, however, that operating expenses shall not include (w) any Capital Expenses, tenant improvement costs, leasing commissions, or development costs, (x) costs and expenses of any litigation, arbitration or other dispute, (y) any environmental investigation, remediation, or removal costs, or (z) any casualty or condemnation restoration costs; provided, however, that for the avoidance of doubt, the same shall constitute Guaranteed Obligations to the extent covered by clause (i) and/or clause (ii) of this definition of Guaranteed Obligations.
(c) Notwithstanding anything to the contrary in this Guaranty, Guarantors’ liability with respect to that certain Guaranteed Obligation described in clause 1(b)(iii) hereof shall not extend beyond the earlier to occur of (x) Borrower’s Tender of a deed-in-lieu of foreclosure to Lender or Lender’s designee with respect to the Properties and (y) the date that Lender or any Affiliate of Lender (or Lender’s or any Affiliate of Lender’s designee) acquires title to the Properties (whether at foreclosure sale or other similar transfer), but, notwithstanding the occurrence of an event described in either (x) or (y) above, (i) in no event shall Guarantors’ liability with respect to that certain Guaranteed Obligation described in clause 1(b)(iii) hereof terminate prior to the Initial Stated Maturity Date (i.e., October 9, 2028) and (ii) such liability of Guarantors with respect to that certain Guaranteed Obligation described in clause 1(b)(iii) hereof shall be calculated assuming Borrowers’ continued ownership and operation of the Properties subject to the terms and conditions of the Loan Documents through the Initial Stated Maturity Date (i.e., October 9, 2028) (“Tender” meaning satisfaction of all of the requirements set forth on Schedule 1 hereto).
2. Guaranty.
(a) Each Guarantor hereby irrevocably, absolutely and unconditionally guarantees to Lender the full, prompt and complete payment when due of the Guaranteed Obligations.
(b) All sums payable to Lender under this Guaranty shall be payable on demand and without reduction for any offset, claim, counterclaim or defense.
(c) Each Guarantor hereby agrees to pay, protect, indemnify, defend and save harmless Lender from and against any and all actual fees, costs, losses, liabilities, obligations, claims, causes of action, suits, demands, judgements, expenses and damages (but excluding any consequential, special or punitive damages), including reasonable attorneys’ fees and disbursements, which Lender may suffer or incur or which otherwise may arise by reason of Borrower’s failure to pay or perform any of the Guaranteed Obligations when due, irrespective of whether such fees, costs, losses, liabilities, claims, causes of action, expenses or damages are incurred by Lender prior or subsequent to (i) Lender’s declaring the Principal, interest and other sums evidenced or secured by the Loan Documents to be due and payable, (ii) the commencement
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or completion of a judicial or non-judicial foreclosure of the Mortgage or (iii) the conveyance of all or any portion of the Property by deed-in-lieu of foreclosure.
(d) Each Guarantor agrees that no portion of any sums applied (other than sums received from such Guarantor in full or partial satisfaction of its obligations hereunder), from time to time, in reduction of the Debt shall be deemed to have been applied in reduction of the Guaranteed Obligations until such time as the Debt has been paid in full, or Guarantors shall have made the full payment required hereunder, it being the intention hereof that the Guaranteed Obligations shall be the last portion of the Debt to be deemed satisfied.
3. Representations and Warranties. Each Guarantor hereby represents and warrants to Lender as follows as to itself (which representations and warranties shall be given as of the date hereof and shall survive the execution and delivery of this Guaranty):
(a) Organization, Authority and Execution. Entity Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all necessary power and authority to own its properties and to conduct its business as presently conducted or proposed to be conducted and to enter into and perform this Guaranty and all other agreements and instruments to be executed by it in connection herewith. This Guaranty has been duly executed and delivered by each Guarantor.
(b) Enforceability. This Guaranty constitutes a legal, valid and binding obligation of each Guarantor, enforceable against each Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally.
(c) No Violation. The execution, delivery and performance by each Guarantor of its obligations under this Guaranty has been duly authorized by all necessary action on behalf of Entity Guarantor and do not and will not violate any law, regulation, order, writ, injunction or decree of any court or governmental body, agency or other instrumentality applicable to a Guarantor, or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the assets of a Guarantor pursuant to the terms of Entity Guarantor’s organization documents, or any mortgage, indenture, agreement or instrument to which a Guarantor is a party or by which it or any of its properties is bound. No Guarantor is in default under any other guaranty which it has provided to Lender.
(d) No Litigation. There are no actions, suits or proceedings at law or at equity, pending or, to each Guarantor’s best knowledge, threatened against or affecting a Guarantor or which involve or might involve the validity or enforceability of this Guaranty or which might materially adversely affect the financial condition of a Guarantor or the ability of a Guarantor to perform any of its obligations under this Guaranty. No Guarantor is in default beyond any applicable grace or cure period with respect to any order, writ, injunction, decree or demand of any Governmental Authority which might materially adversely affect the financial condition of such Guarantor or the ability of such Guarantor to perform any of its obligations under this Guaranty.
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(e) Consents. All consents, approvals, orders or authorizations of, or registrations, declarations or filings with, all Governmental Authorities (collectively, the “Consents”) that are required in connection with the valid execution, delivery and performance by Guarantors of this Guaranty have been obtained and each Guarantor agrees that all Consents required in connection with the carrying out or performance of any of such Guarantor’s obligations under this Guaranty will be obtained when required.
(f) Financial Statements and Other Information. All financial statements of Guarantors heretofore delivered to Lender are true and correct in all material respects and fairly present the financial condition of Guarantors as of the respective dates thereof, and no materially adverse change has occurred in the financial conditions reflected therein since the respective dates thereof. None of the aforesaid financial statements or any certificate or statement furnished to Lender by or on behalf of a Guarantor in connection with the transactions contemplated hereby, and none of the representations and warranties in this Guaranty contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein or herein not misleading. No Guarantor is insolvent within the meaning of the United States Bankruptcy Code or any other applicable law, code or regulation and the execution, delivery and performance of this Guaranty will not render any Guarantor insolvent.
(g) Consideration. Each Guarantor is the owner, directly or indirectly, of certain legal and beneficial equity interests in Borrower.
4. Financial Statements.
(a) Entity Guarantor shall deliver to Lender, (a) within one hundred twenty (120) days after the end of each fiscal year of such Guarantor, a complete copy of such Guarantor’s annual financial statements prepared by such Guarantor and accompanied by audited consolidated financial statements of such Guarantor for the applicable fiscal year, prepared by Guarantor and audited by an independent PCAOB-registered auditor, (b) within thirty (30) days after the end of each fiscal quarter of such Guarantor, financial statements (including (1) a balance sheet as of the end of such fiscal quarter, (2) a statement of income and expense for such fiscal quarter, (3) a statement of cash flow for such fiscal quarter and (4) a statement of change in financial position) certified by the chief financial officer of such Guarantor and in form, content, level of detail and scope reasonably satisfactory to Lender, which certificate shall contain a statement that the requirements described in Section 6 have been satisfied), and (c) thirty (30) days after request by Lender, such other financial information with respect to such Guarantor as Lender may reasonably request.
(b) Each Individual Guarantor shall deliver to Lender, (a) (i) within sixty (60) after the date filed, a complete copy of such Guarantor’s tax return prepared by an independent certified public accountant, certified by such Guarantor and in form, content, level of detail and scope reasonably acceptable to Lender, and (ii) simultaneously with such Guarantor’s delivery to Lender of such tax return, a certificate of such Guarantor setting forth the Net Worth (as defined below) and Liquid Assets (as defined below) of such Guarantor in form, content, level of detail and scope reasonably acceptable to Lender, and (b) thirty (30) days after request by Lender, such other financial information with respect to such Guarantor as Lender may reasonably request.
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5. Unconditional Character of Obligations of Each Guarantor.
(a) The obligations of Guarantors hereunder shall be irrevocable, absolute and unconditional, irrespective of the validity, regularity or enforceability, in whole or in part, of the other Loan Documents or any provision thereof, or the absence of any action to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against Borrower, any Guarantor or any other Person or any action to enforce the same, any failure or delay in the enforcement of the obligations of Borrower under the other Loan Documents or Guarantors under this Guaranty, or any setoff or counterclaim, and irrespective of any other circumstances which might otherwise limit recourse against a Guarantor by Lender or constitute a legal or equitable discharge or defense of a guarantor or surety. Lender may enforce the obligations of any Guarantor under this Guaranty by a proceeding at law, in equity or otherwise, independent of any loan foreclosure or similar proceeding or any deficiency action against Borrower or any other Person at any time, either before or after an action against the Property or any part thereof, Borrower or any other Person. This Guaranty is a guaranty of payment and performance and not merely a guaranty of collection, in each case, solely with respect, and to the extent of, the Guaranteed Obligations. Each Guarantor waives diligence, notice of acceptance of this Guaranty, filing of claims with any court, any proceeding to enforce any provision of any other Loan Document, against such Guarantor, Borrower or any other Person, any right to require a proceeding first against Borrower or any other Person, or to exhaust any security (including, without limitation, the Property) for the performance of the Guaranteed Obligations or any other obligations of Borrower or any other Person, or any protest, presentment, notice of default or other notice or demand whatsoever (except to the extent expressly provided to the contrary in this Guaranty).
(b) The obligations of Guarantors under this Guaranty, and the rights of Lender to enforce the same by proceedings, whether by action at law, suit in equity or otherwise, shall not be in any way affected by any of the following:
(i) any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, receivership, conservatorship, winding up or other similar proceeding involving or affecting Borrower, the Property or any part thereof, any Guarantor or any other Person;
(ii) any failure by Lender or any other Person, whether or not without fault on its part, to perform or comply with any of the terms of the Loan Agreement, or any other Loan Documents, or any document or instrument relating thereto;
(iii) the sale, transfer or conveyance of the Property or any interest therein to any Person, whether now or hereafter having or acquiring an interest in the Property or any interest therein and whether or not pursuant to any foreclosure, trustee sale or similar proceeding against Borrower or the Property or any interest therein;
(iv) the conveyance to Lender, any Affiliate of Lender or Lender’s nominee of the Property or any interest therein by a deed-in-lieu of foreclosure;
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(v) the release of Borrower or any other Person from the performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law or otherwise; or
(vi) the release in whole or in part of any collateral for any or all Guaranteed Obligations or for the Loan or any portion thereof.
(c) Except as otherwise specifically provided in this Guaranty, each Guarantor hereby expressly and irrevocably waives all defenses in an action brought by Lender to enforce this Guaranty based on claims of waiver, release, surrender, alteration or compromise and all setoffs, reductions, or impairments, whether arising hereunder or otherwise.
(d) Lender may deal with Borrower and Affiliates of Borrower in the same manner and as freely as if this Guaranty did not exist and shall be entitled, among other things, to grant Borrower or any other Person such extension or extensions of time to perform any act or acts as may be deemed advisable by Lender, at any time and from time to time, without terminating, affecting or impairing the validity of this Guaranty or the obligations of Guarantors hereunder.
(e) No compromise, alteration, amendment, modification, extension, renewal, release or other change of, or waiver, consent, delay, omission, failure to act or other action with respect to, any liability or obligation under or with respect to, or of any of the terms, covenants or conditions of, the Loan Documents shall in any way alter, impair or affect any of the obligations of Guarantors hereunder, and Guarantors agree that if any Loan Document is modified with Lender’s consent, the Guaranteed Obligations shall automatically be deemed modified to include such modifications.
(f) Lender may proceed to protect and enforce any or all of its rights, powers and remedies under this Guaranty by suit in equity or action at law (including foreclosure of all or any portion of the collateral for the Loan), whether for the specific performance of any covenants or agreements contained in this Guaranty or otherwise, or to take any action authorized or permitted under applicable law (in any order), and shall be entitled to require and enforce the performance of all acts and things required to be performed hereunder by Guarantors. Each and every remedy of Lender shall, to the extent permitted by law, be non-exclusive and cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity.
(g) No waiver shall be deemed to have been made by Lender of any rights hereunder unless the same shall be in writing and signed by Lender, and any such waiver shall be a waiver only with respect to the specific matter involved and shall in no way impair the rights of Lender or the obligations of Guarantors to Lender in any other respect or at any other time.
(h) At the option of Lender, any Guarantor may be joined in any action or proceeding commenced by Lender against Borrower in connection with or based upon any other Loan Documents and recovery may be had against any Guarantor in such action or proceeding or in any independent action or proceeding against such Guarantor to the extent of such Guarantor’s
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liability hereunder, without any requirement that Lender first assert, prosecute or exhaust any remedy or claim against Borrower or any other Person, or any security for the obligations of Borrower or any other Person.
(i) Guarantors agree that this Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment is made by Borrower or any Guarantor to Lender and such payment is rescinded or must otherwise be returned by Lender (as determined by Lender in its sole and absolute discretion) upon insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, receivership, conservatorship, winding up or other similar proceeding involving or affecting Borrower or any Guarantor, all as though such payment had not been made.
(j) In the event that any Guarantor shall advance or become obligated to pay any sums under this Guaranty or in connection with the Guaranteed Obligations or in the event that for any reason whatsoever Borrower or any subsequent owner of the Property or any part thereof is now, or shall hereafter become, indebted to any Guarantor, such Guarantor agrees that (i) the amount of such sums and of such indebtedness and all interest thereon shall at all times be subordinate as to lien, the time of payment and in all other respects to all sums, including Principal and interest and other amounts, at any time owed to Lender under the Loan Documents, and (ii) such Guarantor shall not be entitled to enforce or receive payment thereof until all Principal, interest and other sums due pursuant to the Loan Documents have been paid in full. Nothing herein contained is intended or shall be construed to give any Guarantor any right of subrogation in or under the Loan Documents or any right to participate in any way therein, or in the right, title or interest of Lender in or to any collateral for the Loan, notwithstanding any payments made by any Guarantor under this Guaranty, until the actual and irrevocable receipt by Lender of payment in full of all Principal, interest and other sums due with respect to the Loan or otherwise payable under the Loan Documents. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when any such sums due and owing to Lender shall not have been fully paid, such amount shall be paid by such Guarantor to Lender for credit and application against such sums due and owing to Lender.
(k) Guarantors’ obligations hereunder shall survive a foreclosure, deed-in-lieu of foreclosure or similar proceeding involving the Property and the exercise by Lender of any or all of its remedies pursuant to the Loan Documents.
6. Covenants.
(a) As used in this Section 6, the following terms shall have the respective meanings set forth below:
(i) “GAAP” shall mean generally accepted accounting principles, consistently applied.
(ii) “Liquid Assets” shall mean any of the following, but only to the extent owned individually and located in the United States: assets in the form of cash, cash equivalents, obligations of (or fully guaranteed as to principal and interest by) the United States or any agency or instrumentality thereof (provided the full faith and credit of
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the United States supports such obligation or guarantee), certificates of deposit issued by a commercial bank having net assets of not less than $500 million, securities listed and traded on a recognized stock exchange or traded over the counter and listed in the National Association of Securities Dealers Automatic Quotations, or liquid debt instruments that have a readily ascertainable value and are regularly traded in a recognized financial market.
(iii) “Net Worth” shall mean, as of a given date, (x) the total assets located in the United States of a Guarantor as of such date (exclusive of any interest in the Property or in any other asset that is part of the collateral for the Loan) less (y) such Guarantor’s total liabilities as of such date, determined in accordance with GAAP.
(b) Until all of the Guaranteed Obligations have been paid in full, Guarantors (i) shall collectively maintain (A) a Net Worth in excess of $50,000,000.00 (the “Net Worth Threshold”) and (B) Liquid Assets having a market value of at least $5,000,000.00 (the “Liquid Assets Threshold”) and (ii) shall not sell, pledge, mortgage or otherwise transfer any of its assets, or any interest therein, which would cause Guarantors’ Net Worth to fall below the Net Worth Threshold or Guarantors’ Liquid Assets to fall below the Liquid Assets Threshold.
(c) No Guarantor shall, at any time while a default in the payment of the Guaranteed Obligations has occurred and is continuing, either (i) enter into or effectuate any transaction with any Affiliate which would reduce the Net Worth of such Guarantor (including the payment of any dividend or distribution to a shareholder, or the redemption, retirement, purchase or other acquisition for consideration of any stock or interest in Entity Guarantor) or (ii) sell, pledge, mortgage or otherwise transfer to any Person any of such Guarantor’s assets, or any interest therein.
(d) Entity Guarantor shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence and comply with all Legal Requirements applicable to it and its assets. Entity Guarantor shall not engage in any dissolution, liquidation or consolidation or merger with or into any other business entity without obtaining the prior consent of Lender.
(e) Each Guarantor shall give prompt notice to Lender of any litigation or governmental proceedings pending or threatened against such Guarantor which is reasonably likely to cause a Material Adverse Effect on such Guarantor’s condition (financial or otherwise) or business (including such Guarantor’s ability to perform the Guaranteed Obligations hereunder or under the other Loan Documents to which it is a party).
(f) Each Guarantor will use its good faith and commercially reasonable efforts to comply with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over such Guarantor, including those relating to money laundering and terrorism.
(g) Each Guarantor shall, at such Guarantor’s sole cost and expense:
(i) cure any clerical errors or omissions in the execution and delivery of the Loan Documents to which such Guarantor is a party and execute and deliver, or cause to be executed and delivered, to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts reasonably necessary or desirable, to correct any clerical errors or
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omissions in the Loan Documents to which such Guarantor is a party, as Lender may reasonably require; and
(ii) do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Guaranty and the other Loan Documents to which such Guarantor is a party, as Lender may reasonably require from time to time.
7. Entire Agreement/Amendments. This instrument represents the entire agreement between the parties with respect to the subject matter hereof. The terms of this Guaranty shall not be waived, altered, modified, amended, supplemented or terminated in any manner whatsoever except by written instrument signed by Lender and Guarantors.
8. Successors and Assigns. This Guaranty shall be binding upon each Guarantor, and such Guarantor’s estate, heirs, personal representatives, successors and assigns, may not be assigned or delegated by any Guarantor and shall inure to the benefit of Lender and its successors and assigns.
9. Governing Law.
(a) THIS GUARANTY WAS NEGOTIATED IN THE STATE OF NEW YORK AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT TO THE LOAN AGREEMENT WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY AND THE NOTE, AND THIS GUARANTY AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK AND EACH GUARANTOR WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH GUARANTOR DOES HEREBY DESIGNATE AND APPOINT COZEN O’CONNOR, ATTENTION: WILLIAM F. DAVIS, ESQ., HAVING AN ADDRESS AT 3 WTC, 175 GREENWICH STREET, 55TH FLOOR, NEW YORK, NEW YORK 10007, AS ITS
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AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF SUCH GUARANTOR MAILED OR DELIVERED TO EACH SUCH GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON EACH SUCH GUARANTOR (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH GUARANTOR (i) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR. NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO INSTITUTE ANY LEGAL SUIT, ACTION OR PROCEEDING FOR THE ENFORCEMENT OR FORECLOSURE OF ANY LIEN ON ANY COLLATERAL FOR THE LOAN IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION(S) THAT LENDER MAY ELECT IN ITS SOLE AND ABSOLUTE DISCRETION, AND EACH GUARANTOR WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
10. Section Headings. The headings of the sections and paragraphs of this Guaranty have been inserted for convenience of reference only and shall in no way define, modify, limit or amplify any of the terms or provisions hereof.
11. Severability. Any provision of this Guaranty which may be determined by any competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, each Guarantor hereby waives any provision of law which renders any provision hereof prohibited or unenforceable in any respect.
12. WAIVER OF TRIAL BY JURY. EACH GUARANTOR HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY LITIGATION, ACTION OR PROCEEDING ARISING HEREUNDER OR IN CONNECTION THEREWITH.
13. Other Guaranties. The obligations of each Guarantor hereunder are separate and distinct from, and in addition to, the obligations of such Guarantor now or hereafter arising under any other guaranties, indemnification agreements or other agreements to which such Guarantor is now or hereafter becomes a party. In no event shall any Guarantor be entitled to any credit against amounts due under this Guaranty by reason of amounts paid to Lender by Guarantors
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(or any of them) or any other person under or by reason of the other guaranties, indemnification agreements or other agreements to which Guarantors (or any of them) are now or hereafter become a party.
14. Notices. All notices, demands, requests, consents, approvals or other communications (collectively called “Notices”) required or permitted to be given hereunder to Lender or any Guarantor or which are given to Lender or any Guarantor with respect to this Guaranty shall be in writing and shall be sent by United States registered or certified mail, return receipt requested, postage prepaid, addressed as set forth below, or personally delivered with receipt acknowledged to such address, or in either case, to such other address(es) as the party in question shall have specified most recently by like Notice.
If to Lender, to:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Kimberly Lutterman
E-mail: xxxxx@loancore.com
with a copy to:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Notices
E-mail: xxxxx@loancore.com
with a copy to:
Firsel Ross Gussis & Alexander
10 Parkway North Boulevard, Suite 110
Deerfield, Illinois 60015
Attention: Samuel P. Gussis, Esq.
E-mail: xxxxx@firselross.com
If to Guarantors, to:
c/o Stewards, Inc.
4300 N. University Drive, Suite D105 Lauderhill, Florida 33351
Attention: Katy Murless, Chief Financial Officer
Email: xxxxx@stewards.com
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with a copy to:
Cozen O’Connor
One Liberty Place
1650 Market Street, Suite 2800
Philadelphia, Pennsylvania 19103
Attention: Howard Grossman, Esq.
E-mail: xxxxx@cozen.com
and
Scott Doney, Esq.
3651 Lindell Rd Suite D121
Las Vegas, Nevada 89103
Email: xxxxx@doneylawfirm.com
Notices which are given in the manner aforesaid shall be deemed to have been given or served for all purposes hereunder (i) on the date on which such notice shall have been personally delivered as aforesaid, (ii) on the date of delivery by mail as evidenced by the return receipt therefor, or (iii) on the date of failure to deliver by reason of refusal to accept delivery or changed address of which no Notice was given.
15. Guarantor’s Receipt of Loan Documents. Each Guarantor by its execution hereof acknowledges receipt of true copies of all of the Loan Documents, the terms and conditions of which are hereby incorporated herein by reference.
16. Interest; Expenses.
(a) If Guarantors fail to pay all or any sums due hereunder upon demand by Lender, the amount of such sums payable by Guarantors to Lender shall bear interest from the date of demand until paid at the Default Rate in effect from time to time.
(b) Each Guarantor hereby agrees to pay all costs, charges and expenses, including reasonable attorneys’ fees and disbursements, that may be incurred by Lender in enforcing the covenants, agreements, obligations and liabilities of Guarantors under this Guaranty.
17. Change in Residency. B. Hsiao, M. Hsiao and Steward hereby represent and warrant that they are a resident of the State of Florida and that their primary domicile is in the State of Florida. Quin hereby represents and warrants that he is a resident of the State of New York and that his primary domicile is in the State of New York. No Guarantor shall change its State of residence and/or primary domicile to a State that is a community property jurisdiction unless (i) such Guarantor first (A) provides Lender at least ten (10) Business Days prior written notice thereof and (B) if such Guarantor is married at the time, causes such Guarantor’s spouse to execute and deliver to Lender a spousal consent with respect to this Guaranty (which spousal consent shall be in form and substance satisfactory to Lender) (a “Spousal Consent”) and (ii) if a Guarantor is not married at the time and subsequently marries, or if a Guarantor enters into a new marriage, at any time when such Guarantor is a resident (and/or has a primary domicile) in a
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community property jurisdiction, such Guarantor causes his spouse to execute and deliver to Lender a Spousal Consent within ten (10) days after the occurrence of any such marriage. Guarantors’ failure to comply with any of the foregoing shall, at Lender’s option, constitute an “Event of Default” hereunder and under the Loan Agreement.
18. Joint and Several Obligations. Each Guarantor shall have joint and several liability for the obligations of Guarantors hereunder.
19. Counterparts. This Guaranty may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.
20. Gender; Number; General Definitions. All references to sections and schedules are to sections and schedules in or to this Guaranty unless otherwise specified. All uses of the word “including” or “include” or similar words shall mean “including, without limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty. 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. The phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all reasonable attorneys’, paralegal and law clerk fees and disbursements, including fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property and/or in enforcing its rights hereunder.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of the date first above written.
GUARANTORS:
/s/ Bernard Hsiao
BERNARD HSIAO, an individual
/s/ Michael Hsiao
MICHAEL HSIAO, an individual
/s/ Shaun Quin
SHAUN QUIN, an individual
/s/ Glen Steward
GLEN STEWARD, an individual
STEWARDS, INC.,
a Nevada corporation
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Chief Executive Officer
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GUARANTY OF PAYMENT
made by
SRC ENVY HOLDCO LLC,
as guarantor, in favor of
LOANCORE CAPITAL CREDIT REIT LLC
Dated as of September 23, 2026
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GUARANTY OF PAYMENT
This GUARANTY OF PAYMENT (this “Guaranty”), dated as of September 23, 2026, made by SRC ENVY HOLDCO LLC, a Delaware limited liability company, having an address at 4300 N. University Drive, Suite D105, Lauderhill, FL 33351 (“Guarantor”), in favor of LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company (together with its successors and assigns, hereinafter referred to as “Lender”), having an address c/o LoanCore Capital, 55 Railroad Avenue, Suite 100, Greenwich, Connecticut 06830.
R E C I T A L S:
A. Pursuant to that certain Loan Agreement dated as of the date hereof (as the same may be amended, modified, supplemented, restated or replaced from time to time, the “Loan Agreement”) between Envy Recreational LLC, a Delaware limited liability company (“Envy Recreational”), and Envy Development DE, LLC, a Delaware limited liability company (“Envy Development”; Envy Recreational and Envy Development are referred herein together, individually and collectively, as required by context, as “Borrower”) and Lender, Lender has agreed to make a loan (the “Loan”) to Borrower in the original principal amount of Forty-Seven Million Seven Hundred Thousand and No/100 Dollars ($47,700,000.00), subject to the terms and conditions of the Loan Agreement;
B. The Loan is evidenced by that certain Amended and Restated Promissory Note, dated the date hereof, made by Envy Development and payable to the order of Lender in such principal amount (as the same may be amended, modified, restated, severed, consolidated, renewed, replaced, or supplemented from time to time, the “Note”), which Note is subject to that certain Payment Guaranty executed by Envy Recreational in favor of Lender, dated of even date herewith;
C. It is the intention of Guarantor, and a condition to Lender’s willingness to make the Loan, that Guarantor guarantees the payment of all of the indebtedness and obligations evidenced by and created pursuant to the Loan Agreement, the Note and the other Loan Documents (as defined in the Loan Agreement) as hereinafter provided;
D. This Guaranty is secured by that certain Pledge and Security Agreement (the “Pledge Agreement”), dated as of the date hereof, from Guarantor to Lender, pursuant to which Lender was granted a first priority lien on and security interest in the Collateral (as such term is defined in the Pledge Agreement); and
E. Guarantor hereby acknowledges that Guarantor is the owner of 100% of the equity interests in each Borrower, and, accordingly, Guarantor will materially benefit from Lender’s agreeing to make the Loan;
NOW, THEREFORE, in consideration of the premises set forth herein and as an inducement for and in consideration of the agreement of Lender to make the Loan pursuant to the Loan Agreement, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees, covenants, represents and warrants to Lender as follows:
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1. Definitions.
(a) All capitalized terms used and not defined herein shall have the respective meanings given such terms in the Loan Agreement.
(b) The term “Guaranteed Obligations” means (i) the due and punctual payment in full (and not merely the collectability) of the principal, interest and premiums, if any, on and under the Note, and of the indebtedness evidenced thereby, whether on any Payment Date or at the Maturity Date or accelerated maturity or otherwise, all according to the terms of the Note and the Loan Agreement; (ii) the due and punctual payment in full (and not merely the collectability) of all other sums and charges which may at any time be due and payable under and in accordance with the Note, the Loan Agreement or any other Loan Document; and (iii) the due and punctual performance of all of the other terms, covenants and conditions contained in the Note, the Loan Agreement and the other Loan Documents on the part of Borrower to be performed.
2. Guaranty.
(a) Guarantor hereby irrevocably, absolutely and unconditionally guarantees to Lender the full, prompt and complete payment when due of the Guaranteed Obligations.
(b) All sums payable to Lender under this Guaranty shall be payable on demand and without reduction for any offset, claim, counterclaim or defense.
(c) Guarantor hereby agrees to pay, protect, indemnify, defend and save harmless Lender from and against any and all actual fees, costs, losses, liabilities, obligations, claims, causes of action, suits, demands, judgments, expenses and damages (but excluding any special, consequential or punitive damages), including reasonable attorneys’ fees and disbursements, which Lender may suffer or incur, or which otherwise may arise by reason of Borrower’s failure to pay or perform any of the Guaranteed Obligations when due, irrespective of whether such fees, costs, losses, liabilities, claims, causes of action, expenses or damages are incurred by Lender prior or subsequent to (i) Lender’s declaring the Principal, interest and other sums evidenced or secured by the Loan Documents to be due and payable, (ii) the commencement or completion of a judicial or non-judicial foreclosure of the Mortgage, (iii) the conveyance of all or any portion of the Property by deed-in-lieu of foreclosure, (iv) any UCC Sale (as hereinafter defined) of the Collateral or (v) the conveyance of all or any portion of the Collateral by conveyance-in-lieu of foreclosure.
(d) Guarantor agrees that no portion of any sums applied (other than sums received from Guarantor in full or partial satisfaction of its obligations hereunder), from time to time, in reduction of the Debt shall be deemed to have been applied in reduction of the Guaranteed Obligations until such time as the Debt has been paid in full, or Guarantor shall have made the full payment required hereunder, it being the intention hereof that the Guaranteed Obligations shall be the last portion of the Debt to be deemed satisfied.
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3. Representations and Warranties. Guarantor hereby represents and warrants to Lender as follows (which representations and warranties shall be given as of the date hereof and shall survive the execution and delivery of this Guaranty):
(a) Organization, Authority and Execution. Guarantor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all necessary power and authority to own its properties and to conduct its business as presently conducted or proposed to be conducted and to enter into and perform this Guaranty and all other agreements and instruments to be executed by it in connection herewith. This Guaranty has been duly executed and delivered by Guarantor.
(b) Enforceability. This Guaranty constitutes a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally.
(c) No Violation. The execution, delivery and performance by Guarantor of its obligations under this Guaranty has been duly authorized by all necessary action, and do not and will not violate any law, regulation, order, writ, injunction or decree of any court or governmental body, agency or other instrumentality applicable to Guarantor, or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the assets of Guarantor pursuant to the terms of Guarantor’s articles of organization, or any mortgage, indenture, agreement or instrument to which Guarantor is a party or by which it or any of its properties is bound. Guarantor is not in default under any other guaranty which it has provided to Lender.
(d) No Litigation. There are no actions, suits or proceedings at law or at equity, pending or, to Guarantor’s best knowledge, threatened against or affecting Guarantor or which involve or might involve the validity or enforceability of this Guaranty or which might materially adversely affect the financial condition of Guarantor or the ability of Guarantor to perform any of its obligations under this Guaranty. Guarantor is not in default beyond any applicable grace or cure period with respect to any order, writ, injunction, decree or demand of any Governmental Authority which might materially adversely affect the financial condition of Guarantor or the ability of Guarantor to perform any of its obligations under this Guaranty.
(e) Consents. All consents, approvals, orders or authorizations of, or registrations, declarations or filings with, all Governmental Authorities (collectively, the “Consents”) that are required in connection with the valid execution, delivery and performance by Guarantor of this Guaranty have been obtained and Guarantor agrees that all Consents required in connection with the carrying out or performance of any of Guarantor’s obligations under this Guaranty will be obtained when required.
(f) Financial Statements and Other Information. None of the aforesaid financial statements or any certificate or statement furnished to Lender by or on behalf of Guarantor in connection with the transactions contemplated hereby, and none of the representations and warranties in this Guaranty contains any untrue statement of a material fact or
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omits to state a material fact necessary in order to make the statements contained therein or herein not misleading. Guarantor is not insolvent within the meaning of the United States Bankruptcy Code or any other applicable law, code or regulation and the execution, delivery and performance of this Guaranty will not render Guarantor insolvent.
(g) Consideration. Guarantor is the owner, directly or indirectly, of certain legal and beneficial equity interests in each Borrower.
4. Financial Statements. Guarantor shall deliver to Lender, within twenty
(20) days after request by Lender, such financial information with respect to Guarantor as Lender may reasonably request.
5. Unconditional Character of Obligations of Guarantor.
(a) The obligations of Guarantor hereunder shall be irrevocable, absolute and unconditional, irrespective of the validity, regularity or enforceability, in whole or in part, of the other Loan Documents or any provision thereof, or the absence of any action to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against Borrower, Guarantor or any other Person or any action to enforce the same, any failure or delay in the enforcement of the obligations of Borrower under the other Loan Documents or Guarantor under this Guaranty, or any setoff or counterclaim, and irrespective of any other circumstances which might otherwise limit recourse against Guarantor by Lender or constitute a legal or equitable discharge or defense of a guarantor or surety. Lender may enforce the obligations of Guarantor under this Guaranty by a proceeding at law, in equity or otherwise, independent of any loan foreclosure, UCC Sale or similar proceeding or any deficiency action against Borrower or any other Person at any time, either before or after an action against the Property or any part thereof, the Collateral or any party thereof, Borrower or any other Person. This Guaranty is a guaranty of payment and performance and not merely a guaranty of collection. Guarantor waives diligence, notice of acceptance of this Guaranty, filing of claims with any court, any proceeding to enforce any provision of any other Loan Document, against Guarantor, Borrower or any other Person, any right to require a proceeding first against Borrower or any other Person, or to exhaust any security (including, without limitation, the Property or the Collateral) for the performance of the Guaranteed Obligations or any other obligations of Borrower or any other Person, or any protest, presentment, notice of default or other notice or demand whatsoever (except to the extent expressly provided to the contrary in this Guaranty).
(b) The obligations of Guarantor under this Guaranty, and the rights of Lender to enforce the same by proceedings, whether by action at law, suit in equity or otherwise, shall not be in any way affected by any of the following:
(i) any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, receivership, conservatorship, winding up or other similar proceeding involving or affecting Borrower, the Property or any part thereof, the Collateral or any part thereof, Guarantor or any other Person;
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(ii) any failure by Lender or any other Person, whether or not without fault on its part, to perform or comply with any of the terms of the Loan Agreement, or any other Loan Documents, or any document or instrument relating thereto;
(iii) the sale, transfer or conveyance of the Property or any interest therein to any Person, whether now or hereafter having or acquiring an interest in the Property or any interest therein and whether or not pursuant to any foreclosure, trustee sale or similar proceeding against Borrower or the Property or any interest therein;
(iv) the conveyance to Lender, any Affiliate of Lender or Lender’s nominee of the Property or any interest therein by a deed-in-lieu of foreclosure;
(v) the sale, transfer or conveyance of the Collateral or any interest therein to any Person, whether now or hereafter having or acquiring an interest in the Collateral or any interest therein and whether or not pursuant to any foreclosure, UCC sale or similar proceeding against Borrower, Sole Member or the Collateral or any interest therein;
(vi) the conveyance to Lender, any Affiliate of Lender or Lender’s nominee of the Collateral or any interest therein by a foreclosure, or similar proceeding pursuant to Lender’s rights under the Pledge Agreement or any other Loan Documents and the UCC (“UCC Sale”);
(vii) the release of Borrower or any other Person from the performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law or otherwise; or
(viii) the release in whole or in part of any collateral for any or all Guaranteed Obligations or for the Loan or any portion thereof.
(c) Except as otherwise specifically provided in this Guaranty, Guarantor hereby expressly and irrevocably waives all defenses in an action brought by Lender to enforce this Guaranty based on claims of waiver, release, surrender, alteration or compromise and all setoffs, reductions, or impairments, whether arising hereunder or otherwise.
(d) Lender may deal with Borrower and Affiliates of Borrower in the same manner and as freely as if this Guaranty did not exist and shall be entitled, among other things, to grant Borrower or any other Person such extension or extensions of time to perform any act or acts as may be deemed advisable by Lender, at any time and from time to time, without terminating, affecting or impairing the validity of this Guaranty or the obligations of Guarantor hereunder.
(e) No compromise, alteration, amendment, modification, extension, renewal, release or other change of, or waiver, consent, delay, omission, failure to act or other action with respect to, any liability or obligation under or with respect to, or of any of the terms, covenants or conditions of, the Loan Documents shall in any way alter, impair or affect any of the obligations of Guarantor hereunder, and Guarantor agrees that if any Loan Document is modified
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with Lender’s consent, the Guaranteed Obligations shall automatically be deemed modified to include such modifications.
(f) Lender may proceed to protect and enforce any or all of its rights, powers, and remedies under this Guaranty by suit in equity or action at law (including foreclosure of all or any portion of the collateral for the Loan), whether for the specific performance of any covenants or agreements contained in this Guaranty or otherwise, or to take any action authorized or permitted under applicable law (in any order), and shall be entitled to require and enforce the performance of all acts and things required to be performed hereunder by Guarantor. Each and every remedy of Lender shall, to the extent permitted by law, be non-exclusive and cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity.
(g) No waiver shall be deemed to have been made by Lender of any rights hereunder unless the same shall be in writing and signed by Lender, and any such waiver shall be a waiver only with respect to the specific matter involved and shall in no way impair the rights of Lender or the obligations of Guarantor to Lender in any other respect or at any other time.
(h) At the option of Lender, Guarantor may be joined in any action or proceeding commenced by Lender against Borrower in connection with or based upon any other Loan Documents and recovery may be had against Guarantor in such action or proceeding or in any independent action or proceeding against Guarantor to the extent of Guarantor’s liability hereunder, without any requirement that Lender first assert, prosecute or exhaust any remedy or claim against Borrower or any other Person, or any security for the obligations of Borrower or any other Person.
(i) Guarantor agrees that this Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment is made by Borrower or Guarantor to Lender and such payment is rescinded or must otherwise be returned by Lender (as determined by Lender in its sole and absolute discretion) upon insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, receivership, conservatorship, winding up or other similar proceeding involving or affecting Borrower or Guarantor, all as though such payment had not been made.
(j) In the event that Guarantor shall advance or become obligated to pay any sums under this Guaranty or in connection with the Guaranteed Obligations or in the event that for any reason whatsoever Borrower or any subsequent owner of the Property, the Collateral or any part thereof is now, or shall hereafter become, indebted to Guarantor, Guarantor agrees that (i) the amount of such sums and of such indebtedness and all interest thereon shall at all times be subordinate as to lien, the time of payment and in all other respects to all sums, including Principal and interest and other amounts, at any time owed to Lender under the Loan Documents, and (ii) Guarantor shall not be entitled to enforce or receive payment thereof until all Principal, interest and other sums due pursuant to the Loan Documents have been paid in full. Nothing herein contained is intended or shall be construed to give Guarantor any right of subrogation in or under the Loan Documents or any right to participate in any way therein, or in the right, title or interest of Lender in or to any collateral for the Loan, notwithstanding any payments made by Guarantor under this Guaranty, until the actual and irrevocable receipt by Lender of payment in full of all
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Principal, interest and other sums due with respect to the Loan or otherwise payable under the Loan Documents. If any amount shall be paid to Guarantor on account of such subrogation rights at any time when any such sums due and owing to Lender shall not have been fully paid, such amount shall be paid by Guarantor to Lender for credit and application against such sums due and owing to Lender.
(k) Guarantor’s obligations hereunder shall survive a foreclosure, deed-in-lieu of foreclosure, UCC Sale or similar proceeding involving the Property or the Collateral and the exercise by Lender of any or all of its remedies pursuant to the Loan Documents.
6. Entire Agreement/Amendments. This instrument represents the entire agreement between the parties with respect to the subject matter hereof. The terms of this Guaranty shall not be waived, altered, modified, amended, supplemented or terminated in any manner whatsoever except by written instrument signed by Lender and Guarantor.
7. Successors and Assigns. This Guaranty shall be binding upon Guarantor, and Guarantor’s estate, heirs, personal representatives, successors and assigns, may not be assigned or delegated by Guarantor and shall inure to the benefit of Lender and its successors and assigns.
8. Governing Law.
(a) THIS GUARANTY WAS NEGOTIATED IN THE STATE OF NEW YORK AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT TO THE LOAN AGREEMENT WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY AND THE NOTE, AND THIS GUARANTY AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK AND GUARANTOR WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. GUARANTOR DOES HEREBY DESIGNATE AND APPOINT COZEN O’CONNOR,
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ATTENTION: WILLIAM F. DAVIS, ESQ., HAVING AN ADDRESS AT 3 WTC, 175 GREENWICH STREET, 55TH FLOOR, NEW YORK, NEW YORK 10007, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF GUARANTOR MAILED OR DELIVERED TO GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. GUARANTOR (i) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR. NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO INSTITUTE ANY LEGAL SUIT, ACTION OR PROCEEDING FOR THE ENFORCEMENT OR FORECLOSURE OF ANY LIEN ON ANY COLLATERAL FOR THE LOAN IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION(S) THAT LENDER MAY ELECT IN ITS SOLE AND ABSOLUTE DISCRETION, AND GUARANTOR WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
9. Section Headings. The headings of the sections and paragraphs of this Guaranty have been inserted for convenience of reference only and shall in no way define, modify, limit or amplify any of the terms or provisions hereof.
10. Severability. Any provision of this Guaranty which may be determined by any competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, Guarantor hereby waives any provision of law which renders any provision hereof prohibited or unenforceable in any respect.
11. WAIVER OF TRIAL BY JURY. GUARANTOR HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY LITIGATION, ACTION OR PROCEEDING ARISING HEREUNDER OR IN CONNECTION THEREWITH.
12. Notices. All notices, consents, approvals and requests required or permitted hereunder (a “Notice”) shall be given in writing (even if not specified herein) and shall only be effective for all purposes if either hand delivered with receipt acknowledged, or by a nationally recognized overnight delivery service (such as Federal Express), or by certified or registered
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United States mail, return receipt requested, postage prepaid, or by facsimile and confirmed by facsimile answer back, or e-mailed (with confirmation of delivery thereof) to the e-mail addresses for Lender to the extent set forth in this Section 12 with a subject line identifying the purpose of such Notice and the name of the Property and Borrower; in each case addressed as follows (or to such other address or Person as a party shall designate from time to time by notice to the other party):
If to Lender, to:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Kimberly Lutterman
E-mail: xxxxx@loancore.com
with a copy to:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Notices
E-mail: xxxxx@loancore.com
with a copy to:
Firsel Ross Gussis & Alexander
10 Parkway North Boulevard, Suite 110
Deerfield, Illinois 60015
Attention: Samuel P. Gussis, Esq.
E-mail: xxxxx@firselross.com
If to Guarantor, to:
SRC Envy HoldCo LLC
4300 N. University Drive, Suite D105
Lauderhill, FL 33351
Attention: Katy Murless, Chief Financial Officer
Email: xxxxx@stewards.com
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with a copy to:
Cozen O’Connor
One Liberty Place
1650 Market Street, Suite 2800
Philadelphia, Pennsylvania 19103
Attention: Howard Grossman, Esq.
E-mail: xxxxx@cozen.com
and
Scott Doney, Esq.
3651 Lindell Rd Suite D121
Las Vegas, Nevada 89103
Email: xxxxx@doneylawfirm.com
A notice shall be deemed to have been given: (a) in the case of hand delivery, at the time of delivery; (b) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; (c) in the case of overnight delivery, upon the first attempted delivery on a Business Day; (d) in the case of facsimile, upon the confirmation of delivery of such facsimile transmission; or (e) in the case of e-mail, upon the confirmation of delivery such e-mail.
13. Guarantor’s Receipt of Loan Documents. Guarantor by its execution hereof acknowledges receipt of true copies of all of the Loan Documents, the terms and conditions of which are hereby incorporated herein by reference.
14. Interest; Expenses.
(a) If Guarantor fails to pay all or any sums due hereunder within ten
(10) Business Days of demand by Lender, the amount of such sums payable by Guarantor to Lender shall bear interest from the 11th Business Day after demand until paid at the Default Rate in effect from time to time.
(b) Guarantor hereby agrees to pay all costs, charges and expenses, including reasonable attorneys’ fees and disbursements, that may be incurred by Lender in enforcing the covenants, agreements, obligations and liabilities of Guarantor under this Guaranty.
15. Gender; Number; General Definitions. All references to sections and schedules are to sections and schedules in or to this Guaranty unless otherwise specified. All uses of the word “including” or “include” or similar words shall mean “including, without limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty. 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. The phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all reasonable attorneys’, paralegal and law clerk fees and disbursements, including fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property and/or in enforcing its rights hereunder.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first above written.
GUARANTOR:
SRC ENVY HOLDCO LLC,
a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
[Payment Guaranty (SRC Envy HoldCo LLC - Signature Page]
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PAYMENT GUARANTY
made by
ENVY RECREATIONAL LLC,
as guarantor,
in favor of
LOANCORE CAPITAL CREDIT REIT LLC
Dated as of September 23, 2026
PAYMENT GUARANTY
This PAYMENT GUARANTY (this “Guaranty”), dated as of September 23, 2026, made by ENVY RECREATIONAL LLC, a Delaware limited liability company, having an address at 4300 N. University Drive, Suite D105, Lauderhill, FL 33351 (“Guarantor”), in favor of LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company (together with its successors and assigns, hereinafter referred to as “Lender”), having an address c/o LoanCore Capital, 55 Railroad Avenue, Suite 100, Greenwich, Connecticut 06830.
R E C I T A L S:
A. Pursuant to that certain Loan Agreement dated as of the date hereof (as the same may be amended, modified, supplemented, restated or replaced from time to time, the “Loan Agreement”) between Guarantor, Envy Development DE, LLC, a Delaware limited liability company (“Development”; Development and Guarantor are referred to herein together as (“Borrower”) and Lender, Lender has agreed to make a loan (the “Loan”) to Borrower in the original principal amount of Forty-Seven Million Seven Hundred Thousand and No/100 Dollars ($47,700,000.00), subject to the terms and conditions of the Loan Agreement;
B. The Loan is evidenced by that certain Amended and Restated Promissory Note, dated the date hereof, made by Development and payable to the order of Lender in such principal amount (as the same may be amended, modified, restated, severed, consolidated, renewed, replaced, or supplemented from time to time, the “Note”); and
C. It is the intention of Guarantor, and a condition to Lender’s willingness to make the Loan, that Guarantor guarantees the payment of all of the indebtedness and obligations evidenced by and created pursuant to the Loan Agreement, the Note and the other Loan Documents (as defined in the Loan Agreement) as hereinafter provided;
NOW, THEREFORE, in consideration of the premises set forth herein and as an inducement for and in consideration of the agreement of Lender to make the Loan pursuant to the Loan Agreement, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees, covenants, represents and warrants to Lender as follows:
1. Definitions.
(a) All capitalized terms used and not defined herein shall have the respective meanings given such terms in the Loan Agreement.
(b) The term “Guaranteed Obligations” means (i) the due and punctual payment in full (and not merely the collectability) of the principal, interest and premiums, if any, on and under the Note, and of the indebtedness evidenced thereby, whether on any Payment Date or at the Maturity Date or accelerated maturity or otherwise, all according to the terms of the Note and the Loan Agreement; (ii) the due and punctual payment in full (and not merely the collectability) of all other sums and charges which may at any time be due and payable under and in accordance with the Note, the Loan Agreement or any other Loan Document; and (iii) the due
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and punctual performance of all of the other terms, covenants and conditions contained in the Note, the Loan Agreement and the other Loan Documents on the part of Borrower to be performed.
2. Guaranty.
(a) Guarantor hereby irrevocably, absolutely and unconditionally guarantees to Lender the full, prompt and complete payment when due of the Guaranteed Obligations.
(b) All sums payable to Lender under this Guaranty shall be payable on demand and without reduction for any offset, claim, counterclaim or defense.
(c) Guarantor agrees that no portion of any sums applied (other than sums received from Guarantor in full or partial satisfaction of its obligations hereunder), from time to time, in reduction of the Debt shall be deemed to have been applied in reduction of the Guaranteed Obligations until such time as the Debt has been paid in full, or Guarantor shall have made the full payment required hereunder, it being the intention hereof that the Guaranteed Obligations shall be the last portion of the Debt to be deemed satisfied.
3. Representations and Warranties. Guarantor hereby represents and warrants to Lender as follows (which representations and warranties shall be given as of the date hereof and shall survive the execution and delivery of this Guaranty):
(a) Organization, Authority and Execution. Guarantor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all necessary power and authority enter into and perform this Guaranty. This Guaranty has been duly executed and delivered by Guarantor.
(b) Enforceability. This Guaranty constitutes a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally.
(c) No Violation. The execution, delivery and performance by Guarantor of its obligations under this Guaranty has been duly authorized by all necessary action, and do not and will not violate any law, regulation, order, writ, injunction or decree of any court or governmental body, agency or other instrumentality applicable to Guarantor, or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the assets of Guarantor pursuant to the terms of Guarantor’s organization documents, or any mortgage, indenture, agreement or instrument to which Guarantor is a party or by which it or any of its properties is bound.
(d) No Litigation. There are no actions, suits or proceedings at law or at equity, pending or, to Guarantor’s best knowledge, threatened against or affecting Guarantor or which involve or might involve the validity or enforceability of this Guaranty or which might materially adversely affect the financial condition of Guarantor or the ability of Guarantor to perform any of its obligations under this Guaranty. Guarantor is not in default beyond any
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applicable grace or cure period with respect to any order, writ, injunction, decree or demand of any Governmental Authority which might materially adversely affect the financial condition of Guarantor or the ability of Guarantor to perform any of its obligations under this Guaranty.
(e) Consents. All consents, approvals, orders or authorizations of, or registrations, declarations or filings with, all Governmental Authorities (collectively, the “Consents”) that are required in connection with the valid execution, delivery and performance by Guarantor of this Guaranty have been obtained and Guarantor agrees that all Consents required in connection with the carrying out or performance of any of Guarantor’s obligations under this Guaranty will be obtained when required.
4. Intentionally Omitted.
5. Unconditional Character of Obligations of Guarantor.
(a) The obligations of Guarantor hereunder shall be irrevocable, absolute and unconditional, irrespective of the validity, regularity or enforceability, in whole or in part, of the other Loan Documents or any provision thereof, or the absence of any action to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against Borrower, Guarantor or any other Person or any action to enforce the same, any failure or delay in the enforcement of the obligations of Borrower under the other Loan Documents or Guarantor under this Guaranty, or any setoff or counterclaim, and irrespective of any other circumstances which might otherwise limit recourse against Guarantor by Lender or constitute a legal or equitable discharge or defense of a guarantor or surety. Lender may enforce the obligations of Guarantor under this Guaranty by a proceeding at law, in equity or otherwise, independent of any loan foreclosure or similar proceeding or any deficiency action against any other Borrower or any other Person at any time, either before or after an action against the Property or any part thereof, the Collateral or any party thereof, any other Borrower or any other Person. This Guaranty is a guaranty of payment and performance and not merely a guaranty of collection. Guarantor waives diligence, notice of acceptance of this Guaranty, filing of claims with any court, any proceeding to enforce any provision of any other Loan Document, against Guarantor, any other Borrower or any other Person, any right to require a proceeding first against any other Borrower or any other Person, or to exhaust any security (including, without limitation, the Property) for the performance of the Guaranteed Obligations or any other obligations of Borrower or any other Person, or any protest, presentment, notice of default or other notice or demand whatsoever (except to the extent expressly provided to the contrary in this Guaranty).
(b) The obligations of Guarantor under this Guaranty, and the rights of Lender to enforce the same by proceedings, whether by action at law, suit in equity or otherwise, shall not be in any way affected by any of the following:
(i) any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, receivership, conservatorship, winding up or other similar proceeding involving or affecting any other Borrower, the Property or any part thereof, the Collateral or any part thereof, Guarantor or any other Person;
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(ii) any failure by Lender or any other Person, whether or not without fault on its part, to perform or comply with any of the terms of the Loan Agreement, or any other Loan Documents, or any document or instrument relating thereto;
(iii) the sale, transfer or conveyance of the Property or any interest therein to any Person, whether now or hereafter having or acquiring an interest in the Property or any interest therein and whether or not pursuant to any foreclosure, trustee sale or similar proceeding against Borrower or the Property or any interest therein;
(iv) the conveyance to Lender, any Affiliate of Lender or Lender’s nominee of the Property or any interest therein by a deed-in-lieu of foreclosure;
(v) the sale, transfer or conveyance of the Collateral or any interest therein to any Person, whether now or hereafter having or acquiring an interest in the Collateral or any interest therein and whether or not pursuant to any foreclosure, UCC sale or similar proceeding against any other Borrower, Sole Member or the Collateral or any interest therein;
(vi) the release of any other Borrower or any other Person from the performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law or otherwise; or
(vii) the release in whole or in part of any collateral for any or all Guaranteed Obligations or for the Loan or any portion thereof.
(c) Except as otherwise specifically provided in this Guaranty, Guarantor hereby expressly and irrevocably waives all defenses in an action brought by Lender to enforce this Guaranty based on claims of waiver, release, surrender, alteration or compromise and all setoffs, reductions, or impairments, whether arising hereunder or otherwise.
(d) Lender may deal with Borrower and Affiliates of Borrower in the same manner and as freely as if this Guaranty did not exist and shall be entitled, among other things, to grant Borrower or any other Person such extension or extensions of time to perform any act or acts as may be deemed advisable by Lender, at any time and from time to time, without terminating, affecting or impairing the validity of this Guaranty or the obligations of Guarantor hereunder.
(e) No compromise, alteration, amendment, modification, extension, renewal, release or other change of, or waiver, consent, delay, omission, failure to act or other action with respect to, any liability or obligation under or with respect to, or of any of the terms, covenants or conditions of, the Loan Documents shall in any way alter, impair or affect any of the obligations of Guarantor hereunder, and Guarantor agrees that if any Loan Document is modified with Lender’s consent, the Guaranteed Obligations shall automatically be deemed modified to include such modifications.
(f) Lender may proceed to protect and enforce any or all of its rights, powers, and remedies under this Guaranty by suit in equity or action at law (including foreclosure of all or any portion of the collateral for the Loan), whether for the specific performance of any
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covenants or agreements contained in this Guaranty or otherwise, or to take any action authorized or permitted under applicable law (in any order), and shall be entitled to require and enforce the performance of all acts and things required to be performed hereunder by Guarantor. Each and every remedy of Lender shall, to the extent permitted by law, be non-exclusive and cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity.
(g) No waiver shall be deemed to have been made by Lender of any rights hereunder unless the same shall be in writing and signed by Lender, and any such waiver shall be a waiver only with respect to the specific matter involved and shall in no way impair the rights of Lender or the obligations of Guarantor to Lender in any other respect or at any other time.
(h) At the option of Lender, Guarantor may be joined in any action or proceeding commenced by Lender against any other Borrower in connection with or based upon any other Loan Documents and recovery may be had against Guarantor in such action or proceeding or in any independent action or proceeding against Guarantor to the extent of Guarantor’s liability hereunder, without any requirement that Lender first assert, prosecute or exhaust any remedy or claim against such other Borrower or any other Person, or any security for the obligations of such other Borrower or any other Person.
(i) Guarantor agrees that this Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment is made by any other Borrower or Guarantor to Lender and such payment is rescinded or must otherwise be returned by Lender (as determined by Lender in its sole and absolute discretion) upon insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, receivership, conservatorship, winding up or other similar proceeding involving or affecting such other Borrower or Guarantor, all as though such payment had not been made.
(j) In the event that Guarantor shall advance or become obligated to pay any sums under this Guaranty or in connection with the Guaranteed Obligations or in the event that for any reason whatsoever any other Borrower or any subsequent owner of the Property, the Collateral or any part thereof is now, or shall hereafter become, indebted to Guarantor, Guarantor agrees that (i) the amount of such sums and of such indebtedness and all interest thereon shall at all times be subordinate as to lien, the time of payment and in all other respects to all sums, including Principal and interest and other amounts, at any time owed to Lender under the Loan Documents, and (ii) Guarantor shall not be entitled to enforce or receive payment thereof until all Principal, interest and other sums due pursuant to the Loan Documents have been paid in full. Nothing herein contained is intended or shall be construed to give Guarantor any right of subrogation in or under the Loan Documents or any right to participate in any way therein, or in the right, title or interest of Lender in or to any collateral for the Loan, notwithstanding any payments made by Guarantor under this Guaranty, until the actual and irrevocable receipt by Lender of payment in full of all Principal, interest and other sums due with respect to the Loan or otherwise payable under the Loan Documents. If any amount shall be paid to Guarantor on account of such subrogation rights at any time when any such sums due and owing to Lender shall not have been fully paid, such amount shall be paid by Guarantor to Lender for credit and application against such sums due and owing to Lender.
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(k) Guarantor’s obligations hereunder shall survive a foreclosure, deed-in-lieu of foreclosure, UCC sale or similar proceeding involving the Property or the Collateral and the exercise by Lender of any or all of its remedies pursuant to the Loan Documents.
6. Entire Agreement/Amendments. This instrument represents the entire agreement between the parties with respect to the subject matter hereof. The terms of this Guaranty shall not be waived, altered, modified, amended, supplemented or terminated in any manner whatsoever except by written instrument signed by Lender and Guarantor.
7. Successors and Assigns. This Guaranty shall be binding upon Guarantor, and Guarantor’s estate, heirs, personal representatives, successors and assigns, may not be assigned or delegated by Guarantor and shall inure to the benefit of Lender and its successors and assigns.
8. Governing Law.
(a) THIS GUARANTY WAS NEGOTIATED IN THE STATE OF NEW YORK AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT TO THE LOAN AGREEMENT WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY AND THE NOTE, AND THIS GUARANTY AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK AND GUARANTOR WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. GUARANTOR DOES HEREBY DESIGNATE AND APPOINT COZEN O’CONNOR, ATTENTION: WILLIAM F. DAVIS, ESQ., HAVING AN ADDRESS AT 3 WTC, 175 GREENWICH STREET, 55TH FLOOR, NEW YORK, NEW YORK 10007, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS
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AND WRITTEN NOTICE OF SAID SERVICE OF GUARANTOR MAILED OR DELIVERED TO GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. GUARANTOR (i) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR. NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO INSTITUTE ANY LEGAL SUIT, ACTION OR PROCEEDING FOR THE ENFORCEMENT OR FORECLOSURE OF ANY LIEN ON ANY COLLATERAL FOR THE LOAN IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION(S) THAT LENDER MAY ELECT IN ITS SOLE AND ABSOLUTE DISCRETION, AND GUARANTOR WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
9. Section Headings. The headings of the sections and paragraphs of this Guaranty have been inserted for convenience of reference only and shall in no way define, modify, limit or amplify any of the terms or provisions hereof.
10. Severability. Any provision of this Guaranty which may be determined by any competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, Guarantor hereby waives any provision of law which renders any provision hereof prohibited or unenforceable in any respect.
11. WAIVER OF TRIAL BY JURY. GUARANTOR HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY LITIGATION, ACTION OR PROCEEDING ARISING HEREUNDER OR IN CONNECTION THEREWITH.
12. Notices. All notices, consents, approvals and requests required or permitted hereunder (a “Notice”) shall be given in writing (even if not specified herein) and shall only be effective for all purposes if either hand delivered with receipt acknowledged, or by a nationally recognized overnight delivery service (such as Federal Express), or by certified or registered United States mail, return receipt requested, postage prepaid, or by facsimile and confirmed by facsimile answer back, or e-mailed (with confirmation of delivery thereof) to the e-mail addresses for Lender to the extent set forth in this Section 12 with a subject line identifying the purpose of such Notice and the name of the Property and Borrower; in each case addressed as follows (or to such other address or Person as a party shall designate from time to time by notice to the other party):
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If to Lender, to:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Kimberly Lutterman
E-mail: xxxxx@loancore.com
with a copy to:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Notices
E-mail: xxxxx@loancore.com
with a copy to:
Firsel Ross Gussis & Alexander
10 Parkway North Boulevard, Suite 110
Deerfield, Illinois 60015
Attention: Samuel P. Gussis, Esq.
E-mail: xxxxx@firselross.com
If to Guarantor, to:
Envy Recreational LLC
4300 N. University Drive, Suite D105
Lauderhill, FL 33351
Attention: Katy Murless, Chief Financial Officer
Email: xxxxx@stewards.com
with a copy to:
Cozen O’Connor One Liberty Place
1650 Market Street, Suite 2800
Philadelphia, Pennsylvania 19103
Attention: Howard Grossman, Esq.
E-mail: xxxxx@cozen.com
and
Scott Doney, Esq.
3651 Lindell Rd Suite D121
Las Vegas, Nevada 89103
Email: xxxxx@doneylawfirm.com
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A notice shall be deemed to have been given: (a) in the case of hand delivery, at the time of delivery; (b) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; (c) in the case of overnight delivery, upon the first attempted delivery on a Business Day; (d) in the case of facsimile, upon the confirmation of delivery of such facsimile transmission; or (e) in the case of e-mail, upon the confirmation of delivery such e-mail.
13. Guarantor’s Receipt of Loan Documents. Guarantor by its execution hereof acknowledges receipt of true copies of all of the Loan Documents, the terms and conditions of which are hereby incorporated herein by reference.
14. Interest; Expenses.
(a) If Guarantor fails to pay all or any sums due hereunder within ten
(10) Business Days of demand by Lender, the amount of such sums payable by Guarantor to Lender shall bear interest from the 11th Business Day after demand until paid at the Default Rate in effect from time to time.
(b) Guarantor hereby agrees to pay all costs, charges and expenses, including reasonable attorneys’ fees and disbursements, that may be incurred by Lender in enforcing the covenants, agreements, obligations and liabilities of Guarantor under this Guaranty.
15. Gender; Number; General Definitions. All references to sections and schedules are to sections and schedules in or to this Guaranty unless otherwise specified. All uses of the word “including” or “include” or similar words shall mean “including, without limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty. 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. The phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all reasonable attorneys’, paralegal and law clerk fees and disbursements, including fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property and/or in enforcing its rights hereunder.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first above written.
GUARANTOR:
ENVY RECREATIONAL LLC,
a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
[Payment Guaranty (Envy Recreational LLC) - Signature Page]
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PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT (this “Agreement”) dated as of September 23, 2026, by SRC ENVY HOLDCO LLC, a Delaware limited liability company, having an address at 4300 North University Drive, Suite D105, Lauderhill, Florida 33351 (“Pledgor”), for the benefit of LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company, as lender, having an address at c/o LoanCore Capital, 55 Railroad Avenue, Suite 100, Greenwich, Connecticut 06830 (together with its successors and assigns, the “Lender”).
RECITALS
A. Pursuant to that certain Loan Agreement (as same may be amended, restated, replaced, supplemented, consolidated or otherwise modified, the “Loan Agreement”) dated as of the date hereof between the Lender, as lender, and Envy Recreational LLC, a Delaware limited liability company (“Envy Recreational”), and Envy Development DE, LLC, a Delaware limited liability company (“Envy Development”; Envy Recreational and Envy Development are referred herein together, individually and collectively, as required by context, as “Borrower”), together as borrower, the Lender has agreed to make a loan to Borrower in the original principal amount of Forty-Seven Million Seven Hundred Thousand and No/100 Dollars ($47,700,000.00) (the “Loan”).
B. Pledgor owns 100% of the equity interests in each Borrower.
C. To induce the Lender to make the Loan to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor has agreed to guaranty the payment of the Loan and the performance by Borrower of Borrower’s obligations under the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement) pursuant to that certain Guaranty of Payment made by Pledgor in favor of Lender (the “Payment Guaranty”) and to secure Pledgor’s obligations thereunder by pledging and granting a first priority security interest in the Collateral (as defined below) as security for the Obligations (as defined below).
Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Loan Agreement are used herein as defined therein. In addition, as used herein:
“Assignment of Interest” shall have the meaning ascribed thereto in Section 2.2
hereof.
“Borrower” shall have the meaning ascribed thereto in the Recitals hereof. “Collateral” shall have the meaning ascribed thereto in Section 2.1 hereof.
“Envy Development Operating Agreement” shall mean the Amended and Restated
Limited Liability Company Agreement of Envy Development dated as of the date hereof, as hereafter amended, restated, replaced, supplemented or otherwise modified from time to time.
“Envy Recreational Operating Agreement” shall mean the Limited Liability Company Agreement of Envy Recreational dated as of the date hereof, as hereafter amended, restated, replaced, supplemented or otherwise modified from time to time.
“Loan Agreement” shall have the meaning ascribed thereto in the Recitals hereof. “Obligations” shall mean the Guaranteed Obligations (as defined in the Payment
Guaranty) and all of the obligations of Pledgor under the Payment Guaranty.
“Pledged Interests” shall have the meaning ascribed thereto in Section 2 hereof. “Pledged Securities” shall have the meaning ascribed to such term in Section 2.1
hereof.
“Relevant Documents” shall mean the Envy Development Operating Agreement,
the Envy Recreational Operating Agreement, and all other organizational documents of Envy Development and Envy Recreational, as any of the same may hereafter be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Securities Act” shall mean the Securities Act of 1933 as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect.
“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in the state of New York or such other jurisdiction as may be applicable.
Section 2. Pledge and Delivery of Collateral.
2.1 The Pledge. As continuing collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Obligations, Pledgor hereby irrevocably grants, pledges and assigns, subject to the terms of this Agreement, a continuing first priority lien on and security interest in, and, as a part of such grant, pledge and assignment, hereby assigns to Lender as collateral security, all of Pledgor’s right, title and interest in the following property, whether now owned by Pledgor or hereafter acquired and whether now existing or hereafter coming into existence (all being collectively referred to herein as “Collateral”):
(a) its one hundred percent (100%) membership interests in Envy Development, together with the certificate (in a form attached hereto as Exhibit A-1 and made a part hereof) evidencing the same (the “Envy Development Pledged Interests”);
(b) its one hundred percent (100%) membership interests in Envy Recreational, together with the certificate (in a form attached hereto as Exhibit A-2 and made a part hereof) evidencing the same (the “Envy Recreational Pledged Interests”; the Envy Development Pledged Interests and the Envy Recreational Pledged Interests are referred to herein together as the “Pledged Interests”);
(c) all ownership interests, membership interests, shares, securities, moneys, instruments or property representing a dividend, a distribution or return of capital upon
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or in respect of the Pledged Interests, or otherwise received in exchange therefor, and any warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged Interests;
(d) all rights of Pledgor under the Relevant Documents or any other agreement or instrument relating to the Pledged Interests, including, without limitation, (i) all rights of Pledgor to receive moneys or distributions with respect to the Pledged Interests due and to become due under or pursuant to the Relevant Documents, (ii) all rights of Pledgor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Pledged Interests,
(iii) all claims of Pledgor for damages arising out of or for breach of or default under a Relevant Document, and (iv) any right of Pledgor to perform thereunder and to compel performance and otherwise exercise all rights and remedies thereunder; and
(e) all proceeds of and to any of the property of Pledgor described in clauses (a) through (d) above and, to the extent related to any property described in said clauses or such proceeds, all books, correspondence, credit files, records, invoices and other papers.
The shares of membership interests, partnership interests, certificates, instruments or other documents evidencing or representing the foregoing shall be collectively referred to herein as the “Pledged Securities.”
2.2 Delivery of the Collateral. Pledgor shall deliver to Lender (i) all original Pledged Securities relating to the Pledged Interests pledged by Pledgor concurrently with the execution and delivery of this Agreement and (ii) all other documents evidencing or representing all other Collateral within one (1) day after Pledgor’s receipt thereof. All Collateral which are “certificated securities” within the meaning of the Uniform Commercial Code shall be in bearer form or, if in registered form, shall be accompanied by undated blank equity interest powers (in a form attached hereto as Exhibits B-1 and B-2 and made a part hereof) (together, the “Assignment of Interest”), note power, endorsement or other necessary instruments of transfer, registration or assignment, duly executed in blank and in form and substance satisfactory to Lender. Upon the occurrence and during the continuance of a default by Pledgor under the Payment Guaranty, Lender shall have the right, at any time, in its discretion, to transfer to or to register in the name of Lender or its nominee any or all of the Collateral. Lender shall have the right, at any time in its discretion upon the occurrence and during the continuance of a default by Pledgor under the Payment Guaranty and without notice to Pledgor, to transfer to, and to designate on the Assignment of Interest, any Person to whom the Pledged Interests are sold in accordance with the provisions hereof. In addition, Lender shall have the right at any time to exchange the Assignment of Interest representing or evidencing the Pledged Interests or any portion thereof for one or more additional or substitute Assignments of Interest representing or evidencing smaller or larger percentages of the Pledged Interests represented or evidenced thereby, subject to the terms thereof.
2.3 Acknowledgment of Pledge. Upon the execution and delivery of this Agreement, Pledgor shall cause Borrower to execute and deliver to Lender letters in the form attached hereto as Exhibits C-1 and C-2. Pledgor represents that Borrower’s representations in such letters are true and complete. Pledgor shall cause Borrower to comply with Borrower’s covenants and warranties in such letter.
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Section 3. Further Assurances; Remedies. In furtherance of the grant of the pledge and security interest pursuant to Section 2 hereof, Pledgor hereby agrees with Lender as follows:
3.1 Delivery and Other Perfection.
(a) The Pledgor hereby represents and warrants that (i) the terms of each of the Pledged Securities expressly provide that they are securities governed by Article 8 of the UCC as in effect in each applicable jurisdiction, (ii) Section 34 of the Envy Development Operating Agreement is in full force and effect, (iii) Section 34 of the Envy Recreational Operating Agreement is in full force and effect and (iv) the Relevant Documents for Borrower contain a legend substantially as follows:
“This certificate evidences an interest in (Envy Development or Envy Recreational, as applicable) and shall be a security governed by Article 8 of the Uniform Commercial Code as in effect in the State of Delaware and, to the extent permitted by applicable law, Article 8 of the Uniform Commercial Code of each other applicable jurisdiction. 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. THE TRANSFER OF THIS CERTIFICATE AND/OR THE INTEREST EVIDENCED HEREBY IS RESTRICTED AS PROVIDED IN THE OPERATING AGREEMENT OF THE COMPANY (AS AMENDED FROM TIME TO TIME).”
(b) Pledgor hereby covenants and agrees that it will not agree to any amendment or repeal of Section 34 of the Envy Development Operating Agreement or Section 34 of the Envy Recreational Operating Agreement, in any event shall promptly notify Lender in writing if for any reason the Pledged Securities shall cease to be securities for purposes of the UCC in any applicable jurisdiction.
(c) Pledgor hereby instructs Borrower to register on Borrower’s books and records the pledge of the Pledged Interests in Borrower by Pledgor to Lender. In the event that at any time after the date hereof any Collateral shall be evidenced by an instrument or a certificate other than the Pledged Securities, Pledgor shall or shall cause Borrower to promptly deliver any such instrument or certificate, duly endorsed or subscribed by Pledgor or accompanied by appropriate instruments of transfer or assignment duly executed in blank by Pledgor, to Lender as additional Collateral. Any such instruments or certificates received by Pledgor shall be held by Pledgor in trust, as agent for Lender.
(d) Pledgor shall give, execute, deliver, file and/or record any financing statement, notice, instrument, document, agreement or other papers that may be necessary (in the reasonable judgment of Lender) to create, preserve or perfect the security interest granted pursuant
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hereto or, after the occurrence and during the continuance of a default by Pledgor under the Payment Guaranty, to enable Lender to exercise and enforce its rights hereunder with respect to such pledge and security interest, including, without limitation, causing any or all of the Collateral to be transferred of record into the name of Lender or its nominee (and Lender agrees that if any Collateral is transferred into its name or the name of its nominee, Lender will thereafter promptly give to Pledgor copies of any notices and communications received by it with respect to the Collateral).
(e) Pledgor shall permit representatives of Lender, upon reasonable notice, at any time during normal business hours to inspect and make abstracts from its books and records pertaining to the Collateral, and permit representatives of Lender to be present at Pledgor’s place of business to receive copies of all communications and remittances relating to the Collateral, and forward copies of any notices or communications received by Pledgor with respect to the Collateral, all in such manner as Lender may reasonably require.
(f) Pledgor hereby authorizes Lender to file UCC-1 financing statements, including without limitation an “all assets” filing, with respect to the Collateral. Pledgor agrees to deliver any other document or instrument which Lender may reasonably request with respect to the Collateral for the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted. Without limiting the generality of the foregoing, Pledgor hereby authorizes the filing of financing statements (and amendments of financing statements and continuation statements) that name Pledgor as debtor and Lender as secured party and that cover all personal property or all assets of Pledgor. Pledgor hereby ratifies the filing of any such financing statements (or amendments of financing statements or continuation statements) that were filed prior to the execution hereof.
3.2 Preservation of Rights. Except in accordance with applicable law, Lender shall not be required to take steps necessary to preserve any rights against prior parties to any of the Collateral.
3.3 Pledged Collateral; Distributions.
(a) So long as no a default by Pledgor under the Payment Guaranty shall have occurred and be continuing, Pledgor shall have the right to exercise all of Pledgor’s rights under the Relevant Documents for all purposes not inconsistent with the terms of this Agreement, the Payment Guaranty or any other Loan Document or any other instrument or agreement referred to herein or therein, including the right to receive distributions on the Collateral (subject however to the obligation of Borrower, pursuant to the Loan Agreement, to make payments of all Available Cash during a Cash Management Period to Lender in accordance with the terms and provisions of the Loan Agreement) and other rights relating to the Pledged Interests; and Lender shall execute and deliver to Pledgor or cause to be executed and delivered to Pledgor all such proxies, powers of attorney, distribution and other orders, and all such instruments, without recourse, as Pledgor may reasonably request for the purpose of enabling Pledgor to exercise the rights and powers which they are entitled to exercise pursuant to this Section 3.3(a).
(b) If any a default by Pledgor under the Payment Guaranty shall have occurred, then so long as such default by Pledgor under the Payment Guaranty shall continue, and
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whether or not Lender exercises any available right to declare any of the Obligations due and payable or seeks or pursues any other relief or remedy available to it under applicable law or under this Agreement or any other Loan Document, (i) all distributions on the Collateral shall be paid directly to Lender for application to the Obligations pursuant to the terms hereof and the Payment Guaranty, (ii) if Lender shall so request in writing, Pledgor agrees to execute and deliver to Lender appropriate distribution and other orders and documents to that end and (iii) Pledgor hereby irrevocably authorizes and directs Borrower, after a default by Pledgor under the Payment Guaranty and for so long as such default by Pledgor under the Payment Guaranty is continuing, to pay all such distributions on the Collateral directly to the Lender for application to the Obligations in the order, priority and manner set forth herein and in the Loan Agreement. The foregoing authorization and instructions are irrevocable, may be relied upon by Borrower and may not be modified in any manner other than by the Lender sending to Borrower a notice terminating such authorization and direction.
(c) Anything to the contrary notwithstanding, (i) Pledgor shall remain liable under the Relevant Documents to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by Lender of any of the rights hereunder shall not release Pledgor from any of its duties or obligations under the Relevant Documents and (iii) Lender shall have no obligation or liability under the Relevant Documents by reason of this Agreement, nor shall Lender be obligated to perform any of the obligations or duties of Pledgor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder, except as provided by applicable law.
3.4 Events of Default; Remedies, etc. During the period during which a default by Pledgor under the Payment Guaranty shall have occurred and be continuing, subject to Section 3.10 hereof:
(a) Lender shall have all of the rights and remedies with respect to the Collateral of a secured party under the Uniform Commercial Code (whether or not said Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted, including, without limitation, the right, to the maximum extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if Lender were the sole and absolute owner thereof (and Pledgor agrees to take all such action as may be appropriate to give effect to such right);
(b) Lender in its discretion may, in its name or in the name of Pledgor or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so;
(c) Lender may, upon 20 days’ prior written notice to Pledgor of the time and place, with respect to the Collateral or any part thereof which shall then be or shall thereafter come into the possession, custody or control of Lender or any of its agents, sell, assign or otherwise dispose of all or any part of such Collateral, at such place or places as Lender deems best, and for cash or on credit or for future delivery (without thereby assuming any credit risk), at public or private sale, without demand of performance or notice of intention to effect any such
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disposition or of time or place thereof (except such notice as is required above or by applicable statute and cannot be waived) and Lender or anyone else may be the purchaser, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale), and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise), of Pledgor, any such demand, notice or right and equity being hereby expressly waived and released. Unless prohibited by applicable law, Lender may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned;
(d) Lender may exercise all membership rights, powers and privileges to the same extent as Pledgor is entitled to exercise such rights, powers and privileges;
(e) Upon notice to Pledgor, Lender may cause the Pledged Interests to be sold in accordance with Subsection (c) above and, in connection therewith, cause each purchaser of all or any part of any Pledged Interests to be admitted as a new member or owner of Borrower to the extent of such Pledged Interests, and cause Pledgor to withdraw as a member or owner of Borrower to the extent such Pledged Interests is sold (in accordance with Subsection (c) above), and, if appropriate, cause one or more amended or restated certificates of limited partnership, certificates of limited liability company or articles of incorporation to be filed with respect to Borrower;
(f) Lender may exercise any and all rights and remedies of Pledgor under or in connection with the Relevant Documents or otherwise in respect of the Collateral, including, without limitation, any and all rights of Pledgor to demand or otherwise require payment of any amount under, or performance of any provisions of, the Relevant Documents; and
(g) all payments received by Pledgor under or in connection with the Relevant Documents in respect of the Collateral shall be received in trust for the benefit of Lender, shall be segregated from other funds of Pledgor and shall be forthwith paid over to Lender in the same form as so received (with any necessary indorsement).
The proceeds of each collection, sale or other disposition under this Section 3.4 shall be applied by Lender to the Obligations pursuant to Section 3.6 hereof.
3.5 Private Sale. Pledgor recognizes that Lender may be unable to effect a public sale of any or all of the Collateral, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges and agrees that any such private sale may result in prices and other terms less favorable to Lender than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of being a private sale. Lender shall be under no obligation to delay a sale of any of the Collateral for the period of time necessary to permit Borrower or Pledgor to register such securities for public sale under the
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Securities Act, or under applicable state securities laws, even if Borrower or Pledgor would agree to do so.
(a) Pledgor further shall use commercially reasonable efforts to do or cause to be done all such other acts as may be reasonably necessary to make any sale or sales of all or any portion of the Collateral pursuant to this Section 3.5 valid and binding and in compliance with any and all other requirements of applicable law. Pledgor further agrees that a breach of any of the covenants contained in this Section 3.5 will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 3.5 shall be specifically enforceable against Pledgor, and Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default by Pledgor exists under the Payment Guaranty.
(b) 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. Pledgor 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 Obligations, 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.
(c) The Code states that Lender is able to purchase the Pledged Interests only if they are sold at a public sale. Lender has advised Pledgor that SEC staff personnel have issued various No-Action Letters describing procedures which, in the view of the Securities and Exchange Commission (“SEC”) staff, permit a foreclosure sale of securities to occur in a manner that is public for purposes of Article 9 of the Code, yet not public for purposes of Section 4(2) of the Securities Act. The Code permits Pledgor to agree on the standards for determining whether Lender has complied with its obligations under Article 9. Pledgor specifically agrees that upon the occurrence and during the continuance of a default by Pledgor under the Payment Guaranty (x) it shall not raise any objection to Lender’s purchase of the Pledged Interests provided that such purchase occurs in accordance with the terms hereof (through bidding on the obligations or otherwise) and (y) a foreclosure sale conducted in conformity with the principles set forth in the No-Action Letters (i) shall be considered to be a “public” sale for purposes of the Code; (ii) will not be considered commercially unreasonable solely because Lender has not registered or sought to register the Pledged Interests under the Securities Laws, even if Pledgor or Borrower agrees to pay all costs of the registration process; and (iii) shall not be considered to be commercially unreasonable solely because Lender purchases the Pledged Interests at such a sale.
(d) Pledgor agrees that Lender shall not have any general duty or obligation to make any effort to obtain or pay any particular price for any Collateral 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, Pledgor hereby agrees that any foreclosure sale conducted in accordance
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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) Not less than fifteen (15) Business Days before the foreclosure sale, Lender notifies Pledgor at the address set forth herein 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 conducted at a location in New York, New York designated by Lender on any Business Day between the hours of 9:00 a.m. and 5:00 p.m. or, if public health or other considerations make a live auction inadvisable in the good faith determination of Lender, such auction may be conducted virtually using generally accepted video, web or tele-conferencing technology that simulates a live auction to the extent reasonably feasible (in which case notices under clause (iii) above and clauses (v) and (vi) below shall include instructions as to how qualified bidders may obtain login credentials for such virtual auction);
(v) The notice of the date, time and location of the foreclosure sale is published prior to the date of the foreclosure sale in (A) The New York Times or The Wall Street Journal (or if The New York Times and The Wall Street Journal are no longer publishing, such other newspaper widely circulated in New York, New York) for any three (3) consecutive business days; and (B) and Commercial Mortgage Alert (or if Commercial Mortgage Alert is no longer publishing, another real estate-related trade publication selected in good faith by Lender that is circulated in New York, New York or online) for any three (3) consecutive publication dates; Lender sends notification of the foreclosure sale to all Persons from which Lender has received written notice of a claim or interest in any Collateral and all secured parties identified as a result of a search of the UCC financings statements in the filing offices located in the State of Delaware conducted not later than twenty (20) days and not earlier than thirty (30) days before such notification date.
3.6 Application of Proceeds. Except as otherwise herein expressly provided, the proceeds of any collection, sale or other realization of all or any part of the Collateral pursuant hereto, and any other cash at the time held by Lender under this Section 3, shall be applied by Lender:
First, to the payment of the costs and expenses of such collection, sale or other realization, including reasonable out-of-pocket costs and expenses of Lender and the fees and expenses of their respective agents and counsel, and all expenses, and advances made or incurred by Lender in connection therewith;
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Next, to the payment in full of the Obligations; and
Finally, to the payment to Pledgor, or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.
As used in this Section 3, “proceeds” of Collateral shall mean cash, securities and other property realized in respect of, and distributions in kind of, Collateral, including any thereof received under any reorganization, liquidation or adjustment of debt of Pledgor or any issuer of or obligor on any of the Collateral.
3.7 Cooperation. If Lender shall elect to exercise its right to sell all or any portion of the Collateral as and when permitted pursuant to this Agreement or by applicable law, Pledgor agrees that, upon request of Lender, Pledgor will, at its own expense: (a) use its commercially reasonable efforts to execute and deliver, and cause Borrower and the members, managers, partners, directors and/or officers thereof to execute and deliver, all such instruments and documents, and to do or cause to be done all such other acts and things, as may be necessary or, in the reasonable opinion of Lender, advisable to register such Collateral under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectuses which, in the opinion of Lender, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto; (b) use its commercially reasonable efforts to qualify the Collateral under the state securities laws or “Blue Sky” laws and to obtain all necessary governmental approvals for the sale of the Collateral, as requested by Lender; (c) cause the Borrower to make available to their respective security holders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 11(a) of the Securities Act; (d) execute and deliver, or cause the officers and directors of the Borrower to execute and deliver, to any Person or governmental authority as Lender may choose, any and all documents and writings which, in Lender’s reasonable judgment, may be necessary or appropriate for approval, or be required by, any regulatory authority located in any city, county, state or country where Pledgor or Borrower engages in business, in order to transfer or to more effectively transfer the Pledged Interests or otherwise enforce Lender’s rights hereunder; (e) provide, or and cause Borrower and the members, managers, partners, directors and/or officers to provide, tours of the Property to prospective bidders at any such sale of all or any portion of the Collateral, and (f) do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law. Pledgor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section may be specifically enforced.
3.8 Attorney-in-Fact. Without limiting any rights or powers granted by this Agreement to Lender, upon the occurrence and during the continuance of a default by Pledgor under the Payment Guaranty Lender is hereby appointed, which appointment as attorney-in-fact is irrevocable and coupled with an interest, the attorney-in-fact of Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which Lender may deem necessary or advisable to accomplish the purposes hereof. Without limiting the generality of the foregoing, so long as Lender shall be entitled under this Section 3 to make
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collections in respect of the Collateral, Lender shall have the right and power to receive, endorse and collect all checks made payable to the order of Pledgor representing any payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same. The power-of-attorney granted herein shall terminate automatically if Lender accepts a cure for such default.
3.9 Termination. When all Obligations shall have been paid in full, Lender shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever (except that Lender has not sold, created or suffered to exist thereon any lien, security interest or encumbrance in favor of any third party) any remaining Collateral and money received in respect thereof, to or on the order of Pledgor.
3.10 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 calendar days following the day upon which Lender shall have first served notice upon Pledgor in accordance with Section 6.3 hereof that an Event of Default or a default by Pledgor under the Payment Guaranty has occurred (the “Standstill Period”), Lender shall not consummate a Foreclosure Closing. As used herein, “Foreclosure Closing” means (i) the closing or other consummation of any sale, assignment or other disposition of the Pledged Interests pursuant to Section 3.4 hereof (including to Lender or its designee), including the delivery of the Pledged Securities and the Assignment of Interest to the purchaser or transferee, (ii) Lender’s acceptance of the Pledged Interests in full or partial satisfaction of the Obligations, and (iii) the admission of any purchaser or transferee as a member of Borrower pursuant to Section 3.4(e) hereof.
(b) The Standstill Period shall be tolled during any period in which Lender is prohibited from exercising remedies due to applicable law, court order, or bankruptcy or insolvency proceeding affecting Borrower or the Collateral.
(c) Except as expressly provided in Section 3.10(a) hereof, nothing in this Section 3.10 shall limit or restrict Lender’s right, at any time on or after the occurrence of an Event of Default or a default by Pledgor under the Payment Guaranty (including during the Standstill Period), to initiate, commence and diligently pursue any and all rights and remedies available to it hereunder or under the other Loan Documents, including, without limitation: (i) exercising any right or remedy under Section 3.3(b), Section 3.4 (other than consummating a Foreclosure Closing) or Section 7.1 hereof, including all voting, consensual and other powers of ownership pertaining to the Pledged Interests; (ii) delivering and publishing all notices of disposition or sale required or contemplated by Sections 3.4 and 3.5 hereof, and scheduling, marketing and conducting a public or private sale of the Pledged Interests (provided that no Foreclosure Closing shall occur prior to the expiration of the Standstill Period); and (iii) exercising any right or remedy against Borrower, the Property or any collateral other than the Pledged Interests
(d) Immediately upon the expiration of the Standstill Period, without the need for any further notice (other than notices of disposition or sale previously given in
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accordance with Sections 3.4 and 3.5 hereof), demand, cure period, grace period or other condition, Lender may consummate a Foreclosure Closing and exercise any and all of its rights and remedies granted under this Agreement or any other Loan Document for so long as an Event of Default or a default by Pledgor under the Payment Guaranty shall have occurred and be continuing. The Standstill Period shall expire automatically, shall not be extended, tolled or renewed for any reason except as expressly provided in this Section 3.10, is not a cure period, and shall not constitute a waiver of any Event of Default or default under the Payment Guaranty or a limitation on the accrual of interest (including interest at the Default Rate) or any other amounts payable under the Loan Documents.
Section 4. Entity Covenants. Pledgor covenants and agrees with Lender that, from and after the date of this Agreement until the Debt is paid in full (exclusive of any indemnification or other obligations which are expressly stated in the Loan Documents to survive satisfaction of the Note):
4.1 Change of Name, Identity or Structure. Pledgor shall not change (or permit to be changed) Pledgor’s (a) name, (b) identity (including its trade name or names), (c) principal place of business set forth in the introductory paragraph to this Agreement or, (d) corporate, partnership or other structure, without notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in Pledgor’s structure, without first obtaining the prior written consent of Lender. Pledgor shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein.
4.2 Business and Operations. Pledgor will continue to engage in the businesses now conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Collateral. Pledgor will remain in good standing under the laws of the jurisdiction as and to the extent the same are required for the ownership, of the Collateral.
4.3 Special Purpose. Pledgor shall at all times from and after the date hereof be a Special Purpose Bankruptcy Remote Entity. Pledgor shall not directly or indirectly make any change, amendment or modification to its organizational documents, or otherwise take any action which could result in Pledgor not being a Special Purpose Bankruptcy Remote Entity.
4.4 Preservation of Collateral; Cooperation. Pledgor shall do or cause to be done all things necessary to preserve and to keep in full force and effect its interests in the Collateral, and to defend, at its sole expense, the title to the Collateral and any part of the Collateral. Further, Pledgor shall (i) cooperate in all reasonable respects with Lender’s efforts to preserve the Collateral and to take such actions to preserve the Collateral as Lender may in good faith direct and (ii) take such steps as Lender may from time to time reasonably request to preserve, perfect and maintain Lender’s security interest in the Collateral under applicable law.
4.5 Prohibition on Transfers. Pledgor shall not sell, discount, allow credits or allowances, assign, extend the time for payment on, convey, lease, transfer, encumber or otherwise hypothecate or dispose of the Collateral or any part of the Collateral, or create, incur, assume or suffer to exist any lien upon any of the Collateral other than liens in favor of Lender.
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4.6 Patriot Act.
(a) Pledgor will comply with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Pledgor, including those relating to money laundering and terrorism. Lender shall have the right, from time-to-time, to audit Pledgor’s compliance with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Pledgor, including those relating to money laundering and terrorism. In the event that Pledgor fails to comply with the Patriot Act or any such requirements of Governmental Authorities, then Lender may, at its option, cause Pledgor to comply therewith and any and all reasonable costs and expenses incurred by Lender in connection therewith shall be secured by the Mortgage and the other Loan Documents and shall be immediately due and payable. For purposes of this Agreement, the term “Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as the same was restored and amended by the Uniting and Strengthening America by Fulfilling Rights and Ensuring Effective Discipline over Monitoring Act (USA FREEDOM ACTS OF 2015), as the same may be amended from time to time, and corresponding provisions of future laws.
(b) At all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to the Loan Documents, (i) none of the funds or other assets of Pledgor shall constitute property of, or shall be beneficially owned, directly or indirectly, by any Person subject to trade restrictions under United States law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder, with the result that the investment in Pledgor (whether directly or indirectly), would be prohibited by law (each, an “Embargoed Person”), or the Loan made by Lender would be in violation of law, (ii) no Embargoed Person shall have any interest of any nature whatsoever in Pledgor, with the result that the investment in Pledgor (whether directly or indirectly), would be prohibited by law or the Loan would be in violation of law, and (iii) none of the funds of Pledgor shall be derived from any unlawful activity with the result that the investment in Pledgor (whether directly or indirectly), would be prohibited by law or the Loan would be in violation of law.
4.7 Books and Records. Pledgor shall keep and maintain, or will cause to be kept and maintained, proper and accurate books and records reflecting the financial affairs of Pledgor.
4.8 Further Assurances. At any time and from time to time, upon the written request of Lender, and at the sole expense of Pledgor, Pledgor shall (i) promptly and duly give, execute, deliver, file and/or record such further instruments and documents and take such further actions as Lender may reasonably request for the purposes of obtaining, creating, perfecting, validating or preserving the full benefits of this Agreement and of the rights and powers herein granted including filing UCC financing or continuation statements, (ii) cure any defects in the execution and delivery of the Loan Documents to which Pledgor is a party and execute and deliver, or cause to be executed and delivered, to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary, to correct any omissions in the Loan Documents to which Pledgor is a party, as Lender may reasonably require; and (iii) do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better
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and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents to which Pledgor is a party, as Lender may reasonably require from time to time. Pledgor hereby authorizes Lender to file any such financing statement or continuation statement without the signature of Pledgor to the extent permitted by law. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or chattel paper, such note, instrument or chattel paper shall be promptly delivered to Lender, duly endorsed in a manner satisfactory to Lender, to be held as Collateral pursuant to this Agreement.
Section 5. Representations and Warranties. Pledgor hereby warrants, represents and covenants to Lender that:
5.1 Organization; Special Purpose. Pledgor is duly organized and existing and in good standing under the laws of the state in which such entity is organized. Pledgor is currently qualified or licensed (as applicable) and shall remain qualified or licensed to do business in each jurisdiction in which the nature of its business requires it to be so qualified or licensed.
5.2 Duly Authorized; Enforceability. The execution and delivery by Pledgor (and its representative executing below, if any) of this Agreement has been duly authorized and this Agreement constitutes valid and binding obligations of Pledgor, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights, or by the application of rules of equity.
5.3 No Conflicts. The execution, delivery and performance by Pledgor of this Agreement do not violate any provision of any law or regulation, or result in any breach or default under any contract, obligation, indenture or other instrument to which Pledgor is a party or by which Pledgor is bound.
5.4 Litigation. There are no pending or threatened in writing actions, claims, investigations, suits or proceedings before any governmental authority, court or administrative agency which would reasonably be expected to materially and adversely affect the financial condition or operations of Pledgor, Borrower, the Collateral and/or the Property.
5.5 Fraudulent Transfer. None of the transactions contemplated by the Loan Documents will be or have been made with an actual intent to hinder, delay or defraud any present or future creditors of Borrower or Pledgor, and Borrower and Pledgor, on the date hereof, will have received fair and reasonably equivalent value in good faith for the continued grant of the liens or security interests effected by the Loan Documents. As of the date hereof, Borrower and Pledgor are solvent and will not be rendered insolvent by the transactions contemplated by the Loan Documents. As of the date hereof, Borrower and Pledgor are able to pay their respective debts as they become due.
5.6 Pledged Collateral.
(a) The exact name of Pledgor is, and at all times has been, SRC Envy HoldCo LLC.
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(b) Pledgor is the sole record and beneficial owner of, and has good title to, the Collateral, free and clear of any and all Liens in favor of, or claims of, any other Person (and no right or option to acquire the same exists in favor of any other Person).
(c) 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 Agreement).
(d) The principal place of business of Pledgor and the office where Borrower keeps its records concerning the Collateral will be located at all times at the address specified in the introductory paragraph of this Agreement.
(e) The Pledged Securities have been duly and validly issued and are fully paid and nonassessable and are not subject to any options to purchase or similar rights of any Person.
(f) There currently exist no certificates, instruments or writings representing the Pledged Interests other than the certificate delivered to Lender.
(g) This Agreement, together with the delivery to Lender of all original Pledged Securities relating to the Pledged Interests, create a valid security interest in the Collateral, securing the payment of the Obligations, and upon the filing in the appropriate filing offices of the financing statements to be delivered pursuant to this Agreement, such security interests will be perfected, first priority security interests, and all filings and other actions necessary to perfect such security interests will have been duly taken. Upon the exercise of its rights and remedies under this Agreement, Lender will succeed to all of the rights, titles and interest of Pledgor in Borrower without the consent of any other Person and will, without the consent of any other Person, be admitted as the sole member in Borrower.
(h) The Pledged Interests are “securities” within the meaning of Article 8 of the Code and are “financial assets” within the meaning of Article 8 of the Code. None of the Pledged Collateral is (A) held in a securities account as defined under Article 8 of the Code, (B) directly dealt in or traded on a securities exchange or in a securities market, or (C) an investment company security as defined under Article 8 of the Code.
5.7 Books and Records. Pledgor shall keep and maintain or will cause to be kept and maintained proper and accurate books and records reflecting the financial affairs of Pledgor.
5.8 Other Representations and Warranties. As of the date hereof and continuing thereafter for the term of the Loan, the representations and warranties set forth in Sections 4.9 (Tax Filings), 4.10 (ERISA; No Plan Assets), 4.13 (Federal Reserve Regulations; Investment Company Act; Bank Holding Company), 4.17 (Fraudulent Transfer), 4.26 (FIRPTA), and 4.30(b) (Patriot Act) of the Loan Agreement are true and correct with respect to Pledgor, it being understood that wherever the term “Borrower” is used in each the foregoing sections it shall be deemed to be “Pledgor”.
Section 6. Miscellaneous.
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6.1 No Waiver. No failure on the part of Lender or any of its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by Lender or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided herein are cumulative and are not exclusive of any remedies provided by law.
6.2 Governing Law.
(a) THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, PLEDGOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK AND PLEDGOR WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. PLEDGOR DOES HEREBY DESIGNATE AND APPOINT:
COZEN O’CONNOR
ATTENTION: WILLIAM F. DAVIS, ESQ.
3 WTC
175 GREENWICH STREET, 55TH FLOOR
NEW YORK, NEW YORK 10007
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND PLEDGOR AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF PLEDGOR MAILED OR DELIVERED TO PLEDGOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON PLEDGOR (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. PLEDGOR (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
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(WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
6.3 Notices. All notices, consents, approvals and requests required or permitted hereunder shall be given in the manner and to the addresses set forth in the Payment Guaranty.
6.4 Waivers, etc. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by Pledgor and Lender. Any such amendment or waiver shall be binding upon Lender and Pledgor.
6.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of Pledgor and inure to the benefit of the successors and assigns of Lender (provided, however, that Pledgor shall not assign or transfer its rights hereunder without the prior written consent of Lender). Without limiting the foregoing, Lender may at any time and from time to time without the consent of Pledgor, assign or otherwise transfer all or any portion of its rights and remedies under this Agreement to any other person or entity, either separately or together with other property of Pledgor for such purposes in connection with a transfer of Lender’s interest in the Payment Guaranty and the other Loan Documents and on such terms as Lender shall elect, and such other person or entity shall thereupon become vested with all of the rights and obligations in respect thereof granted to Lender herein or otherwise. Each representation and agreement made by Pledgor in this Agreement shall be deemed to run to, and each reference in this Agreement to Lender shall be deemed to refer to, Lender and each of its successors and assigns.
6.6 Indemnification. Pledgor hereby agrees to indemnify Lender and its directors, officers, employees and agents from, and hold each of them harmless against, any and all actual losses, liabilities, claims, damages or expenses incurred by any of them arising out of or by reason of any claim of any Person (1) relating to or arising out of the acts or omissions of Pledgor under this Agreement or the Relevant Documents (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of Lender or the Person to be indemnified, or their respective officers directors, employees or agents), or (2) resulting from the ownership of or lien on any Collateral, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation or litigation or other proceedings (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of Lender or the Person to be indemnified, and their respective officers directors, employees or agents).
6.7 No Election of Remedies.
(a) Without limitation as to any other right or remedy provided to Lender in this Agreement, the Payment Guaranty or the other Loan Documents, in the case of a default by Pledgor under the Payment Guaranty which has occurred and is continuing (i) Lender shall have the right to pursue all of its rights and remedies under this Agreement, the Payment Guaranty and the other Loan Documents, at law and/or in equity, in one proceeding, or separately and independently in separate proceedings from time to time, as Lender, in its sole and absolute
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discretion, shall determine from time to time, (ii) Lender shall not be required to either marshall assets, sell any of the Collateral in any particular order of alienation (and may sell the same simultaneously and together or separately), or be subject to any “one action” or “election of remedies” law or rule with respect to any of the Collateral, (iii) the exercise by Lender of any remedies against any one item of Collateral will not impede Lender from subsequently or simultaneously exercising remedies against any other item of Collateral, (iv) all liens and other rights, remedies or privileges provided to Lender herein shall remain in full force and effect until Lender has exhausted all of its remedies against the Collateral and all Collateral has been sold and/or otherwise realized upon in satisfaction of the Debt, and (v) Lender may resort for the payment of the Debt to any security held by Lender in such order and manner as Lender, in its discretion, may elect and Lender may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to foreclose this Agreement.
(b) Without notice to or consent of Pledgor and without impairment of the lien and rights created by this Agreement, Lender may, at any time (in its sole and absolute discretion, but Lender shall have no obligation to), execute and deliver to Pledgor a written instrument releasing all or a portion of the security interest and lien created by this Agreement and any UCC financing statement filed in connection herewith as security for any or all of the obligations of Pledgor now existing or hereafter arising under or in respect of the Payment Guaranty, whereupon following the execution and delivery by Lender to Pledgor of any such written instrument of release, this Agreement shall no longer secure such obligations so released.
6.8 Severability. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of Lender in order to carry out the intentions of the parties hereto as nearly as may be possible and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.
Section 7. Article 8 Matters.
7.1 Irrevocable Proxy. Solely with respect to Article 8 Matters (as hereinafter defined), Pledgor hereby irrevocably grants and appoints Lender, from the date of this Agreement until the termination of this Agreement in accordance with its terms, as Pledgor’s true and lawful proxy, for and in Pledgor’s name, place and stead to vote the Pledged Interests in Borrower by Pledgor, whether directly or indirectly, beneficially or of record, now owned or hereafter acquired, with respect to such Article 8 Matters. The proxy granted and appointed in this Section 7.1 shall include the right to sign Pledgor’s name (as the member of Borrower) to any consent, certificate or other document relating to an Article 8 Matter and the Pledged Interests that applicable law may permit or require, to cause the Pledged Interest to be voted in accordance with the preceding sentence. Pledgor hereby represents and warrants that there are no other proxies and powers of attorney with respect to an Article 8 Matter and the Pledged Interest that Pledgor may have granted or appointed. Pledgor will not give a subsequent proxy or power of attorney or enter into any other voting agreement with respect to the Pledged Interest with respect to any Article 8 Matter and any attempt to do so with respect to an Article 8 Matter shall be void and of no effect.
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7.2 Definition of “Article 8 Matters”. As used herein, “Article 8 Matter” means any action, decision, determination or election by Borrower or its member(s) that its membership interests or other equity interests, or any of them, 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.
The proxies and powers granted by the Pledgor pursuant to this Agreement are coupled with an interest and are given to secure the performance of the Pledgor’s obligations under this Agreement.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed as of the day and year first above written.
PLEDGOR:
SRC ENVY HOLDCO LLC,
a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
[Pledge and Security Agreement - Signature Page]
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SPRINGING CASH MANAGEMENT AGREEMENT
This SPRINGING CASH MANAGEMENT AGREEMENT (this “Agreement”) is entered into as of September 23, 2026, by and among ENVY RECREATIONAL LLC, a Delaware limited liability company, ENVY DEVELOPMENT DE, LLC, a Delaware limited liability company (individually or collectively as the context may require, jointly and severally, “Borrower”), PNC BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, “Deposit Bank”) and LOANCORE CAPITAL CREDIT REIT LLC, a Delaware limited liability company (together with its successors and assigns, “Lender”).
RECITALS:
A. Pursuant to the terms of a Loan Agreement, dated as of the date hereof, between Borrower and Lender (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender has agreed to provide financing (the “Loan”) to Borrower, which is secured by, among other things, the Property (as defined in the Loan Agreement).
NOW THEREFORE, in consideration of the mutual premises contained herein and for other good and valuable consideration the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
Other Defined Terms
Section 1.1.
(a) As used herein the following capitalized terms shall have the respective meanings set forth below:
“Active” shall mean the account being open and available to transact. This status of the account is also referred to as a springing status.
“Authorized Representative” shall mean a natural person authorized to execute this Agreement, amendments to the Agreement or exhibits and to provide instructions, and who is identified on an incumbency certificate in the form of Exhibit B-1, B-2, or B-3, as applicable, delivered to Deposit Bank.
“Business Day” shall mean any day other than (i) a Saturday and a Sunday and (ii) a day on which federally insured depository institutions in New York, New York are authorized or obligated by law, governmental decree or executive order to be closed.
“Cash Management Period” shall have the meaning set forth in the Loan
Agreement.
“Collateral” shall have the meaning set forth in Section 6.2 hereof.
“Inactive” shall mean the account being open and unavailable to transact. This
status of the account is also referred to as an unsprung status.
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“Loan Satisfaction Event” shall mean the satisfaction in full of the Obligations.
“Master User Agreement” shall mean an agreement between the Deposit Bank and a Person that identifies such Person’s designated users, including their access and permissions to the PNC PAID portal.
“Obligations” shall mean any and all debt, liabilities and obligations of Borrower to Lender pursuant to or in connection with the Loan, whether now or hereafter existing, including without limiting the generality of the foregoing, the indebtedness evidenced by the Note, all interest accruing thereon, and any and all debt, liabilities and obligations of Borrower under the Loan Documents.
“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other person or entity, and any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
“Servicer” shall mean an entity designated by Lender to exercise Lender’s rights and responsibilities under this Agreement, by written notice to Deposit Bank. Deposit Bank shall have the right to rely on instructions and other communications received from Servicer to the same extent as if such instructions or other communications were received directly from Lender.
“Springing Cash Management Account” also referred to as Cash Management Account in this agreement, shall have the meaning set forth in Section 2.1 hereof.
“Trigger Event” shall mean Lender or its Servicer provides written notice to Deposit Bank relating to the account status of Active (springing) or Inactive, per covenants and conditions of this Agreement and the Loan Agreement.
“UCC” shall have the meaning set forth in Section 2.4 hereof.
(b) The meanings given to capitalized terms defined herein shall be equally applicable in both singular and plural forms of such terms.
(c) Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Loan Agreement.
ARTICLE 2
Establishment of the Springing Cash Management Account.
Section 2.1. Borrower has established and maintains at Deposit Bank a deposit account bearing account number 1098144188 (the “Springing Cash Management Account”) and which is entitled “Envy Development DE, LLC, as Borrower, for the benefit of Lender, as Secured Party – Cash Management Account.” Borrower and Lender acknowledge and agree that the Deposit Bank will not be required to establish or open the Cash Management Account, or provide any services under this Agreement, if such account opening would violate Deposit Bank’s policies
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and procedures. Lender shall have the right to cause Deposit Bank to entitle the Cash Management Account with such other designation as Lender may select in its reasonable discretion to reflect any assignment or transfer by Lender of its rights hereunder. Following the establishment of the Springing Cash Management Account, the account shall be maintained throughout the term of this Agreement.
Section 2.2. The Springing Cash Management Account will default at creation to an Inactive account (unsprung) status. Upon the occurrence or cure of a Trigger Event, Lender will deliver notice to Deposit Bank in the form of an executed Exhibit C, attached hereto. The account will change from Active to Inactive status depending upon the options selected on the executed Exhibit C. While the Springing Cash Management Account is in an Active (springing) account status, the Borrower agrees to maintain a minimum balance of $5,000.00 (the “Peg Balance”) in the Cash Management Account. If at any time during the Active (springing) Cash Management Period, the balance in the Cash Management Account falls below the Peg Balance, Borrower shall promptly deposit into the Cash Management Account sufficient funds to meet the Peg Balance requirement.
Section 2.3. If at any point the Springing Cash Management Account has a Trigger Event resulting in the account going from Active to Inactive, the Lender/Servicer is required to remit any funds associated with the Peg Balance, to the Borrower using the process outlined in Section 3.1 of this Agreement.
Section 2.4. The Cash Management Account shall be a non-interest-bearing account. All amounts then on deposit in the Cash Management Account are deemed an asset of Borrower, subject to the lien and security interest granted Lender hereunder, subject to Lender’s sole dominion and control thereof and all of the terms and conditions of this Agreement.
Section 2.5. In order to further secure the performance by Borrower of the Obligations, Borrower hereby (i) requests that the Cash Management Account be established on its behalf at Deposit Bank in the name set forth above and (ii) acknowledges that (A) the Cash Management Account will be subject to the sole dominion, control and discretion of Lender, subject to the terms, covenants and conditions of this Agreement and the Loan Agreement, (B) Lender (or Servicer, if designated) shall have the sole right to direct disbursements from the Cash Management Account, and (C) neither Borrower nor any other Person claiming on behalf of or through Borrower shall have any right or authority, whether express or implied, to make use of, withdraw, or direct the use or withdrawal of any funds from the Cash Management Account or to give any instructions to Deposit Bank or any other Person with respect to the Cash Management Account.
Section 2.6. The Cash Management Account shall at all times be a “deposit account” as such term is defined in Section 9-102(a)(29) of the Uniform Commercial Code as in effect in the State of New York (the “UCC”) and control of the Cash Management Account shall be vested in Lender in accordance with Section 9-104 of the UCC.
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ARTICLE 3
Allocation and Disbursement of Funds in the Cash Management Account.
Section 3.1. Borrower, Lender and Deposit Bank agree that Deposit Bank will comply with instructions originated by Lender or its Servicer directing disposition of funds in the Cash Management Account (including wire transfers of money from the Cash Management Account pursuant to standing transfer orders and such other actions as shall from time to time be specified in writing by Lender or its Servicer without notice to or further consent of Borrower). Lender agrees that such instructions shall be facilitated through: (i) the PNC PAID portal by their designated users in accordance with users access and permissions listed in Exhibits B-2 and B-3 or (ii) other mutually agreed upon method.
Section 3.2. Payment instructions are to be provided in Exhibit A on the date hereof, and amendments to Exhibit A will be accepted for modifications to payment instructions over the term of this Agreement. Lender or its Servicer may submit modifications to payment instructions through the PNC PAID portal by their designated users in accordance with users access and permissions listed in Exhibits B-2 and B-3. Any modifications submitted by Lender or its Servicer through the PNC PAID portal will be deemed amendments to Exhibit A of this Agreement.
Section 3.3. The insufficiency of funds on deposit in the Cash Management Account shall not relieve Borrower of the obligation to make any payments, as and when due pursuant to the Loan Agreement and the other Loan Documents, and such obligations shall be separate and independent, and not conditioned on any event or circumstance whatsoever. No provision of this Agreement shall require the Deposit Bank to (i) risk, expend or advance its own funds, or (ii) otherwise, incur any financial liability or potential financial liability in the performance of its duties or the exercise of its rights under this Agreement.
ARTICLE 4
Fees of Deposit Bank
Section 4.1. Borrower agrees to pay the fees of Deposit Bank on the last Business Day of each month in accordance with the fee schedule attached hereto as Schedule A. Deposit Bank shall be entitled to debit the Cash Management Account for its fees and any other amounts due under the fee schedule attached as Schedule A.
Section 4.2. Upon the request of Borrower, Deposit Bank shall include its fees in an account analysis statement.
ARTICLE 5
Termination.
Section 5.1. Lender may replace Deposit Bank with a new cash management bank (i) upon five (5) days’ prior written notice to Borrower and Deposit Bank or (ii) immediately upon prior written notice from Lender to Deposit Bank if the Springing Cash Management Account fails to remain an Eligible Account (as defined in the Loan Agreement). Borrower hereby agrees to take all reasonable action necessary to facilitate the transfer of the respective obligations,
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duties and rights of Deposit Bank to the successor bank thereof selected by Lender in its sole and absolute discretion.
Section 5.2. Deposit Bank may resign from its obligations under this Agreement at any time after thirty (30) calendar days’ prior written notice to the other parties hereto, but in no event shall Deposit Bank be released of its obligations hereunder unless and until (i) a bank has been designated by Lender as a successor to Deposit Bank and assumed the obligations of Deposit Bank hereunder and all funds in the Cash Management Account have been transferred to such successor bank or (ii) Lender consents to such release in writing. Lender shall designate a successor to Deposit Bank in its sole and absolute discretion promptly after receipt of notice of resignation by Deposit Bank. Borrower and Lender shall take all reasonable actions necessary to cause such designated successor bank promptly to assume the obligations of Deposit Bank hereunder. However, in the event no successor bank has been appointed ninety (90) days after the Deposit Bank has provided written notice of such resignation, this Agreement shall be terminated and Deposit Bank will transfer all collected and available balances (less any deductions permitted hereunder) in the Cash Management Account to Lender or Servicer or otherwise in accordance with Lender’s or Servicer’s written instructions, not to be unreasonably withheld, and the Deposit Bank shall thereupon be relieved of all further duties and obligations under this Agreement. Notwithstanding anything to the contrary contained in the foregoing, Deposit Bank may resign from this Agreement immediately upon written notice to Lender and Borrower in the event (i) of suspected fraud or illegal activity in connection with the Cash Management Account or this Agreement or (ii) in the sole judgement of the Deposit Bank, it is necessary or desirable to do so because of legal process, applicable law or regulation, or other government guidelines. Notwithstanding any such termination, this Agreement shall continue in full force and effect as to all transactions for which Deposit Bank has commenced processing and as to all rights and liabilities arising prior to such termination.
Section 5.3. Notwithstanding anything to the contrary contained in the foregoing, Deposit Bank may resign from this Agreement upon ten (10) Business Days’ prior written notice to Lender and Borrower in the event of: (i) the insolvency, receivership, or voluntary or involuntary bankruptcy of the Borrower, or the institution of any proceeding therefor, or any assignment for the benefit of the Borrower’s creditors, or (ii) in Deposit Bank’s sole judgment, that the financial condition or business of the Borrower is impaired or Deposit Bank reasonably believes that Borrower may not have sufficient available funds in the Cash Management Account to make payments due under Section 4.1, above. Notwithstanding any such termination, this Agreement shall continue in full force and effect as to all transactions for which Deposit Bank has commenced processing and as to all rights and liabilities arising prior to such termination.
Section 5.4. Except following the effective date of Deposit Bank’s resignation or the early replacement of Deposit Bank as set forth in Sections 5.1 and 5.2 above, Deposit Bank shall not cause or permit the Cash Management Account to be closed without the prior written consent of Lender.
Section 5.5. Lender may terminate this Agreement at any time upon prior written notice to Borrower and Deposit Bank; provided, however, the failure of any notice to be sent to Borrower or the lack of receipt by Borrower of any notice shall not diminish or otherwise affect
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the effectiveness of any notice received by Deposit Bank. Lender agrees to terminate this Agreement promptly upon the occurrence of a Loan Satisfaction Event.
ARTICLE 6
Matters Concerning Borrower.
Section 6.1. Borrower will provide Exhibit B-1 that will list its users, including their access and permissions to be granted access to the PNC PAID portal. All users for the Borrower will have read only access in the PNC PAID portal. Modifications to Borrower’s users and/or their access and permissions will be accepted by amendments to Exhibit B-1. If Borrower has a Master User Agreement in place with Deposit Bank, that agreement will supersede any previous Exhibit B-1s for this Agreement unless it’s stated in Exhibit B-1 that the Master User Agreement users and/or their access and permissions are not applicable to this Agreement.
Section 6.2. Borrower hereby pledges, transfers and assigns to Lender, and grants to Lender, as additional security for the payment and performance of the Obligations, a continuing perfected first priority security interest in and to, and a first lien upon, the following property of Borrower (whether now owned or existing or hereafter acquired and regardless of where located) (all of the same, collectively, the “Collateral”): (i) all of Borrower’s right, title and interest in and to the Cash Management Account and all cash, property or rights transferred to or deposited therein from time to time, and (ii) any and all proceeds (as defined in the UCC) of the foregoing. This Agreement and the pledge, assignment and grant of security interest made hereby shall secure payment of all amounts payable by Borrower to Lender under the Loan Documents. Borrower agrees to execute, acknowledge, deliver, file or do at its sole cost and expense, all other acts, assignments, notices, agreements or other instruments as Lender may reasonably require in order to effectuate, assure, convey, secure, assign, transfer and convey unto Lender any of the rights granted by this Agreement and to more fully perfect and protect any lien or security interest granted hereby.
ARTICLE 7
Certain Matters Regarding Lender.
Section 7.1. Lender will provide Exhibit B-2 that will list its users, including their access and permissions to be granted access to the PNC PAID portal. Modifications to Lender’s users and/or their access and permissions will be accepted by amendments to Exhibit B-2. If Lender has a Master User Agreement in place with Deposit Bank, that agreement will supersede any previous Exhibit B-2s for this Agreement unless it’s stated in Exhibit B-2 that the Master User Agreement users and/or their access and permissions are not applicable to this Agreement.
Section 7.2. Borrower agrees that Lender may exercise in respect of the Collateral all rights and remedies available to Lender hereunder or under the other Loan Documents or otherwise available at law or in equity. Borrower acknowledges and agrees that, upon the occurrence and during the continuance of any Event of Default, it will have no further right to request or otherwise require Lender to disburse funds from the Cash Management Account in accordance with the terms of this Agreement, it being agreed that Lender may, at its option, (i) direct Deposit Bank to continue to hold the funds in the Cash Management Account, (ii) continue
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from time to time to apply all or any portion of the funds held in the Cash Management Account to any payment(s) which such funds could have been applied to prior to such Event of Default, to the extent and in such order and manner as Lender in its sole and absolute discretion may determine, or (iii) direct Deposit Bank from time to time to disburse all or any portion of the funds held in the Cash Management Account or other Collateral then or thereafter held by Deposit Bank to Lender, in which event Lender may apply the funds held in the Cash Management Account or other Collateral to the Obligations in any order and in such manner as Lender may determine in its sole and absolute discretion.
Section 7.3. Borrower agrees that, upon the occurrence and during the continuance of any Event of Default, Lender may, at any time or from time to time, collect, appropriate, redeem, realize upon or otherwise enforce its rights with respect to the Collateral in accordance with the Loan Agreement, without notice to Borrower and without the need to institute any legal action, make demand, exhaust any other remedies or otherwise proceed to enforce its rights.
Section 7.4. No failure on the part of Lender to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right under this Agreement or the other Loan Documents. The remedies provided in this Agreement, the Note, the Loan Agreement and the other Loan Documents are cumulative and not exclusive of any remedies provided at law or in equity.
Section 7.5. In the event of any inconsistency between this Article VII and the provisions of the Loan Agreement, the provisions of the Loan Agreement shall prevail.
ARTICLE 8
Certain Matters Regarding Servicer.
Section 8.1. At the option of Lender, the Loan may be serviced by a Servicer selected by Lender and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a written servicing agreement between Lender and Servicer.
Section 8.2. Servicer will provide Exhibit B-3 that will list its users, including their access and permissions to be granted access to the PNC PAID portal. Modifications to Servicer’s users and/or their access and permissions will be accepted by amendments to Exhibit B-3. If Servicer has a Master User Agreement in place with Deposit Bank, that agreement will supersede any previous Exhibit B-3s for this Agreement unless it’s stated in Exhibit B-3 that the Master User Agreement users and/or their access and permissions are not applicable to this Agreement.
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ARTICLE 9
Amendment; Successor and Assigns; Assignments.
Section 9.1. This Agreement may be amended only by a writing executed by Deposit Bank and Authorized Representatives of Borrower and Lender, with the exception of Exhibits A, B-1, B-2 and B-3. Amendments to Exhibit A can be accepted by Deposit Bank from an Authorized Representative of Lender or its Servicer without notice to other parties to this Agreement. Deposit Bank shall confirm amendments to Exhibit A by telephone call-back to an Authorized Representative specified on the respective Exhibit B-2 or B-3. Amendments to Exhibits B-1, B-2 and B-3 can be accepted by Deposit Bank from an Authorized Representative of each respective party without notice to the other parties to this Agreement.
Section 9.2. This Agreement shall bind and inure to the benefit of and be enforceable by Borrower, Lender and Deposit Bank and their respective successors and assigns.
Section 9.3. Lender shall have the right to assign or transfer rights and obligations under this Agreement without limitation. Any assignee or transferee shall be entitled to all the benefits afforded Lender under this Agreement; provided, however, that such assignee or transferee shall upon written request deliver to the other parties hereto written confirmation that such assignee or transferee agrees to be bound by the terms of this Agreement.
Section 9.4. Borrower shall have no right to assign or transfer its rights and obligations hereunder without the prior written consent of Lender and Deposit Bank. Deposit Bank shall have no right to assign or transfer its rights and obligations hereunder without the prior written consent of Lender; provided, however that no such consent will be required if such assignment or transfer takes place as part of a merger, acquisition or corporate reorganization affecting Deposit Bank.
ARTICLE 10
Notices.
Section 10.1. Except as otherwise provided in this Agreement (such as directing the disbursement of funds by the Deposit Bank on behalf of Lender), all notices, consents, approvals and requests permitted or required by this Agreement shall be in writing, delivered by personal delivery (whether by messenger or otherwise), overnight courier service, certified or registered mail or by electronic mail, and will be deemed to have been duly given (a) immediately upon personal delivery (whether by messenger, or otherwise), (b) when actually received, in the case of delivery overnight courier service or United States mail, or (c) when delivered to the e-mail address given below, in the case of electronic mail provided that written notification of receipt is obtained from the recipient after completion of the electronic mail transmission.
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If to Lender:
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Kimberly Lutterman
Email: xxxxx@loancore.com
LoanCore Capital Credit REIT LLC
c/o LoanCore Capital
55 Railroad Avenue, Suite 100
Greenwich, Connecticut 06830
Attention: Notices
Email: xxxxx@loancore.com
with a copy to:
Firsel Ross Gussis & Alexander
10 Parkway North Boulevard, Suite 110
Deerfield, Illinois 60015
Attention: Samuel P. Gussis, Esq.
Email: xxxxx@firselross.com
If to Borrower:
Envy Development DE, LLC
4300 N. University Drive, Suite D105
Lauderhill, FL 33351
Attention: Katy Murless, Chief Financial Officer
Email: xxxxx@stewards.com
with a copy to:
Cozen O’Connor One Liberty Place
1650 Market Street, Suite 2800
Philadelphia, PA 19103
Attention: Howard Grossman, Esq.
Email: xxxxx@cozen.com
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If to Deposit Bank:
PNC Bank, National Association
80 South Eighth Street, Suite 3715
Minneapolis, MN 55402
Attn: CMA PAID TEAM
Email: xxxxx@pnc.com
Phone: 833-762-3855
PNC Bank, National Association
500 First Avenue
Mailstop: P7-PFSC-02-E
Pittsburgh, Pennsylvania 15219
Attention: TM Legal Liaison Team
In all cases, each party hereto shall be entitled to rely on a copy or electronic transmission of any document with the same legal effect as if it were the original of such document. The parties acknowledges that there are certain security, corruption, transmission error and access availability risks associated with using open networks such as the internet and each of Borrower and Lender assumes such risks.
ARTICLE 11
Limitation on Lender’s Liability.
Section 11.1. Lender shall not be liable for any acts, omissions, errors in judgment or mistakes of fact or law, including, without limitation, acts, omissions, errors or mistakes with respect to the Collateral, except for those arising as a result of Lender’s gross negligence or willful misconduct. Without limiting the generality of the foregoing, except as otherwise expressly provided for herein or as required by applicable law, Lender shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not Lender has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other right pertaining to any Collateral. Lender is hereby authorized by Borrower to act on any written instruction believed by Lender in good faith to have been given or sent by Borrower.
ARTICLE 12
Mortgagee-in-Possession.
Section 12.1. Borrower hereby confirms and agrees that notwithstanding the provisions of this Agreement, Borrower retains sole control of the operation and maintenance of the Property, subject to the obligations of Borrower under the Loan Agreement, the Security Instrument, the Assignment of Leases and the other Loan Documents, and Lender is not and shall not be deemed to be a mortgagee-in-possession nor shall Lender be subject to any liability with respect to the Property or otherwise based upon any claim of lender liability.
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ARTICLE 13
Standard of Care; Indemnification.
Section 13.1. Deposit Bank shall be responsible for the performance of only such duties as are specifically set forth herein or contained in instructions given to Deposit Bank which are not contrary to the provisions of this Agreement. Deposit Bank will use reasonable care with respect to the safekeeping of property in the Cash Management Account and, except as otherwise expressly provided herein, in carrying out its obligations under this Agreement. Deposit Bank’s responsibility hereunder is limited to any loss occasioned directly by the gross negligence or willful misconduct of Deposit Bank. In no event, however, shall Deposit Bank have any responsibility for consequential, indirect, special, punitive or exemplary damages, whether or not it has notice thereof, nor shall it have any responsibility or liability for the validity or enforceability of any security interest or other interest of Lender or Borrower in the Cash Management Account.
Section 13.2. Except where Deposit Bank has been grossly negligent or has committed willful misconduct, Borrower and Lender will release Deposit Bank from, and Borrower shall indemnify and hold Deposit Bank harmless from and against, any and all losses, claims, damages, liabilities, costs and expenses (including, without limitation, reasonable counsel fees, whether arising in an action or proceeding among the parties hereto or otherwise) to which Deposit Bank may become subject, or which it may suffer or incur, arising out of or based upon this Agreement or the actions contemplated hereby. The provisions of this Article 13 shall survive termination of this Agreement.
ARTICLE 14
Certain Matters Affecting Deposit Bank.
Section 14.1. Deposit Bank may rely and shall be protected in acting or refraining from acting upon any notice, instruction, demand or certificate believed by it to be genuine and to have been signed or presented by the proper party or parties, and it may be assumed that any person purporting to act on behalf of any party giving any of the foregoing in connection with the provisions hereof has been duly authorized to do so. Deposit Bank may consult with legal counsel and is entitled to rely on the advice of such counsel; provided however, that the foregoing shall not be construed to affect or limit the responsibilities or liabilities of Deposit Bank under this Agreement. This Section 14.1 shall survive the termination of this Agreement.
Section 14.2. The duties and obligations of Deposit Bank hereunder shall be determined solely by the express provisions of this Agreement. Deposit Bank shall not be liable except for the performance of Deposit Bank’s duties and obligations as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against Deposit Bank.
Section 14.3. At the direction of Lender, Deposit Bank shall disburse funds in the Cash Management Account by wire transfer to Lender for final disposition including but not limited to all tax payments and insurance premiums. Deposit Bank shall not be liable for any
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failure to timely pay tax payments or insurance premiums in any case in which Lender shall have directed Deposit Bank to make such payments directly.
Section 14.4. Deposit Bank hereby acknowledges and agrees that (a) the Cash Management Account shall be held by Deposit Bank in the name as set forth in Section 2.1 of this Agreement for the benefit of Lender as secured party, (b) all funds held in the Cash Management Account shall be held for the benefit of Lender, (c) Borrower has granted to Lender a first priority security interest in the Collateral, and (d) Deposit Bank shall not disburse any funds from the Cash Management Account except as provided herein. Deposit Bank hereby waives any right of offset, banker’s lien or similar rights against, or any assignment of, or security interest or other interest in, the Collateral, except that Deposit Bank may charge or set off against the Cash Management Account for (i) any of Deposit Bank’s charges, fees and expenses provided for herein for which Borrower is responsible that have not been paid or satisfied after written demand from Deposit Bank, (ii) all items deposited in and credited to the Cash Management Account and subsequently returned unpaid or with respect to which Deposit Bank fails to receive final settlement, (iii) all charges and obligations and liabilities arising out of any cash management services provided by Deposit Bank under this Agreement, including, but not limited to, transactions that have not been paid or satisfied after written demand from Deposit Bank, and (iv) any amounts deposited in the Cash Management Account in error or as necessary to correct processing errors. If there are insufficient collected funds in the Cash Management Account to cover the amount of any returned check or other adjustment or correction to be debited thereto, Borrower shall repay Deposit Bank the amount of such debit immediately upon written demand.
Section 14.5. If at any time: Deposit Bank (a) is in receipt of a notice from Lender or Servicer which causes a dispute or conflict regarding the disposition of funds in the Cash Management Account, or (b) is served with legal process or a bankruptcy notice which it in good faith believes prohibits the disbursement of the funds deposited in the Cash Management Account, then Deposit Bank shall have the right (i) to place a hold on the funds in the Cash Management Account until such time as it receives an appropriate court order or other assurance satisfactory to it as to the disposition of the funds in the Cash Management Account, or (ii) to commence, at Borrower’s expense, an interpleader action in any competent Federal or State court located in the State of New York, and otherwise to take no further action except in accordance with joint written instructions from Borrower and Lender or Servicer or in accordance with the final order of a competent court, served on Deposit Bank.
Section 14.6. Deposit Bank agrees to provide Borrower, Lender and/or Servicer access to view monthly account statements and daily account activity via Deposit Bank’s online reporting facility, PNC PAID. Borrower shall be deemed at all times to have consented to Deposit Bank’s release of such account information to Lender (and Servicer, if applicable).
ARTICLE 15
Governing Law and Jury Trial Waiver.
Section 15.1. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
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(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES APPLIED IN NEW YORK). ALL PARTIES HERETO HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF NEW YORK FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. ALL PARTIES HERETO IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NEW YORK SHALL BE DEEMED TO BE DEPOSIT BANK’S “JURISDICTION” WITHIN THE MEANING OF SECTION 9-304 OF THE UNIFORM COMMERCIAL CODE IN EFFECT IN THE STATE OF NEW YORK.
Section 15.2. THE PARTIES HERETO HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT 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 EACH PARTY HERETO 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.
ARTICLE 16
Miscellaneous
Section 16.1. This Agreement may be executed in any number of counterparts each of which shall be deemed an original and all of which, taken together, shall constitute this Agreement. Delivery of an executed counterpart of a signature page to this Agreement by pdf, facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart. Any party so executing this Agreement by pdf, facsimile or other electronic transmission shall, upon request, promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by pdf, facsimile or electronic transmission.
Section 16.2. Borrower hereby acknowledges and agrees that Lender shall be permitted to request from Deposit Bank, and Deposit Bank shall be permitted to provide to Lender, at Borrower’s sole cost and expense, (a) such information as Lender may reasonably request concerning the Cash Management Account, including without limitation, (i) amounts held on deposit in the Cash Management Account, (ii) receipts into the Cash Management Account, (iii) distributions from the Cash Management Account, and (iv) monthly statements and (b) online read-only access to activity in the Cash Management Account via Deposit Bank's online banking portal; provided, however, nothing set forth above shall require Deposit Bank to provide Lender
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with any information concerning the Cash Management Account
or which is not typically provided by Deposit Bank in the ordinary course of its business.
Section 16.3. To the extent that the terms of this Agreement are inconsistent with, or prohibited or unenforceable under, any applicable law or regulation, they will be deemed ineffective only to the extent of such prohibition or unenforceability and will be deemed modified and applied in a manner consistent with such law or regulation. Any provision of this Agreement which is deemed unenforceable or invalid in any jurisdiction will not affect the enforceability or validity of the remaining provisions of this Agreement or the same provision in any other jurisdiction.
Section 16.4. Any paragraph or other captions are inserted for convenience only and shall not be considered a part of or affect the interpretation or construction of any of the provisions of this Agreement. This Agreement constitutes the entire and final agreement among the parties with respect to the subject matter hereof, and no oral or prior written statements or representations not incorporated herein shall have any force or effect. This Agreement shall not be effective until signed by Deposit Bank, Lender and Borrower. This Agreement shall be effective even if the Schedules and Exhibits are not attached hereto.
[The Remainder of this Page is Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement in several counterparts (each of which shall be deemed an original) as of the date first above written.
BORROWER:
ENVY DEVELOPMENT DE, LLC,
a Delaware limited liability company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
[SIGNATURES CONTINUE ON FOLLOWING PAGES]
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LENDER:
LOANCORE CAPITAL CREDIT REIT LLC,
a Delaware limited liability company
By: /s/ Jason Mergen
Name: Jason Mergen
Title: Managing Director
[SIGNATURES CONCLUDE ON FOLLOWING PAGE]
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DEPOSIT BANK:
PNC BANK, NATIONAL ASSOCIATION,
a national banking association
Signature: /s/ Emma MacMillan
Name: Emma MacMillan
Title: Vice President
[END OF SIGNATURE PAGES]
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REIMBURSEMENT AGREEMENT
This REIMBURSEMENT AGREEMENT (this “Agreement”) is made and entered into as of September 23 , 2026 (the “Effective Date”) by and among BERNARD HSIAO (“Bernard”), MICHAEL HSIAO (“Michael”) (Bernard and Michael collectively, the “Hsiao Parties”, and each a “Hsiao Party”), GLEN STEWARD (“Glen”), SHAUN QUIN (“Shaun”), STEWARDS, INC., a Nevada corporation (OTC: SWRD) (“Issuer,” and together with Glen and Shaun, the “Stewards Guarantors,” and each a “Stewards Guarantor”), and STEWARDS INTERNATIONAL FUNDS PCC ON BEHALF OF THE STEWARDS PRIVATE CREDIT FUND, a Mauritius Protected Cell Company (“Stewards International”, Stewards International and Issuer are hereafter referred to individually as a “Stewards Party” and collectively as the “Stewards Parties”) (all the foregoing collectively, the “Parties”, and each a “Party”).
RECITALS
WHEREAS, Envy Development DE, LLC, a Delaware limited liability company (“Envy Development”) and Envy Recreational LLC, a Delaware limited liability company (“Envy Recreational,” and together with Envy Development, “Borrower”), each an affiliate of the Stewards Parties, have or will become indebted to LoanCore Capital Credit REIT LLC (the “Lender”) for a loan in the original principal amount of $47,700,000 (the “Loan”) pursuant to that certain Loan Agreement dated as of the Effective Date (the “Loan Agreement”) and certain other documents evidencing and/or securing the Loan (together with the Loan Agreement, the “Loan Documents”);
WHEREAS, the Loan is secured by, among other things, that certain Guaranty of Recourse Obligations executed and delivered by Bernard, Michael, Glen, Shaun and Issuer (each, a “Guarantor” and collectively, the “Guarantors”) in favor of the Lender as a condition of Lender making the Loan (as amended, restated, or supplemented from time to time, the “Guaranty”); and
WHEREAS, the Parties hereto wish to allocate their respective maximum obligations for the responsibilities for the Obligations (as hereinafter defined).
NOW, THEREFORE, the Parties hereto hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement:
“Claim” means any and all claims, demands, charges, complaints, actions, causes of action, suits, proceedings, liabilities, obligations, losses, damages, payments, settlements, judgments, orders, awards, fines, penalties and costs and expenses of any kind (including reasonable attorneys’ and other professional fees and expenses, and all court costs through all appeals).
“Governmental Authority” means any Federal, State, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such
organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.
“Obligations” means all liabilities, covenants, and obligations to or in favor of Lender under the Guaranty, including without limitation attorneys’ fees and costs incurred to enforce or collect upon the foregoing.
“Person” means a natural person, corporation, limited liability company, partnership, joint venture, association, trust, or other business or legal entity, a non-profit, charitable or other organization, or a Governmental Authority of any kind.
“Purchase Agreement” means that certain Membership Interests Purchase and Sale Agreement dated as of September 21 , 2026, by and among Envy Development PB, LLC, a Florida limited liability company, Hsu Gamma Investments LP, a Delaware limited partnership, Michael, the Estate of Christopher Longsworth, The Myelin Group, LLC, a Florida limited liability company, Envy Development, Envy Recreational, SRC Envy Holdco LLC, a Delaware limited liability company, and Issuer.
2. Reimbursement Obligations. The Guarantors are liable for the Obligations pursuant to the Guaranty. The Parties agree that the Hsiao Parties and the Stewards Guarantors shall have liability with respect to the Obligations as follows (with respect to each such Party, its “Maximum Obligation”), regardless of any provisions to the contrary in the Loan Documents and/or the Purchase Agreement:
2.1 Liability of Hsiao Parties. To the extent that a Hsiao Party or a Stewards Guarantor incurs any Obligations at any time under the Guaranty which are attributable to the intentional fraud or willful misconduct of either Hsiao Party, (a) the Hsiao Parties shall be liable for 100% of all such Obligations, shall pay the entire amount of such Obligations directly to the Lender, and jointly and severally shall indemnify and hold the Stewards Parties and Stewards Guarantors harmless from the same (or, in the case of a prior payment of any such Obligations made by a Stewards Guarantor to the Lender, the Hsiao Parties shall be jointly and severally liable to reimburse such Stewards Guarantor(s) for each such payment); and (b) no payment or reimbursement shall be due or payable by any Stewards Party under this Agreement with respect to such Obligations.
2.2 Liability of Stewards Parties. To the extent that a Hsiao Party incurs any Obligations at any time under the Guaranty other than an Obligation described in the foregoing Section 2.1, (a) the Stewards Guarantors shall be liable for 100% of all such Obligations and shall pay the entire amount of such Obligations directly to the Lender, and the Stewards Parties jointly and severally shall indemnify and hold the Hsiao Parties harmless from the same (or, in the case of a prior payment of any such Obligations made by a Hsiao Party to the Lender, the Stewards Parties shall be jointly and severally liable to reimburse such Hsiao Party(s) for each such payment); and (b) no payment or reimbursement shall be due or payable by either Hsiao Party under this Agreement with respect to such Obligations.
2.3 Overage. If a Hsiao Party, on the one hand, or a Stewards Guarantor, on the other hand, is called upon to pay and actually does pay any Obligations in excess of such Party’s
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Maximum Obligation as provided herein (an “Overage Guarantor”), then the Stewards Parties or the Hsiao Parties, respectively, hereby absolutely, unconditionally and irrevocably agree, jointly and severally, to reimburse the Overage Guarantor promptly (and in all events within fifteen (15) days) upon written demand an amount such that, after giving effect to such reimbursement, the Overage Guarantor shall have borne only its Maximum Obligation on a total, cumulative basis with respect to the Obligations owed to that date.
3. Procedure.
3.1 Notice of Claims. The Hsiao Parties, on the one hand, and the Stewards Guarantors and the Stewards Parties, on the other hand, shall give the other Parties prompt written notice after becoming aware of or receiving notice of any Claim, specifying the factual basis of such Claim in reasonable detail; provided, however, that the failure of a Party to so notify the other Parties shall not limit or otherwise affect a Party’s rights to be indemnified pursuant hereto, except to the extent such delay shall materially and adversely prejudice any defense of such Claim. Each Party agrees to cooperate in a commercially reasonable manner with the other Parties in the conduct and resolution of each Claim in accordance herewith.
3.2 Conduct of Defense; Settlement. The Hsiao Parties shall have the right to appear, defend, settle and/or compromise Obligations covered by the provisions of Section 2.1 hereof (including by selecting counsel to represent them with respect to such Obligations). As a condition precedent to their obligations hereunder, the Stewards Parties shall have the right (and the Hsiao Parties shall permit the Stewards Parties), to the extent permitted by applicable law, to appear, defend, settle and/or compromise Obligations covered by the provisions of Section 2.2 hereof (including, without limitation, by engaging in direct discussions and negotiations with the Lender and its representatives and selecting counsel to represent the Stewards Parties with respect to such Obligations) and/or to conduct or direct the Hsiao Parties and the Stewards Guarantors with respect to appearances, defense, settlement and/or compromise of such Obligations (and the selection of counsel with respect thereto) by making all decisions and determinations with respect thereto (and the Hsiao Parties and the Stewards Guarantors shall follow such decisions and determinations); provided, however, that (a) the Stewards Parties shall consult regularly with the Hsiao Parties regarding communications with the Lender and other matters relating to the Obligations; (b) no such settlement or compromise shall include non-cash payments or consideration to the Lender; (c) any such settlement or compromise shall include a full and unconditional release by the Lender of the Hsiao Parties with respect to the Claims asserted and the events giving rise to such Obligations; and (d) the Stewards Parties shall not enter into any settlement or compromise agreement with respect to any such Claims or Obligations without the prior written consent of the Hsiao Parties, such consent not to be unreasonably withheld, conditioned, or delayed. If the Stewards Parties propose in good faith to enter into a settlement or compromise agreement in accordance with this Section 3.2 with respect to any Claims or Obligations covered under the provisions of Section 2.1, and the Hsiao Parties fail to consent to such settlement or compromise agreement within seven (7) days of the date of delivery of the written request therefor, then the Hsiao Parties shall be solely responsible for 100% of all costs and expenses of the pursuit and/or defense of the Claims related to such Obligations (including, without limitation, attorneys’ fees and costs) from and after the expiration of such period.
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4. Nature of Parties’ Obligations; Waivers. If and to the extent that the Hsiao Parties or the Stewards Parties, or any of the foregoing (for the purposes of this Section 4 only, being individually and collectively referred to herein as a “Subject Guarantor”), would be deemed or construed to be a guarantor or surety under applicable law with respect to its obligations under this Agreement, each Subject Guarantor hereby agrees as follows:
4.1 This is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection. This guaranty may not be revoked by such Subject Guarantor and shall continue to be effective with respect to any Obligations arising or created after any attempted revocation by such Subject Guarantor. Such Subject Guarantor expressly agrees that until each and every term, condition, covenant and obligation of this Agreement is fully performed, such Subject Guarantor shall not be released by any act or event which might be deemed a legal or equitable discharge or exoneration of a surety, or because of any waiver, extension, modification, forbearance or delay or other act or omission of any of the Hsiao Parties or any of the Stewards Parties, as applicable, or because of any failure to proceed promptly or otherwise against any other Party or other Person, or because of any action taken or omitted or circumstance which might vary the risk or affect the rights or remedies of such Subject Guarantor as against any other Party, or because of any further dealings between or among the Hsiao Parties or the Stewards Parties, as applicable, whether relating to this Agreement or otherwise. Such Subject Guarantor hereby expressly, irrevocably waives and surrenders any defense to its liability under this Agreement based upon any of the foregoing acts, omissions, things, agreements, waivers or any of the like, except to the extent expressly provided in Section 2 hereof. It is the purpose and intent of this Agreement that the obligations of such Subject Guarantor hereunder shall be absolute and unconditional under any and all circumstances, subject to and in accordance with the terms and conditions hereof.
4.2 Such Subject Guarantor hereby irrevocably waives:
(a) Any right it may have to require any other Party to proceed against any other Party or other Person or pursue any other remedy in such other Party’s power to pursue, it being acknowledged and agreed that the covenants and obligations of the each Party hereunder are independent of each other Party’s obligations, and such other Party or shall not be required to make any demand upon, exercise any right to declare a default by, or proceed against any other Party or other Person prior to proceeding against such Subject Guarantor to the full extent of its covenants and obligations hereunder;
(b) Any defense based on any legal disability of a Hsiao Party or a Stewards Party and any discharge, release or limitation of the liability of any Hsiao Parties to Stewards Parties or of any Stewards Parties to Hsiao Parties, as applicable, whether consensual or arising by operation of law or any bankruptcy, reorganization, receivership, insolvency, or debtor relief proceeding, or from any other cause, or any Claim that such Subject Guarantor’s obligations exceed or are more burdensome than those of any Hsiao Party or Stewards Party, as applicable;
(c) All presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Agreement and of the existence, creation, or incurring of new or additional indebtedness, and demands and notices of every kind, except to the extent expressly provided herein;
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(d) Any defense that a Hsiao Party or a Stewards Party, as applicable, may have to the payment or performance of any obligation set forth in this Agreement; and
(e) Until all obligations under this Agreement have been paid and performed in full, all rights of subrogation and all rights to enforce any remedy that such Subject Guarantor may have against a Hsiao Party or a Stewards Party, as applicable, all regardless of whether such Subject Guarantor may have made any payments to a Hsiao Party or a Stewards Party, as applicable.
4.3 This Agreement and each Party’s obligations hereunder shall not be affected, limited, modified, or impaired upon the occurrence at any time or from time to time of any event, including, without limitation, any of the following:
(a) The compromise, settlement, change, or modification by the Lender, whether material or otherwise, of any or all of the liabilities, obligations, covenants, or agreements of any Guarantor under the Guaranty, or of Borrower or any other Person under the other Loan Documents, or otherwise, provided such compromise, settlement, change, or modification does not adversely affect a Party without its advance written consent;
(b) The waiver by the Lender of the payment, performance, or observance by Borrower or any other Person of any of its covenants, obligations, or agreements contained in the Loan Documents or the waiver by the Lender of the payment, performance, or observance by any Guarantor of any of their covenants, obligations, or agreements contained in the Guaranty;
(c) The extension of time for payment of any amount due and owing under the Loan Documents, including the Guaranty, or of the time for performance of any other covenant, obligation, or agreement under or arising out of the Loan Documents, including the Guaranty, or the extension or the renewal of any of them;
(d) The taking, the failure to take, or the delay in taking by the Lender of any of the actions referred to in the Loan Documents, including the Guaranty;
(e) The full or partial discharge of Borrower or any other Party in bankruptcy or similar proceedings or otherwise;
(f) The default or failure of any Party to fully perform any of its obligations set forth in this Agreement; or
(g) Any other circumstance which otherwise might constitute a defense available to, or a discharge of Borrower or any other Person with respect to, its obligations under the Loan Documents, or any Guarantor with respect to its obligations under the Guaranty, or any Party with respect to its obligations under this Agreement.
5. Reinstatement of Obligations under this Agreement. If at any time all or any part of any payment made by a Hsiao Party or a Stewards Party, as applicable (a “Payor”), to another Party pursuant to this Agreement is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of the Payor), then, to the extent of the payment rescinded or returned, the obligations of the Payor and its associated
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Party(ies) hereunder shall be deemed to have continued in existence, notwithstanding such previous payment made by the Payor or receipt of payment by the receiving Party. In this event, the obligations of the Payor and its associated Party(ies) hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment, as though such prior payment by the Payor had never been made.
6. Additional Provisions.
6.1 Representations and Warranties. Each Party represents and warrants to each other Party as follows: (a) that such Party has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and that Agreement constitutes the valid and legally binding obligation of such Party, enforceable in accordance with the terms and conditions hereof except as such enforceability may be limited by bankruptcy, insolvency, liquidation, moratorium, reorganization or other similar laws affecting rights of creditors generally and by general principles of equity (regardless of whether considered in a proceeding at law or in equity); (b) if such Party is a legal entity, that it has authorized the execution, delivery, and performance of this Agreement by all necessary entity action; (c) that such Party need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority or any other Person in order to perform its obligations under this Agreement; and (d) that the execution and the delivery of this Agreement and the performance of its obligations hereunder will not (i) violate any statute, regulation, rule, injunction, judgment, order, decree, charge or other restriction of any court or other Governmental Authority to which such Party is subject; or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, or create in any other Person the right to accelerate, terminate, modify or cancel under any agreement, contract, lease, license, instrument, or other arrangement to which such Party is a party or by which it or any of its assets are bound or subject.
6.2 Binding Effect; Assignment. The rights and obligations under this Agreement shall bind and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. The rights and obligations under this Agreement of each Party shall not be assigned or delegated without the advance written consent of each other Party, which each such other Party may grant or withhold in its sole discretion.
6.3 No Third Party Beneficiaries. Notwithstanding anything herein to the contrary, no provision of this Agreement is intended to benefit any Person other than the Parties and their successors and permitted assigns, and no provision hereof shall be enforceable by any other Person. Nothing in this Agreement shall relieve or discharge the obligation or liability of any third Person to any Party to this Agreement, nor shall any provision of this Agreement give any third Person any right of subrogation or action over or against any Party to this Agreement.
6.4 Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Party agrees, at the written request of any other Party, to execute and deliver such additional documents, instruments, conveyances, and assurances and to take such further actions as may be required to carry out the provisions hereof and give effect to the transactions contemplated hereby.
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6.5 Notices. Any notice or other communication permitted or required to be given hereunder to any Party shall be at the address of such Party set forth in Schedule 6.5 attached hereto. All notices and other communications under this Agreement shall be in writing and shall be delivered in person with written acknowledgment by the recipient of such delivery; by national or international courier service with receipt and tracking number; or by electronic mail. Every notice and other communication under this Agreement shall be deemed to be received: (a) if by personal delivery, on the date delivered with written acknowledgment by the recipient of such delivery; (b) if by national or international courier service, on the date delivered per the courier’s receipt; and (c) if by electronic mail, on the date confirmed as sent (to the proper electronic mail address) by receipt / statement of the transmitting machine or computer. A Party may change its delivery information as set forth on Schedule 6.5 by giving written notice to such effect to each other Party in accordance herewith.
6.6 Amendment. This Agreement may be amended, restated, or supplemented only by an agreement in writing signed and delivered by each Party. A waiver of any provision of this Agreement shall require execution and delivery thereof by the Party to be bound by such waiver.
6.7 Non-Waiver. No failure to exercise, and no delay in exercising, any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege hereunder preclude the exercise of any other right, power or privilege. No waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision, nor shall any waiver be implied from any course of dealing between the Parties hereto. No extension of time for performance of any obligations or other acts hereunder or under any other agreement shall be deemed to be an extension of the time for performance of any other obligations or any other acts.
6.8 Entire Agreement. This Agreement constitutes the sole and entire agreement of the Parties with respect to the subject matter contained herein and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by or on behalf of any Party other than those expressly set forth in this Agreement.
6.9 Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the Parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement. The Parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement or by making such other modifications as it deems warranted to carry out the intent and agreement of the Parties as embodied herein to the maximum extent permitted by applicable law. Additionally, the Parties expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this
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Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions had not been set forth herein.
6.10 Governing Law; Consent to Jurisdiction. This Agreement will be governed by, and the rights and remedies of the Parties hereto determined in accordance with, the laws of the State of Delaware. Each Party agrees that any Claim brought by any Party against any other Party seeking to enforce, interpret, or challenge the enforceability of any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby, whether in contract or otherwise (each, a “Proceeding”), shall be brought only in the Chancery Court of the State of Delaware (or other appropriate State court in the State of Delaware) or the Federal courts located in the State of Delaware, and not in any other State or Federal court. Each Party hereby consents to process being served in any such action or proceeding by personal delivery of a copy thereof to the address for it set forth in Schedule 7.5 hereof and agrees that such service upon receipt shall constitute good and sufficient service of process or notice thereof. Nothing in this Section shall affect or eliminate any right to serve process in any other manner permitted by applicable legal requirements. A Party shall be entitled to enforce any judgment obtained hereunder in any court of competent jurisdiction.
6.11 Waiver of Jury Trial. WITH RESPECT TO ANY PROCEEDING (AS DEFINED HEREIN), ANY AND ALL CLAIMS AND COUNTERCLAIMS ASSERTED IN CONNECTION THEREWITH, TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY HEREBY: (A) AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY; AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH PARTY AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY OTHERWISE WOULD ACCRUE OR EXIST. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
6.12 Remedies; Attorneys’ Fees. The rights and remedies of the Parties under this Agreement are cumulative, each Party shall have all rights and remedies provided by law and/or in equity, and nothing in this Agreement shall be construed to prevent any Party from seeking and recovering monetary or other damages sustained by such Party as a result of any breach or violation of the covenants or agreements set forth in this Agreement, and/or to seek any equitable relief. Additionally, in the event that the Hsiao Parties or the Stewards Parties fail to indemnify or reimburse the other as required hereunder within fifteen (15) days after the delivery of written demand therefor, the Party who is entitled to but does not receive payment (the “Aggrieved Party”) shall be entitled (a) to receive simple interest on the unpaid amount accrued at a rate equal to the lower of (i) eight percent (8%) per annum; and (ii) the highest rate permitted by applicable law, until payment in full (with such rate of interest to continue to apply after the attainment of any legal judgment, in lieu of any statutory or other interest under applicable law); and (b) in any
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Proceeding to enforce, interpret, or challenge the enforceability of this Agreement, the prevailing Party therein shall be entitled, in addition to all other damages to which it may be entitled, to its reasonable attorneys’ fees, court costs, and all other costs of litigation or other action, through all appeals.
6.13 Counterparts. This Agreement may be executed and delivered in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement executed and delivered by facsimile, e-mail, or any other means of electronic transmission, including DocuSign, shall be deemed to be and shall have the same legal effect as delivery of an originally-signed version of this Agreement.
[Balance of page intentionally left blank; signature pages follow.]
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[Signature Page to Reimbursement Agreement]
IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the Effective Date.
HSIAO PARTIES:
/s/ Bernard Hsiao
BERNARD HSIAO
/s/ Michael Hsiao
MICHAEL HSIAO
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[Signature Page to Reimbursement Agreement]
GLEN:
/s/ Glen Steward
GLEN STEWARD
SHAUN:
/s/ Shaun Quin
SHAUN QUIN
STEWARDS PARTIES:
STEWARDS, INC., a Nevada corporation (OTC: SWRD)
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
STEWARDS INTERNATIONAL FUNDS PCC ON BEHALF OF THE STEWARDS PRIVATE
CREDIT FUND, a Mauritius Protected Cell Company
By: /s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
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SCHEDULE 6.5
Delivery Information for Notices and Other Communications
Bernard Hsiao
3210 Hunter Road
Weston, FL 33331
Email: xxxxx@invesca.com
Michael Hsiao
340 N Fig Tree Lane
Plantation, FL 33317
Email:xxxxx@invesca.com
Glen Steward
c/o Stewards, Inc.
4300 N. University Drive, Suite D105
Lauderhill, FL 33351
Email: xxxxx@stewards.global
Shaun Quin
c/o Stewards, Inc.
4300 N. University Drive, Suite D105
Lauderhill, FL 33351
Email: xxxxx@stewards.com
Stewards, Inc., and/or Stewards International Funds PCC on behalf of The Stewards Private Credit Fund
c/o Stewards, Inc.
4300 N. University Drive, Suite D105 Lauderhill, FL 33351
Attn: Shaun Quin
Email: xxxxx@stewards.com
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Escrow Agreement
THIS ESCROW AGREEMENT made as of September 23, 2026 (the "Effective Date") by and among ClearTrust, LLC, a Florida limited liability company maintaining its principal corporate office at 2420 Brunello Trace, Lutz, Florida 33558 (the "Escrow Agent"), Stewards, Inc. ("Party A"), maintaining its principal place of business at 4300 N University Dr, Ste D105 Lauderhill, FL 33351, and ENVY DEVELOPMENT PB, LLC and THE MYELIN GROUP ("Party B"), maintaining its principal place of business at 3210 Hunter Rd, 3210 Hunter Rd, Weston, FL 33331. Party A, Party B, and the Escrow Agent are each referred to herein as a “Party” and collectively as the “Parties.” The identities, roles, and transaction-specific terms applicable to Party A and Party B are set forth in Exhibit A, which is incorporated herein by this reference.
W I T N E S S E T H
WHEREAS, Party A and Party B are parties to the transaction described in Exhibit A (the “Underlying Transaction”);
WHEREAS, in connection with the Underlying Transaction, certain shares of stock, as more particularly described in Exhibit A (the “Escrow Shares”), are to be held in escrow pending satisfaction of the conditions set forth in Exhibit A;
WHEREAS, the Parties wish to establish an escrow arrangement for the Escrow Shares, to be held by the Escrow Agent and released and/or delivered by the Escrow Agent in accordance with the terms of this Agreement and the instructions set forth in Exhibit A (the “Instructions”); and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to the terms and conditions of this Agreement.
NOW THEREFORE, the Parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions.
• “Escrow Agent Fees” shall mean the fees set forth in Exhibit A, payable to the Escrow Agent by the Party identified in Exhibit A on the Effective Date of this Agreement.
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• “Escrow Shares” shall have the meaning set forth in the Recitals and as further described in Exhibit A.
• “Instructions” shall mean the issuance, release, and delivery instructions set forth in Exhibit A, as the same may be amended in a writing signed by Party A and Party B.
• “Parties” shall collectively mean Party A, Party B, and the Escrow Agent, and “Party” shall mean any one of them.
• “Underlying Transaction” shall have the meaning set forth in the Recitals and as further described in Exhibit A.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Appointment of Escrow Agent. Party A and Party B hereby appoint ClearTrust, LLC as escrow agent in accordance with the terms and conditions set forth herein, and the Escrow Agent hereby accepts such appointment.
2.2. Release and/or Delivery of Escrow Shares. During the term of this Agreement, the Escrow Shares shall be recorded by the Escrow Agent as registered in the name of the Party identified in Exhibit A but coded with a stop transfer, indicating the shares cannot otherwise be transferred and are subject to the terms and conditions of this Agreement. Acting in its capacity as escrow agent for the other Parties, the Escrow Agent shall release and/or deliver the Escrow Shares to Party A and/or Party B in accordance with the Instructions set forth in Exhibit A. Subject to Section 3.2 hereof, the Escrow Agent must receive signed Instructions in accordance with Article III below to be able to release and deliver the Escrow Shares.
ARTICLE III
RELEASE OF ESCROW SHARES
3.1. Release of Escrow. The Escrow Agent shall release the Escrow Shares in accordance with the following:
(a) The Escrow Agent shall release the Escrow Shares to Party A or deliver the Escrow Shares to Party B in accordance with the Instructions, but only upon the following conditions: (i) the Parties hereto, along with their respective principals, owners, or managing members, clear an OFAC scan to be performed by the Escrow Agent at the time the written confirmation is received; and (ii) the Escrow Agent Fees described in Article I of this Agreement have been paid in full. If the Parties and their respective principals, owners, or managing members fail to clear an OFAC scan at the time the written confirmation is received, the Escrow Shares shall be released or delivered to a third party as directed by the intended transferee, provided the
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intended transferee or such third party provides the Escrow Agent with a legal opinion confirming that such transfer would not violate applicable rules and regulations. If the transfer contemplated by the preceding sentence cannot be completed because it would violate applicable rules and regulations for any other reason, the Parties shall work in good faith to find a solution that approximates the intent of this Agreement (including transferring control over the Escrow Shares to the appropriate Party) that is acceptable to all Parties, and if the Parties still cannot reach a resolution, the Escrow Agent shall release or deliver the Escrow Shares in accordance with a Court Order (as defined below).
3.2 Notwithstanding the above, upon receipt by the Escrow Agent of a final and non-appealable judgment, order, decree, or award of a court of competent jurisdiction (a “Court Order”), the Escrow Agent shall deliver the Escrow Shares in accordance with the Court Order. Any Court Order shall be accompanied by an opinion of counsel for the Party presenting the Court Order to the Escrow Agent (which opinion shall be reasonably satisfactory to the Escrow Agent) to the effect that the court issuing the Court Order has competent jurisdiction and that the Court Order is final and non-appealable.
3.3. Interpleader. Should any controversy arise among the Parties with respect to this Agreement or with respect to the right to receive the Escrow Shares, the Escrow Agent shall have the right to consult counsel and/or to institute an appropriate interpleader action to determine the rights of the Parties. The Escrow Agent is also hereby authorized to institute an appropriate interpleader action upon receipt of a written letter of direction executed by the Parties so directing the Escrow Agent. If the Escrow Agent is directed to institute an appropriate interpleader action, it shall institute such action not prior to thirty (30) days after receipt of such letter of direction and not later than sixty (60) days after such date. Any interpleader action instituted in accordance with this Section 3 shall be filed in any court of competent jurisdiction in Tampa, Florida, and the Escrow Shares in dispute shall be deposited with the court, in which event the Escrow Agent shall be relieved of and discharged from any and all obligations and liabilities under and pursuant to this Agreement with respect to the Escrow Shares.
ARTICLE IV
CONCERNING THE ESCROW AGENT
(a) The Escrow Agent is not a party to, and is not bound by or charged with notice of, any agreement out of which this escrow may arise. The Escrow Agent acts under this Agreement as escrow agent only and is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness, or validity of the subject matter of the escrow, or any part thereof, or for the form or execution of any notice given by any other Party, or for the identity or authority of any person executing any such notice. The Escrow Agent will have no duties or responsibilities other than those expressly set forth in this Agreement. The Escrow Agent will be under no liability to anyone by reason of any failure on the part of any Party
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(other than the Escrow Agent) or any maker, endorser, or other signatory of any document to perform such person's or entity's obligations hereunder or under any such document. Except for any existing stock transfer agent agreement between the Escrow Agent and Party A or Party B, along with this Agreement and Instructions to the Escrow Agent pursuant to the terms of this Agreement, the Escrow Agent will not be obligated to recognize any agreement between or among any or all of the persons or entities referred to herein, notwithstanding its knowledge thereof. The Escrow Agent shall not be required to expend or risk any of its own funds or otherwise incur any liability, financial or otherwise, in the performance of any of its duties hereunder.
(b) The Escrow Agent will not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, and may rely conclusively on, and will be protected in acting upon, any order, notice, demand, certificate, or opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report, or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is reasonably believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The Escrow Agent’s total aggregate liability relating to any services performed under this Agreement (whether in contract or tort or under any other theory of liability) shall not exceed the amount paid or payable by the Parties for those services giving rise to such claim. The duties and responsibilities of the Escrow Agent hereunder shall be determined solely by the express provisions of this Agreement, and no other or further duties or responsibilities shall be implied.
(c) The Escrow Agent will be indemnified and held harmless by Party A and Party B from and against any expenses, including reasonable attorneys' fees and disbursements, damages, or losses suffered by the Escrow Agent in connection with any claim or demand, which, in any way, directly or indirectly, arises out of or relates to this Agreement or the services of the Escrow Agent hereunder; except that if the Escrow Agent is guilty of willful misconduct, fraud, or gross negligence under this Agreement, then the Escrow Agent will bear all losses, damages and expenses arising as a result of such willful misconduct, fraud, or gross negligence. Promptly after receipt by the Escrow Agent of notice of any such demand or claim or the commencement of any action, suit, or proceeding relating to such demand or claim, the Escrow Agent will notify the other Parties in writing. For purposes hereof, the terms “expense” and “loss” will include all amounts paid or payable to satisfy any such claim or demand, or in settlement of any such claim, demand, action, suit, or proceeding settled with the express written consent of the Parties, and all costs and expenses, including, but not limited to, reasonable attorneys' fees and disbursements, paid or incurred in investigating or defending against any such claim, demand, action, suit or proceeding. The provisions of this Article IV shall survive the termination of this Agreement.
(d) If at any time the Escrow Agent is served with any judicial or administrative order, judgment, decree, writ, or other form of judicial or administrative process which in any way affects the Escrow Shares (including but not limited to orders of attachment or garnishment or other forms of levies or injunctions or stays relating to the transfer of the Escrow Shares), the
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Escrow Agent is authorized to comply therewith in any manner it or legal counsel of its own choosing deems appropriate; and if the Escrow Agent complies with any such judicial or administrative order, judgment, decree, writ, or other form of judicial or administrative process, the Escrow Agent shall not be liable to any of the Parties or to any other person or entity even though such order, judgment, decree, writ, or process may be subsequently modified or vacated or otherwise determined to have been without legal force or effect.
(e) The Escrow Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation, or responsibility hereunder by reason of any occurrence beyond the control of the Escrow Agent (including but not limited to any act or provision of any present or future law or regulation or governmental authority, any act of war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility).
(f) The Escrow Agent shall not be called upon to advise any Party as to the wisdom in selling or retaining or taking or refraining from any action with respect to any securities or other property deposited hereunder.
(g) The Escrow Agent shall not be under any duty to give the Escrow Shares held by it hereunder any greater degree of care than it gives its own similar property.
(h) When the Escrow Agent acts on any information, instructions, or communications (including, but not limited to, communications with respect to the delivery of securities) sent by facsimile, email, or other form of electronic or data transmission, the Escrow Agent, absent gross negligence, shall not be responsible or liable in the event such communication is not an authorized or authentic communication (whether due to fraud, distortion, or otherwise). In the event of any ambiguity or uncertainty hereunder or in any notice, instruction, or other communication received by the Escrow Agent hereunder, the Escrow Agent may, in its sole discretion, refrain from taking any action other than to retain possession of the Escrow Shares, unless the Escrow Agent receives written instructions, signed by Party A and Party B, which eliminate such ambiguity or uncertainty.
(i) The Escrow Agent does not have any interest in the Escrow Shares but is serving as escrow holder only and having only possession thereof. Party A shall pay or reimburse the Escrow Agent, upon request, for any transfer taxes or other taxes relating to the Escrow Shares incurred in connection herewith and shall indemnify and hold harmless the Escrow Agent from any amounts that it is obligated to pay in the way of such taxes, unless otherwise specified in Exhibit A. It is understood that the Escrow Agent shall only be responsible for income reporting with respect to income earned on performing the services described in this Agreement and will not be responsible for any other reporting. This paragraph shall survive notwithstanding any termination of this Agreement or the resignation or removal of the Escrow Agent.
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(j) The Escrow Agent may generally engage in any kind of business with the issuer of the Escrow Shares identified in Exhibit A, Party A, or Party B, or any subsidiary or affiliate thereof, as if it had not entered into this Agreement or any other agreement with them. The Escrow Agent and its affiliates and their officers, directors, employees, and agents (including legal counsel) may now or hereafter be engaged in one or more transactions with such issuer, Party A, or Party B, or any subsidiary or affiliate thereof, or may act as trustee, agent, or representative of either of the foregoing Parties or otherwise be engaged in other transactions with such Parties (collectively, the “Other Activities”). Without limiting the foregoing, the Escrow Agent and its affiliates and their officers, directors, employees, and agents (including legal counsel) shall not be responsible to account to such issuer, Party A, or Party B, or any subsidiary or affiliate thereof, for such Other Activities.
(k) Fees and Expenses. In consideration of the services provided hereunder, the Party identified in Exhibit A agrees to pay the Escrow Agent any and all Escrow Agent Fees incurred hereunder. Any outstanding invoice aged more than thirty days is subject to 18% simple interest per annum, or the maximum interest rate as allowed by law. In addition, that Party agrees to pay the Escrow Agent's out of pocket costs and expenses (“Expenses”), including reasonable attorneys' fees in the event of any dispute or litigation threatened or commenced which requires the Escrow Agent, in its opinion, to refer such matter to its attorneys, and packaging and postal fees and expenses (including FedEx). The Escrow Agent will incur no liability for any delay reasonably required to obtain such advice of counsel.
(l) Resignation of Escrow Agent. At any time, upon ten (10) days' written notice to Party A and Party B, the Escrow Agent may resign and be discharged from its duties as escrow agent hereunder. As soon as practicable after its resignation, the Escrow Agent will promptly turn over to a successor escrow agent appointed by Party A and Party B the Escrow Shares held hereunder upon presentation of a document appointing the new escrow agent and evidencing its acceptance thereof. If, by the end of the 10-day period following the giving of notice of resignation by the Escrow Agent, Party A and Party B shall have failed to appoint a successor escrow agent, the Escrow Agent may interplead the Escrow Shares into the registry of any court having jurisdiction.
(m) Records. The Escrow Agent shall maintain accurate records of all transactions hereunder. Promptly after the termination of this Agreement and payment of any and all outstanding invoices, the Escrow Agent shall provide the Parties with a complete copy of such records, certified by the Escrow Agent to be a complete and accurate account of all such transactions. The authorized representatives of each of the Parties shall have access to such books and records at all reasonable times during normal business hours upon reasonable notice to the Escrow Agent.
4.2. Dispute Resolution; Judgments. Resolution of disputes arising under this Agreement shall be subject to the following terms and conditions:
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If any dispute shall arise with respect to the delivery, ownership, right of possession, or disposition of the Escrow Shares, or if the Escrow Agent shall in good faith be uncertain as to its duties or rights hereunder, the Escrow Agent shall be authorized, without liability to anyone, to
(i) refrain from taking any action other than to continue to hold the Escrow Shares pending receipt of a joint instruction from Party A and Party B, or (ii) deposit the Escrow Shares with any court of competent jurisdiction in the State of Florida, in which event the Escrow Agent shall give written notice thereof to the Parties and shall thereupon be relieved and discharged from all further obligations pursuant to this Agreement. The Escrow Agent may, but shall be under no duty to, institute or defend any legal proceedings which relate to the Escrow Shares.
ARTICLE V
GENERAL MATTERS
5.1. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile or electronic execution and delivery of this Agreement is legal, valid, and binding for all purposes.
5.2. Assignment and Modification. This Agreement and the rights and obligations hereunder of any of the Parties may not be assigned without the prior written consent of the other Parties. Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of each of the Parties and their respective successors and permitted assigns. No other person will acquire or have any rights under, or by virtue of, this Agreement. No portion of the Escrow Shares shall be subject to interference or control by any creditor of any Party, or be subject to being taken or reached by any legal or equitable process in satisfaction of any debt or other liability of any such Party prior to the disbursement thereof to such Party in accordance with the provisions of this Agreement. This Agreement may be changed or modified only in writing signed by all of the Parties. No waiver of any right or remedy hereunder shall be valid unless the same shall be in writing and signed by the Party giving such waiver. No waiver by any Party with respect to any condition, default, or breach of covenant hereunder shall be deemed to extend to any prior or subsequent condition, default, or breach of covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
5.3. Headings. The headings contained in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement.
5.4. Attorneys' Fees. If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing Party shall be entitled to recover reasonable attorneys' fees from the other Party (unless such other Party is the Escrow Agent), which fees may be set by the court in the trial of such action or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief that may be awarded.
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5.5. Entire Agreement. This Agreement, together with Exhibit A and Exhibit B, constitutes the entire agreement between the Parties and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written, of the Parties. There are no warranties, representations, or other agreements made by the Parties in connection with the subject matter hereof except as specifically set forth in this Agreement.
5.6. Extended Meanings. In this Agreement, words importing the singular number include the plural and vice versa; words importing the masculine gender include the feminine and neuter genders. The word “person” includes an individual, body corporate, partnership, trustee or trust, or unincorporated association, executor, administrator, or legal representative.
5.7. Law Governing this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction. Any action brought by any Party against another concerning the transactions contemplated by this Agreement shall be brought only in the state or federal courts located in the State of Florida. All Parties and the individuals executing this Agreement on behalf of the Parties agree to submit to the jurisdiction of such courts and waive trial by jury. The prevailing Party (which shall be the Party which receives an award most closely resembling the remedy or action sought) shall be entitled to recover from the other Party its reasonable attorneys' fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law in a manner most closely approximating the Parties' intent as evidenced by the original provision. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
5.8. Specific Enforcement; Consent to Jurisdiction. Party A and Party B acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. Each of Party A and Party B hereby waives, and agrees not to assert in any such suit, action, or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action, or proceeding is brought in an inconvenient forum, or that the venue of the suit, action, or proceeding is improper. Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.
5.9. Termination. This Agreement shall terminate upon the release of all of the Escrow Shares.
5.10. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein,
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shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, email, or facsimile, addressed as set forth below or to such other address as such Party shall have specified most recently by written notice.
Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile or email, with accurate confirmation generated by the transmitting system, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received), or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
(a) If to Party A, to the address set forth in Exhibit A.
(b) If to Party B, to the address set forth in Exhibit A.
(c) If to the Escrow Agent, to:
ClearTrust, LLC
2420 Brunello Trace
Lutz, FL 33558
Attn: Kara Kennedy
inbox@cleartrusttransfer.com
or to such other address as any of them shall give to the others by notice made pursuant to this Section 5.10.
5.11. Invalidity. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal, or unenforceable in any respect for any reason, the validity, legality, and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the Parties shall be enforceable to the fullest extent permitted by law.
(CONTINUED ON FOLLOWING PAGE)
| 9 |
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.
/s/ Kara Kennedy
Name: Kara Kennedy
Title: President
CLEARTRUST, LLC as Escrow Agent
/s/ Shaun Quin
Name: Shaun Quin
Title: Authorized Signatory
Stewards, Inc. as Party A
/s/ Michael Hsiao
Name: Michael Hsiao
Title: Authorized Signatory
ENVY DEVELOPMENT PB, LLC and THE MYELIN GROUP as Party B
| 10 |
ENVY DEVELOPMENT PB, LLC
CONSOLIDATED STATEMENT OF REVENUES AND CERTAIN EXPENSES
For the Year Ended December 31, 2025
Table of Contents
| Page | ||
| Independent Auditor’s Report | 3 | |
| Consilidated Statement of Revenue and Certain Operating Expenses | 5 | |
| Notes to the Consolidated Statement of Revenue and Operating Expenses | 6 |
| 2 |
Your Vision Our Focus
INDEPENDENT AUDITOR’S REPORT
To the Sole Member
Envy Development PB, LLC:
Opinion
We have audited the accompanying consolidated statement of revenues and certain operating expenses of Envy Development PB, LLC (the “Company”) for the year ended December 31, 2025, and the related notes to the consolidated statement of revenues and certain operating expenses (collectively, the “financial statement”).
In our opinion, the accompanying financial statement presents fairly, in all material respects, the revenues and certain operating expenses of the Company described in Note 2 of the financial statement for the year ended December 31, 2025, in accordance with U.S. generally accepted accounting principles.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statement section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
We draw attention to Note 2 to the financial statement, which describes that the accompanying financial statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Company’s revenues and expenses. As a result, the financial statement may not be suitable for another purpose. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statement
Management is responsible for the preparation and fair presentation of the financial statement in accordance with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statement that is free from material misstatement, whether due to fraud or error.
In preparing the financial statement, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statement is available to be issued.
| 3 |
Auditors’ Responsibilities for the Audit of the Financial Statement
Our objectives are to obtain reasonable assurance about whether the financial statement as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statement.
In performing an audit in accordance with GAAS, we:
· Exercise professional judgment and maintain professional skepticism throughout the audit.
· Identify and assess the risks of material misstatement of the financial statement, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.
· Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statement.
· Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
Turner, Stone & Company, L.L.P. Dallas, Texas
September 23, 2026
| 4 |
ENVY DEVELOPMENT PB, LLC
CONSOLIDATED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
For the Year Ended December 31, 2025
| December 31, 2025 | ||||
| Revenue | ||||
| Rental and other property revenues | $ | 4,904,596 | ||
| Total revenue | 4,904,596 | |||
| Certain operating expenses | ||||
| Property operating expenses | 2,685,209 | |||
| Taxes and insurance | 1,817,940 | |||
| Total certain operating expenses | 4,503,149 | |||
| Revenues in Excess of Certain Operating Expenses | $ | 401,447 | ||
See accompanying notes to the consolidated statement of revenues and certain operating expenses.
| 5 |
ENVY DEVELOPMENT PB, LLC
NOTES TO THE CONSOLIDATED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
For the Year Ended December 31, 2025
1. Organization
Envy Development PB, LLC (the “Company”), a Florida limited liability company, was formed on July 10, 2017. The Company is a single-member limited liability company. The Company owns and operates an apartment complex (the “Property”), a 214-unit residential community located in Pompano Beach, Florida. The Company is to continue until terminated in accordance with the Limited Liability Company Agreement.
2. Basis of Presentation
The accompanying consolidated statement of revenues and certain operating expenses (the “financial statement”) has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”) promulgated under the Securities Act of 1933, as amended. Accordingly, the financial statement is not representative of the actual operations for the period presented as revenues, and certain operating expenses, which may not be directly attributable to the revenues and expenses expected to be incurred in the future operations of the Property, have been excluded. Such items include management fees, depreciation, amortization, and interest.
3. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying financial statement includes the accounts of Envy Development PB, LLC and its wholly-owned subsidiary, Envy Development DE, LLC, a Delaware limited liability company. All material intercompany accounts and transactions have been eliminated.
Revenue Recognition
The Property’s residential units are rented to tenants under various lease agreements that are generally one year in length. All leases are accounted for as operating leases. The Property recognizes rental revenue on a straight-line basis over the terms of the rental agreements and in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 842, Leases. Rental revenue is recognized on an accrual basis and when the collectability of the amounts due from tenants is deemed probable. Rental revenue is included within rental and other property revenues on the Property’s statement of revenues and certain operating expenses.
Tenant reimbursements for common area maintenance and other recoverable expenses, such as pet, administrative, application and other fees, are recognized when the services are provided and the obligations are satisfied. Tenant reimbursements are included within rental and other property revenues on the Property’s statements of revenues and certain operating expenses.
Certain Operating Expenses
Certain operating expenses include only those costs expected to be comparable to the proposed future operations of the Property. Property operating expenses include administrative, repairs and maintenance, marketing, payroll, utilities, taxes, and insurance.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reporting and disclosure of revenues and certain expenses during the reporting period to present the statement of revenues and certain operating expenses. The estimates, judgments and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.
| 6 |
ENVY DEVELOPMENT PB, LLC
NOTES TO THE CONSOLIDATED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
For the Year Ended December 31, 2025
4. Minimum Future Lease Rentals
There are various lease agreements in place with tenants to lease space in the Property. As of December 31, 2025, the minimum future cash rents receivable under non-cancelable operating leases in each of the next five years and thereafter are as follows:
| 2026 | $ | 4,227,152 | |||
| 2027 | 252,845 | ||||
| Thereafter | — | ||||
| $ | 4,479,997 |
Leases generally require reimbursement of the tenant’s proportional share of common area, real estate taxes and other operating expenses, which are excluded from the amounts above.
5. Tenant Concentrations
No single tenant comprised over 10% of the Property’s total revenue for the year ended December 31, 2025.
6. Commitments and Contingencies
The Property is subject to various legal actions and claims arising in the ordinary course of business. Although the outcome of any legal matter cannot be predicted with certainty, management does not believe that any of these legal proceedings or matters will have a material adverse effect on the financial position or results of operations or liquidity of the Property.
7. Related Party Transactions
There were no significant related party transactions during the year ended December 31, 2025.
8. Subsequent Events
The Property evaluated subsequent events through September 16, 2026, the date the financial statements were available to be issued.
Income Tax Refund
Subsequent to December 31, 2025, the Company received a federal income tax refund of $202,030 related to its 2025 tax year. The refund resulted from a successful property tax challenge. No income tax receivable was recorded as of December 31, 2025, as property tax challenges are recorded in the accounting period when the final determination or settlement was reached.
| 7 |
ENVY AT POMPANO BEACH
Historical Statement of Revenues and Certain Operating Expenses
For the Six Months Ended June 30, 2026 and 2025 (Unaudited) (in thousands)
The following unaudited historical statement of revenues and certain operating expenses of Envy at Pompano Beach (the “Property”), a 214-unit apartment community held through Envy Development PB, LLC and its wholly-owned subsidiary, is presented under Rule 3-14 of Regulation S-X. It should be read together with the audited statement of revenues and certain operating expenses of the Property for the year ended December 31, 2025, which is filed separately.
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |||||||
| Revenue | ||||||||
| Rental and other property revenues | $ | 2,861 | $ | 2,459 | ||||
| Total revenue | 2,861 | 2,459 | ||||||
| Certain operating expenses | ||||||||
| Property operating expenses | 903 | 929 | ||||||
| Taxes and insurance | 641 | 1,019 | ||||||
| Total certain operating expenses | 1,544 | 1,948 | ||||||
| Revenues in Excess of Certain Operating Expenses | $ | 1,317 | $ | 511 | ||||
Notes to the Historical Statement of Revenues and Certain Operating Expenses
1. Basis of presentation. The Property is a 214-unit residential apartment community located in Pompano Beach, Florida, held through Envy Development PB, LLC and its wholly-owned subsidiary, Envy Development DE, LLC. This statement has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X and is not intended to be a complete presentation of the Property’s revenues and expenses. It is not representative of the actual operations of the Property for the periods presented. The interim statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation. They have been prepared on a basis consistent with the audited statement of revenues and certain operating expenses of the Property for the year ended December 31, 2025.
2. Excluded expenses. In accordance with Rule 3-14, the statement excludes expenses not comparable to the proposed future operations of the Property, including mortgage interest, depreciation and amortization, management fees, and income taxes. As a result of these exclusions, the statement is not indicative of the results of operations of the Property going forward.
3. Revenue recognition. The Property’s residential units are leased to tenants under agreements that are generally one year in length and are accounted for as operating leases under ASC 842, with rental revenue recognized on a straight-line basis when collectibility is probable. Tenant reimbursements and other property fees are recognized when the related services are provided.
4. Cash flow information. Separate historical statements of cash flows for the Property are not presented. Because the statement excludes mortgage interest, depreciation, amortization, management fees and income taxes, historical cash flow information on a basis comparable to the Property’s future operations is not available.
5. Material factors. Rental and other property revenues increased from $2.46 million for the six months ended June 30, 2025 to $2.86 million for the six months ended June 30, 2026, and vacancy losses were lower in the 2026 period. Taxes and insurance for the six months ended June 30, 2026 include a real estate tax refund of approximately $202,000, which is non-recurring. The historical amounts exclude, or do not reflect, items that will affect the Property’s future operations, including mortgage interest on the acquisition financing and the Company’s go-forward insurance program. Management is not aware of any other material factors relating to the Property that would cause the reported financial information not to be indicative of future operating results.
6. Subsequent event. On September 23, 2026, the Property was acquired by Stewards, Inc. in a transaction accounted for as an asset acquisition under ASC 805-50.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Stewards, Inc. (the "Company") is providing this unaudited pro forma condensed combined financial information to illustrate the effects of the acquisition by SRC Envy Holdco LLC, a wholly owned subsidiary of the Company, of all membership interests in Envy Development DE, LLC and Envy Recreational, LLC (the "Envy Acquisition"). The acquired real estate consists of a 214-unit apartment community, a 26-slip marina and a three-story commercial community center in Pompano Beach, Florida. Envy Recreational, LLC was formed in connection with the acquisition, and the marina and commercial community center did not generate revenue before closing. The Envy Acquisition closed on September 23, 2026 and is accounted for as an asset acquisition under ASC 805-50.
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of SEC Regulation S-X. The pro forma adjustments are Transaction Accounting Adjustments reflecting the application of required accounting to the Envy Acquisition. No Management’s Adjustments are presented. The acquired real estate operations are presented under Rule 3-14, which reflects revenues and certain operating expenses and excludes mortgage interest, depreciation and amortization, management fees and income taxes that are not comparable to the future operations of the property.
A pro forma condensed combined balance sheet as of June 30, 2026 is presented as if the Envy Acquisition had occurred on that date. The pro forma condensed combined statements of operations for the year ended December 31, 2025 and the six months ended June 30, 2026 give effect to the Envy Acquisition as if it had occurred on January 1, 2025, in accordance with 17 CFR 210.11-02(a)(6)(i).
This information was derived from and should be read in conjunction with the Company’s historical financial statements and the historical statement of revenues and certain operating expenses of the acquired property. The pro forma information is for illustrative purposes only and does not purport to represent what the results of operations or financial position would actually have been.
Preliminary acquisition accounting. The final valuation of the make-whole obligation associated with the 7,000,000 escrowed shares remains subject to completion of the valuation specialist’s analysis. Changes in the final measurement could materially affect the recorded liability, acquired-asset basis and related depreciation and amortization.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2025 (in thousands, except per share data)
| Stewards, Inc. | Envy (Rule 3-14) | Envy Transaction Adjustments | Notes | Pro Forma Combined | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| Income, financing and brokerage | $ | 11,660 | — | — | $ | 11,660 | ||||||||||||||
| Income from rental property | 4,617 | 4,905 | — | 9,522 | ||||||||||||||||
| Total revenues | 16,277 | 4,905 | — | 21,182 | ||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Financing and brokerage | 2,518 | — | — | 2,518 | ||||||||||||||||
| Rental property | 2,100 | 4,007 | — | F | 6,107 | |||||||||||||||
| Total cost of revenue | 4,618 | 4,007 | — | 8,625 | ||||||||||||||||
| Gross profit | 11,659 | 898 | — | 12,557 | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| General and administrative expenses | 12,142 | 497 | — | F | 12,639 | |||||||||||||||
| Provision for credit losses | 1,774 | — | — | 1,774 | ||||||||||||||||
| Depreciation and amortization | 6,090 | — | 3,504 | A | 9,594 | |||||||||||||||
| Professional fees | 3,061 | — | — | 3,061 | ||||||||||||||||
| Total operating expenses | 23,067 | 497 | 3,504 | 27,068 | ||||||||||||||||
| Loss from operations | (11,408 | ) | 401 | (3,504 | ) | (14,511 | ) | |||||||||||||
| Other income (expense) | ||||||||||||||||||||
| Interest expense | (8,452 | ) | — | (4,019 | ) | E | (12,471 | ) | ||||||||||||
| Financing charges | (648 | ) | — | (572 | ) | C | (1,220 | ) | ||||||||||||
| Other losses | (208 | ) | — | — | (208 | ) | ||||||||||||||
| Total other income (expense) | (9,308 | ) | — | (4,591 | ) | (13,899 | ) | |||||||||||||
| Net loss before income taxes | (20,716 | ) | 401 | (8,095 | ) | (28,410 | ) | |||||||||||||
| Income tax provision | (41 | ) | — | — | D | (41 | ) | |||||||||||||
| Net loss | (20,757 | ) | 401 | (8,095 | ) | (28,451 | ) | |||||||||||||
| Deemed dividend from conversion of preferred stock | (700 | ) | — | — | (700 | ) | ||||||||||||||
| Dividend on preferred stock | (1,651 | ) | — | — | (1,651 | ) | ||||||||||||||
| Net loss applicable to common stockholders | $ | (23,108 | ) | $ | 401 | $ | (8,095 | ) | $ | (30,802 | ) | |||||||||
| Net Loss Per Common Share - basic and diluted | $ | (0.16 | ) | $ | (0.19 | ) | ||||||||||||||
| Weighted-Average Common Shares Outstanding - basic and diluted | 145,573 | 14,263 | B | 159,836 | ||||||||||||||||
| Comprehensive Loss | ||||||||||||||||||||
| Net loss | (20,757 | ) | 401 | (8,095 | ) | (28,451 | ) | |||||||||||||
| Unrealized gain (loss) on foreign currency translation | ||||||||||||||||||||
| Total comprehensive loss | $ | (20,757 | ) | $ | 401 | $ | (8,095 | ) | $ | (28,451 | ) | |||||||||
For the Six Months Ended June 30, 2026 (in thousands, except per share data)
| Stewards, Inc. | Envy (Rule 3-14) | Envy Transaction Adjustments | Notes | Pro Forma Combined | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| Income, financing and brokerage | $ | 2,539 | — | — | $ | 2,539 | ||||||||||||||
| Income from rental property | 4,783 | 2,861 | — | 7,644 | ||||||||||||||||
| Total revenues | 7,322 | 2,861 | — | 10,183 | ||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Financing and brokerage | 471 | — | — | 471 | ||||||||||||||||
| Rental property | 2,782 | 1,357 | — | F | 4,139 | |||||||||||||||
| Total cost of revenue | 3,253 | 1,357 | — | 4,610 | ||||||||||||||||
| Gross profit | 4,069 | 1,504 | — | 5,573 | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| General and administrative expenses | 5,742 | 187 | — | F | 5,929 | |||||||||||||||
| Provision for credit losses | 251 | — | — | 251 | ||||||||||||||||
| Depreciation and amortization | 4,320 | — | 1,737 | A | 6,057 | |||||||||||||||
| Professional fees | 1,924 | — | — | 1,924 | ||||||||||||||||
| Total operating expenses | 12,237 | 187 | 1,737 | 14,161 | ||||||||||||||||
| Loss from operations | (8,168 | ) | 1,317 | (1,737 | ) | (8,588 | ) | |||||||||||||
| Other income (expense) | ||||||||||||||||||||
| Interest expense | (6,078 | ) | — | (1,993 | ) | E | (8,071 | ) | ||||||||||||
| Financing charges | (34 | ) | — | (284 | ) | C | (318 | ) | ||||||||||||
| Change in fair value of the warrant instrument | 1,364 | — | — | 1,364 | ||||||||||||||||
| Other loss | (27 | ) | — | — | (27 | ) | ||||||||||||||
| Total other income (expense) | (4,775 | ) | — | (2,277 | ) | (7,052 | ) | |||||||||||||
| Net loss before income taxes | (12,943 | ) | 1,317 | (4,014 | ) | (15,640 | ) | |||||||||||||
| Income tax provision | — | — | — | D | — | |||||||||||||||
| Net loss | (12,943 | ) | 1,317 | (4,014 | ) | (15,640 | ) | |||||||||||||
| Dividend on preferred stock | (1,342 | ) | — | — | (1,342 | ) | ||||||||||||||
| Net loss applicable to common stockholders | $ | (14,285 | ) | $ | 1,317 | $ | (4,014 | ) | $ | (16,982 | ) | |||||||||
| Net Loss Per Common Share - basic and diluted | $ | (0.07 | ) | $ | (0.08 | ) | ||||||||||||||
| Weighted-Average Common Shares Outstanding - basic and diluted | 208,881 | 14,263 | B | 223,144 | ||||||||||||||||
| Comprehensive Loss | ||||||||||||||||||||
| Net loss | (12,943 | ) | 1,317 | (4,014 | ) | (15,640 | ) | |||||||||||||
| Unrealized gain (loss) on foreign currency translation | ||||||||||||||||||||
| Total comprehensive loss | $ | (12,943 | ) | $ | 1,317 | $ | (4,014 | ) | $ | (15,640 | ) | |||||||||
| 2 |
Notes to the Unaudited Pro Forma Condensed Combined Statements of Operations
A - Reflects depreciation and amortization of the acquired asset basis allocated to depreciable real estate, furniture, fixtures and equipment, and the in-place lease intangible. Land is not depreciated. The adjustment uses a 44-year life for building and improvements, a 17-year life for site improvements, a 4-year life for furniture, fixtures and equipment, and a 12-month life for the in-place lease intangible. The resulting adjustment is approximately $3.504 million for the year ended December 31, 2025 and $1.737 million for the six months ended June 30, 2026.
B - Reflects all 14,263,025 rollover shares issued at closing, including the 7,000,000 escrowed shares, as outstanding from the beginning of each period presented. The escrowed shares are treated as equity because they were issued at closing, although they remain subject to the contractual escrow, release and redemption mechanics. Because the Company reports a net loss, diluted earnings per share equals basic earnings per share.
C - Reflects the recurring guaranty fee on the new $47.70m loan at 1.20% per year, or $0.57m, being the 1.50% contractual fee net of the 0.30% payable to Stewards that eliminates on consolidation, presented in financing charges.
D - Reflects the income tax effect of the pro forma adjustments. No pro forma income tax benefit has been recognized on the pro forma adjustments because the Company is in a net operating loss position with an accumulated deficit and does not recognize a tax benefit on additional losses.
E - Reflects interest expense on the new $47.70m LoanCore Capital Credit REIT LLC loan based on one-month Term SOFR of 3.9375% plus 3.60%, or 7.5375% in total (actual/360), together with amortization of the $0.75m of debt issuance costs over the 24-month loan term (ASC 835-30). The resulting adjustment is approximately $4.019 million for the year ended December 31, 2025 and $1.993 million for the six months ended June 30, 2026.
F - Certain operating-expense captions in the Envy Rule 3-14 historical statements have been reclassified within the Envy column to conform to the Company’s presentation. These reclassifications do not change total revenues, total certain operating expenses or revenues in excess of certain operating expenses.
| 3 |
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2026 (in thousands)
| Stewards, Inc. | Transaction Adjustments | Notes | Pro Forma Combined | |||||||||||||
| ASSETS | ||||||||||||||||
| Cash, cash equivalents | $ | 1,096 | $ | (577 | ) | b | $ | 519 | ||||||||
| Advance receivables, net | 4,948 | 4,948 | ||||||||||||||
| Prepaid expense | 728 | 287 | g | 1,015 | ||||||||||||
| Loan commitment asset | 3,719 | 3,719 | ||||||||||||||
| Due from related parties | 64 | 64 | ||||||||||||||
| Restricted cash | 3,715 | 2,906 | c | 6,621 | ||||||||||||
| Note receivable | 1,706 | (1,500 | ) | e | 206 | |||||||||||
| Other current assets | 549 | 34 | d | 583 | ||||||||||||
| Total current assets | 16,525 | 1,150 | 17,675 | |||||||||||||
| Fixed assets, net | 154,067 | 84,723 | a | 238,790 | ||||||||||||
| Operating lease right-of-use asset | 18 | 18 | ||||||||||||||
| Intangible assets, net | 985 | 1,439 | a | 2,424 | ||||||||||||
| Goodwill | 1,219 | 1,219 | ||||||||||||||
| Other assets | 1,162 | 520 | f | 1,682 | ||||||||||||
| TOTAL ASSETS | $ | 173,976 | $ | 87,832 | $ | 261,808 | ||||||||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | 7,302 | $ | 135 | d | $ | 7,437 | |||||||||
| Syndicate payable | 3,231 | 3,231 | ||||||||||||||
| Due to related parties - current | 1,883 | 1,883 | ||||||||||||||
| Deferred consideration - current | 270 | 4,060 | b | 4,330 | ||||||||||||
| Operating lease liabilities - current | 15 | 15 | ||||||||||||||
| Notes payable, net - current | 2,622 | 2,000 | h | 4,622 | ||||||||||||
| Warrant liability | 3,719 | 3,719 | ||||||||||||||
| Mortgage loan - current | — | — | ||||||||||||||
| Other current liabilities | 329 | 168 | d | 497 | ||||||||||||
| Total current liabilities | 19,371 | 6,363 | 25,734 | |||||||||||||
| Deferred consideration | 39 | 39 | ||||||||||||||
| Notes payable, net | 38,761 | 38,761 | ||||||||||||||
| Mortgage loan | 77,588 | 46,953 | b | 124,541 | ||||||||||||
| Other non-current liabilities | 291 | 291 | ||||||||||||||
| Total liabilities | 136,050 | 53,316 | 189,366 | |||||||||||||
| Redeemable nonparticipating noncontrolling interest | 8,462 | 8,462 | ||||||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Series A preferred stock | 7 | 7 | ||||||||||||||
| Series B preferred stock | 1 | 1 | ||||||||||||||
| Common stock | 21 | 1 | b | 22 | ||||||||||||
| Paid-in capital | 73,619 | 34,515 | b | 108,134 | ||||||||||||
| Accumulated deficit | (71,639 | ) | (71,639 | ) | ||||||||||||
| Accumulated other comprehensive income | 3 | 3 | ||||||||||||||
| Nonparticipating noncontrolling interest | 27,452 | 27,452 | ||||||||||||||
| Total stockholders’ equity | 29,464 | 34,516 | 63,980 | |||||||||||||
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | $ | 173,976 | $ | 87,832 | $ | 261,808 | ||||||||||
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Notes to the Unaudited Pro Forma Condensed Combined Balance Sheet
Preliminary Consideration Transferred (in thousands)
| Component | Measurement | Amount |
| Deposit applied | Three $500,000 promissory notes | $ 1,500 |
| Existing mortgage and net purchase-price adjustments | Property-level debt and closing adjustments | 45,711 |
| Total non-share consideration | Sum of preceding non-share components | 47,211 |
| Equity consideration | 14,263,025 shares at $2.42 | 34,517 |
| Preliminary make-whole obligation | Mechanical estimate, subject to final valuation | 4,060 |
| Total consideration transferred | 85,787 | |
| Direct acquisition costs | Capitalized under ASC 805-50 | 374 |
| Total asset acquisition cost | $ 86,161 |
The $90.0 million contractual price and $3.00 per-share reference were used to determine the share count. For preliminary GAAP accounting, the 14,263,025 shares were measured at the $2.42 closing market price.
a - Reflects the acquired Envy real estate under ASC 805-50 (asset acquisition, relative fair value). The acquisition is accounted for as an asset acquisition because substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, the property. Preliminary fair-value consideration of $85.79m, together with $0.37m of capitalised direct acquisition costs, is allocated on a relative fair value basis to $84.72m of building, land, site improvements and equipment and $1.44m of in-place lease intangibles, using the BBG appraisal. The elevator is included within the appraised building and equipment. The acquisition accounting remains preliminary because the final valuation of the make-whole obligation is subject to completion of the valuation specialist’s analysis.
b - Reflects the financing and consideration. The Company placed a new $47.70m loan from LoanCore Capital Credit REIT LLC that refinanced and replaced the existing $44.56m mortgage, shown net of $0.75m of debt issuance costs at $46.95m. Under ASC 805-50, all 14,263,025 rollover shares are recorded in equity at the acquisition-date market price of $2.42, comprising $1,426 of common stock at $0.0001 par value and $34.52m of paid-in capital. This equity classification includes the 7,000,000 escrowed shares because they were issued at closing, although they remain subject to the MIPA redemption and sale mechanics, which contemplate seven monthly gross cash payments of $3.0 million, offset by proceeds from permitted share-sale or borrowing transactions. The associated make-whole obligation is presented as deferred consideration at a preliminary estimated acquisition-date fair value of $4.06 million. The $4.06 million amount is an accounting estimate and not a contractual cap. The final valuation remains subject to completion of the valuation specialist’s analysis and may differ materially. A $2.00m short-term promissory note issued to Envy Development PB, LLC funds a portion of the closing cash requirement (note h).
c - Reflects lender-required reserves of $2.75m (property tax and insurance escrows, interest, leasing, capital expenditure, security and repair reserves and the DACA minimum balance), recorded as restricted cash together with the transferred tenant security-deposit cash. Closing prorations are embedded in the rollover share consideration and settle in cash at closing, and are not presented as separate working capital adjustments. Items retained by the seller are excluded.
d - Reflects the Envy working-capital assets and liabilities that transfer with the entity, recorded at their June 30, 2026 carrying amounts: acquired assets of $34,070 of operating receivables and $160,491 of tenant security-deposit cash, and assumed liabilities of $117,501 of accrued operating expenses, $16,325 of accrued payroll, $7,155 of refunds payable and the $160,491 tenant security-deposit obligation.
e - Reflects the $1.50m acquisition deposit, consisting of three $500,000 promissory notes funded before June 30, 2026 and recorded in note receivable in the historical balance sheet. The deposit is applied against the purchase price at closing, reducing the note receivable and the cash required to fund the acquisition; it is not a June 30, 2026 cash movement.
f - Reflects the interest rate cap purchased at closing to hedge the floating-rate LoanCore loan, recorded as a derivative asset at its $0.52m premium under ASC 815; it is not expensed and not netted against the loan.
g - Reflects the property insurance premium of $0.29m paid at closing for the go-forward policy, recorded as prepaid insurance and amortised over the policy term.
h - Reflects a $2.00m short-term promissory note issued to Envy Development PB, LLC in connection with the closing and recorded in current notes payable. The note is effective September 17, 2026, bears interest at $1,333.33 per day and matures on October 5, 2026. Interest through maturity is not more than approximately $25,000 and is not separately reflected in the pro forma statements of operations because it is not material.
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ENVY AT POMPANO BEACH
Historical Statement of Revenues and Certain Operating Expenses
For the Six Months Ended June 30, 2026 and 2025 (Unaudited) (in thousands)
The following unaudited historical statement of revenues and certain operating expenses of Envy at Pompano Beach (the “Property”), a 214-unit apartment community held through Envy Development PB, LLC and its wholly-owned subsidiary, is presented under Rule 3-14 of Regulation S-X. It should be read together with the audited statement of revenues and certain operating expenses of the Property for the year ended December 31, 2025, which is filed separately. Envy Recreational, LLC was formed in connection with the acquisition, and revenue generated by the marina and commercial community center before closing was immaterial. Accordingly, historical operating results for those assets have not been separately included.
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |||||||
| Revenue | ||||||||
| Rental and other property revenues | $ | 2,861 | $ | 2,459 | ||||
| Total revenue | 2,861 | 2,459 | ||||||
| Certain operating expenses | ||||||||
| Property operating expenses | 903 | 929 | ||||||
| Taxes and insurance | 641 | 1,019 | ||||||
| Total certain operating expenses | 1,544 | 1,948 | ||||||
| Revenues in Excess of Certain Operating Expenses | $ | 1,317 | $ | 511 | ||||
Notes to the Historical Statement of Revenues and Certain Operating Expenses
1. Basis of presentation. The Property is a 214-unit residential apartment community located in Pompano Beach, Florida, held through Envy Development PB, LLC and its wholly-owned subsidiary, Envy Development DE, LLC. This statement has been prepared for the purpose of complying with Rule 3-14 of Regulation S-X and is not intended to be a complete presentation of the Property’s revenues and expenses. It is not representative of the actual operations of the Property for the periods presented. The interim statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation. They have been prepared on a basis consistent with the audited statement of revenues and certain operating expenses of the Property for the year ended December 31, 2025.
2. Excluded expenses. In accordance with Rule 3-14, the statement excludes expenses not comparable to the proposed future operations of the Property, including mortgage interest, depreciation and amortization, management fees, and income taxes. As a result of these exclusions, the statement is not indicative of the results of operations of the Property going forward.
3. Revenue recognition. The Property’s residential units are leased to tenants under agreements that are generally one year in length and are accounted for as operating leases under ASC 842, with rental revenue recognized on a straight-line basis when collectibility is probable. Tenant reimbursements and other property fees are recognized when the related services are provided.
4. Cash flow information. Separate historical statements of cash flows for the Property are not presented. Because the statement excludes mortgage interest, depreciation, amortization, management fees and income taxes, historical cash flow information on a basis comparable to the Property’s future operations is not available.
5. Material factors. Rental and other property revenues increased from $2,459 thousand for the six months ended June 30, 2025 to $2,861 thousand for the six months ended June 30, 2026, and vacancy losses were lower in the 2026 period. Taxes and insurance for the six months ended June 30, 2026 include a real estate tax refund of approximately $202,000 arising from a successful property tax challenge, which is non-recurring. The historical amounts exclude, or do not reflect, items that will affect the Property’s future operations, including mortgage interest on the acquisition financing and the Company’s go-forward insurance program. Management is not aware of any other material factors relating to the Property that would cause the reported financial information not to be indicative of future operating results.
6. Subsequent event. On September 23, 2026, the Property was acquired by Stewards, Inc. in a transaction accounted for as an asset acquisition under ASC 805-0.
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