PERMITTED PREFERRED EQUITY Clause Samples

PERMITTED PREFERRED EQUITY. Notwithstanding the provisions of Section 7.2 hereof, direct or indirect equity interests in Mezzanine Borrower may be Transferred in connection with the creation of a preferred class of equity in Mezzanine Borrower (the “Permitted Preferred Equity”) provided that each of the following conditions are satisfied: (a) Lender shall have received at least forty-five (45) days prior written notice of such proposed preferred equity; (b) No Event of Default shall have occurred and be continuing; (c) One hundred percent (100%) of the proceeds of such Permitted Preferred Equity is invested in the Property as a part of a renovation of the Property as set forth in a renovation budget approved by Lender and applied towards the payment of the reasonable out of pockets costs and expenses of the issuer and Borrower (and their direct or indirect members and/or partners) related to the creation and documentation of such Preferred Equity, provided that no more than $1,000,000 may be applied towards the payment of such costs and expenses; (d) The identity of the provider of such Permitted Preferred Equity is reasonably approved by Lender in writing, including, without limitation, confirmation that such provider is not an Embargoed Person and has not in the last ten (10) years has made an assignment for the benefit of creditors or taken advantage of any Creditors Rights Laws; (e) Lender shall have received payment of all reasonable out-of pocket costs and expenses, including reasonable attorneys’ fees, in connection with the review of the proposed preferred equity; (f) Such Permitted Preferred Equity (i) does not, when combined with the outstanding principal balance of the Loan and the Mezzanine Loan (and/or the Permitted Mezzanine Financing, as applicable), exceed eighty-five percent (85%) of (A) the as-is appraised value of the Property (as determined by an appraiser commissioned by Lender) as of the time when such Permitted Preferred Equity is made, plus (B) the cash value of such Permitted Preferred Equity, (ii) does not have a redemption date earlier than one (1) year after the stated maturity date of the Loan and the Mezzanine Loan, (iii) is in a face amount of not less than $10,000,000 and (iv) provides that the payment of the return thereon shall be at all times subordinate to all payments due under the Loan and the Mezzanine Loan, and such return shall accrue in the event that net cash flow from the Property (after payment of Debt Service and Monthly Mezzanine Debt Se...