Single Purpose. (a) Borrower hereby represents and warrants to, and covenants that, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement. (b) Borrower hereby represents and warrants, and covenants that, as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower: (i) do not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable; (ii) do not and will not engage in any business other than the ownership of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents; (iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any Affiliate, any constituent party or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party; (iv) have not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness other than the Debt may be secured (subordinate, pari passu or otherwise) by the Collateral, the First Mezzanine Collateral or the Property, as applicable; (v) have not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates; (vi) are and will remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective assets as the same shall become due; (vii) have done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their existence, and will not, nor will permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement or other organizational documents of such constituent party without the prior consent of Lender; (viii) will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet; (ix) will be, and at all times will hold themselves out to the public as, legal entities separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their status as separate entities, shall conduct business in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name; (x) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective size and character and in light of their respective contemplated business operations; (xi) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them; (xii) will not commingle their respective funds and other assets with those of any Affiliate or constituent party or any other Person, and will hold all of their respective assets in its own name; (xiii) has and will maintain their respective assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective individual assets from those of any Affiliate or constituent party or any other Person; (xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person; (xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts; (xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds; (xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses; (xviii) will not pledge each of their assets to secure the obligations of any other Person; (xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower; (xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate; (xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes; (xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and (xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities). (i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners. (ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower. (d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise. (e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Second Mezzanine Loan Agreement
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in fullfull (unless otherwise hereafter consented to by Lender or, Borrowerif the Loan has been included in a Securitization, Mortgage Borrower and First Mezzanine Borrower:unless a Rating Agency Confirmation is received):
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
(ii) do not incidental personal property necessary for the ownership or operation of the Property and (iii) Permitted Investments, cash and cash equivalents.
(b) Borrower will not engage engage, directly or indirectly, in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except Except for capital contributions and capital or distributions permitted under the terms and conditions of this Agreement Borrower’s operating agreements and properly reflected on the books of and records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any such constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business in amounts not equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to exceed in the aggregate $2,000,000.00, subclauses (when combined with liabilities of Mortgage Borrower ii) and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are (iii) shall be (x) not more than sixty (60) days past due, (y) incurred in the date incurred, are ordinary course of business and (z) not evidenced by a note and are paid when due; and no more than five percent (5%) of the outstanding principal amount of the Loan at any one time. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;except that any permitted equipment financing or equipment lease may be secured by such equipment.
(ve) have Borrower has not made and will not make any loans or advances in the nature of loans to any third party other Person (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;Affiliates or owners or any other Person (except for securities that are Permitted Investments).
(vif) are Subject to there being sufficient revenues from the Property, Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe all applicable organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower without the prior consent of Lender in any manner that (i) violates or is inconsistent with any of the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and other Person. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its any Affiliate provided that (ai) appropriate notation shall be made inclusion on such consolidated financial statements statement is in accordance with the requirements of GAAP (or such other accounting method reasonably acceptable to indicate Lender), (ii) such consolidated financial statement shall contain a footnote to the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate effect that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person owned by Borrower and (biii) such assets shall also be are listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns unless Borrower is a tax-disregarded entity not required to file tax returns under applicable law and if Borrower is a corporation will not file a consolidated federal income tax return with any other Person. Borrower shall pay any taxes required to be paid under applicable law. Borrower shall maintain its books, records, resolutions (if any) and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Subject to there being sufficient revenues from the Property, Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect To the fullest extent permitted by law, neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall at all times have at least either a Delaware corporation or two (2) Independent Directors as Borrower’s springing members, each of member(s) which, upon the dissolution of such the sole member of Borrower or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member the sole member(s) of Borrower.
(dp) Borrower shall at all times cause there to be at least one (1) two duly appointed member members of the board of directors or independent of each SPC Party (if any) or, if Borrower is a single member Delaware limited liability company, at least two duly appointed managers of Borrower who is in each case are provided by a nationally recognized company that provides professional independent directors or managers (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or manager of such Borrower, and may not have been at any time during the preceding five (5) years years, (i) a stockholder, director (other than as an Independent DirectorDirector of such SPC party), officer, membermanager (other than as Independent Director of Borrower, trusteeif Borrower is a single member limited liability company), employee, partner, member, attorney or counsel of such SPC Party, Borrower or any Affiliate of either any of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them (other than a Person provided to serve as Independent Director by a company that provides professional independent directors or managers or other general corporate services to Borrower, such SPC Party or any Affiliate of either of them), (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.other
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Individual Property, as applicable;
and (ii) do not and incidental personal property or other assets necessary for the ownership or operation of the Individual Property.
(b) Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Individual Property, entering into the Loan as applicable, a co-borrower and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used at the Individual Property; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed in excess of three percent (3%) of the aggregate $2,000,000.00Allocated Loan Amount, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness other than the Debt may be secured (subordinate, pari passu or otherwise) by the Collateral, the First Mezzanine Collateral or the Property, incurred as applicable;
(v) have not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
(vi) are and will remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective assets as the same shall become due;
(vii) have done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their existence, and will not, nor will permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement or other organizational documents of such constituent party without the prior consent of Lender;
(viii) will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;
(ix) will be, and at all times will hold themselves out to the public as, legal entities separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their status as separate entities, shall conduct business matters in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;
(x) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective size and character and in light of their respective contemplated business operations;
(xi) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) will not commingle their respective funds and other assets with those of any Affiliate or constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) has and will maintain their respective assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective individual assets from those of any Affiliate or constituent party or any other Person;
(xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
subclause (ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon above and not more than sixty (60) days from the dissolution of such sole member or date due as to the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, matters in subclause (iii) above, subject only to Borrower’s right to diligently prosecute a Person or other entity controlling or under common control good faith dispute as to amounts due and payable in accordance with any such stockholder, partner, customer, supplier or other Person, or the provisions of this Agreement and (ivz) a member of incurred in the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.ordinary course of
Appears in 1 contract
Samples: Loan Agreement (Wells Real Estate Investment Trust Inc)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Lender that since Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants thatcreation, as of the date hereof and until such time as the Debt Obligations shall be paid and performed in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower has not owned, does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower has not engaged, does not engage, and will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have has not entered and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan Debt and (Cii) liabilities unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding one percent (1%) of the original principal amount of the Loan at any one time; provided that any Indebtedness incurred in the ordinary course of Borrower’s business in amounts not pursuant to exceed in the aggregate $2,000,000.00, subclause (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are ii) shall be (x) not more than sixty (60) days past due and (y) incurred in the date incurredordinary course of business (the Indebtedness described in the foregoing clauses (i) and (ii) is referred to herein, are not evidenced by a note and are paid when due; and no collectively, as “Permitted Indebtedness”). No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will intends to remain solvent and will Borrower has and intends to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;; provided, however, the foregoing shall not be interpreted so as to require any member of Borrower or any constituent entity to contribute additional capital in connection therewith, it being expressly understood and agreed that this provision is solely for the purpose of preserving the bankruptcy remote aspects of Borrower.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will notnot terminate or fail to comply with the provisions of its organizational documents, nor will permit any constituent party to, or amend, modify or otherwise change the its partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party without the prior consent of Lender;documents.
(viiih) Borrower has maintained and will maintain all of its accounts, books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party other Person. Borrower’s assets have not been and will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a EAST\53909776.4 consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person Person, and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower has and will file its own tax returns (to the extent Borrower is required to file any such tax returns)and will not file a consolidated federal income tax return with any other Person. Borrower has maintained and shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower has been and will be, and has and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), has and shall correct any known misunderstanding regarding their its status as a separate entitiesentity, has and shall conduct business in their its own name, has not and shall not identify themselves itself or any of their its Affiliates as a division or part of the other other, and has and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) will Borrower has maintained and intends to maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;; provided, however, the foregoing shall not be interpreted so as to require any member of Borrower or any constituent entity to contribute additional capital in connection therewith, it being expressly understood and agreed that this provision is solely for the purpose of preserving the bankruptcy remote aspects of Borrower.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower has not and will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and has held and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower has not and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;.
(xvo) Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all the representations, warranties and covenants in this Section 3.1.24, and (ii) all the organizational documents of Borrower.
(p) Borrower has not permitted and will not permit any Affiliate or constituent party independent access to their respective its bank accounts;.
(xviq) if they respectively employ any employees of their own, will Borrower has paid and shall pay the salaries of its own employees (if any) from its own funds and has and shall maintain a sufficient number of employees (if any) in light of its contemplated business operations; provided, however, the foregoing shall not be EAST\53909776.4 interpreted so as to require any such employees from their own respective funds;member of Borrower or any constituent entity to contribute additional capital in connection therewith, it being expressly understood and agreed that this provision is solely for the purpose of preserving the bankruptcy remote aspects of Borrower.
(xviir) will Borrower has compensated and shall compensate each of their own its consultants and agents from their its funds for services provided to them it and pay from their its own assets all obligations of any kind incurred; provided, including shared overhead expenses;however, the foregoing shall not be interpreted so as to require any member of Borrower or any constituent entity to contribute additional capital in connection therewith, it being expressly understood and agreed that this provision is solely for the purpose of preserving the bankruptcy remote aspects of Borrower.
(xviiis) Borrower has not, and without the unanimous consent of all of its members, partners, directors or managers (including each Independent Director) will not pledge each of their assets not, take any action that might cause Borrower to secure the obligations of any other Person;become insolvent.
(xixt) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) has allocated and will allocate fairly and reasonably any overhead expenses that are shared with any affiliateexpenses, including for shared office space space.
(u) Except in connection with the Loan, Borrower has not pledged and will not pledge its assets for services performed the benefit of any other Person.
(v) Borrower either (i) has no, and will have no, obligation to indemnify its officers, directors, managers, members or partners, as the case may be, or (ii) if it has any such obligation, such obligation is fully subordinated to the Debt and will not constitute a claim against Borrower if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation.
(w) Borrower will consider the interests of Borrower’s creditors in connection with all limited liability company or limited partnership actions.
(x) Except as provided in the Loan Documents, Borrower has not and will not have any of its obligations guaranteed by any employee Affiliate.
(y) The organizational documents of an affiliateBorrower shall provide that except as may be expressly permitted herein as long as any portion of the Obligations remain outstanding, Borrower will not without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed:
(i) except in connection with a sale or other transfer permitted under the Loan Documents, sell all or substantially all of its assets;
(xxiii) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times amend its organizational documents with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained matters set forth in this Section 3.1.24 as if such representation3.1.24, warranty or covenant was made directly by such SPC Party. Upon without the withdrawal or the disassociation consent of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.Lender; or
Appears in 1 contract
Samples: Loan Agreement (O'Donnell Strategic Industrial REIT, Inc.)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, BorrowerBorrower has not at any time, Mortgage Borrower does not presently, and First Mezzanine Borrowershall not:
(ia) do not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicableand (ii) incidental personal property necessary for the ownership or operation of the Property;
(iib) do not and will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral Property or the Property, as applicable, and will fail to conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;
(ivd) have not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the LoanDebt, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower(ii) unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding $1,000,000.00 at any one time, and (iii) Indebtedness incurred in the Mortgage Loan, financing of equipment and other personal property used on the Property with respect annual payments not exceeding $500,000.00 in the aggregate; provided that any Indebtedness incurred pursuant to Mortgage Borrower, subclauses (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (Ciii) liabilities shall be (x) paid within sixty (60) days of the date incurred and (y) incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;
(ve) have not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not or acquire obligations or securities of its Affiliates;
(vif) are and will fail to remain solvent and will or fail to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;
(viig) have done or have caused fail to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the reasonable prior consent of Lender in any manner that (i) violates the covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender’s consent;
(viiih) will fail to maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet. Borrower will file its own tax returns (to the extent Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any Person other than Cedar Shopping Centers Inc. Borrower shall maintain its books, records, resolutions and agreements as official records;
(ixi) will fail to be, and at all times will or fail to hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall fail to correct any known misunderstanding regarding their its status as a separate entitiesentity, shall fail to conduct business in their its own name, or fail to maintain and utilize separate stationery, invoices and checks bearing its own name, and Borrower shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own nameother;
(xj) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective size and character and in light of their respective contemplated business operationsintentionally omitted;
(xik) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of Borrower nor permit any constituent party of Borrower to do any of themthe foregoing;
(xiil) will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;
(xiiim) has and will fail to maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;
(xivn) will not guarantee or become obligated for the debts of any other Person and does not and will not or hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), fail to cause each general partner or managing member (each, an “SPC Party”) shall to be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.;
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall fail to have at least two (2) springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower shall at all times fail to cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is are provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them(other than payment for services as an Independent Director), (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used (For purposes of this subclause (p), the term “Affiliate” means any person controlling, under common control with, or controlled by the person in this definition, question; and the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.) A natural person who satisfies the foregoing definition other than subparagraph (ii) shall not be disqualified from serving as an Independent Director if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors and that also provides other corporate services in the ordinary course of its business. A natural person who otherwise satisfies the foregoing definition except for being the independent director of a “special purpose entity” affiliated with the borrower that does not own a direct or indirect equity interest in the borrower or any co-borrower shall not be disqualified from serving as an Independent Director of the SPC Party if such individual is at the time of initial appointment, or at any time while serving as a Independent Director of the SPC Party, an Independent Director of a “special purpose entity” affiliated with the Borrower or the SPC Party (other than any entity that owns a direct or indirect equity interest in borrower or any co-borrower) if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors. For purposes of this paragraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in the SPC Party’s organizational documents.
(eq) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-by laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC PartyBorrower, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members one (1) member who are each is an Independent Director.
(r) intentionally omitted.
(s) permit any Affiliate or constituent party independent access to its bank accounts.
(t) fail to pay the salaries of its own employees (if any) from its own funds or fail to maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) fail to compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i1) do Propco Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property and (2) Opco Borrower does not own and will not own any asset or property other than the personalty and other assets owned by it necessary for the operation of the Property.
(1) Propco Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, Property and (2) Opco Borrower will not engage in any business other than the First Mezzanine Collateral or management and operation of the Property, as applicable, and each Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable (taking into account all facts and circumstances) and either substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;party or a capital contribution or distribution.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used on the Property; provided that any indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed excess of 5% of the outstanding principal amount of the Loan in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are incurred as to the matters in subclause (ii) above and not evidenced by a note more than sixty (60) days from the date due as to the matters in subclause (iii) above and are paid when due; and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, Property other than Indebtedness of the First Mezzanine Collateral or type described in and subject to the Property, as applicable;requirements of clause (iii) of this clause (d).
(ve) have Except as expressly contemplated by the Loan Documents with respect to the other Borrower and the Cross Borrower, Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of any of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay all of its debts and liabilities (including, as applicable, a fairly allocated portion of shared personnel and overhead expenses) only from their respective its own assets and as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities applicable to Borrower and preserve each of their Borrower’s existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower without the prior consent of Lender in any manner that (i) violates or makes such organizational documents inconsistent with the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements (it being acknowledged that the agent under the Cash Management Agency Agreement shall be continuously able to produce separate balance sheets of the Borrowers) and (except as contemplated in the Cash Management Agency Agreement) bank accounts as official records, separate from those of its Affiliates and from those of any constituent party and other Person. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements (and/or in Annual Reports on Form 10-K filed with U.S. Securities and Exchange Commission in which such financial statements are contained) to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also are continuously able to be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns (to the extent Borrower is required to file tax returns). Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;name (except with respect to payments or communications made on behalf of the Borrower by the counterparty to the Cash Management Agency Agreement, in which event, such counterparty shall nevertheless identify the Borrower as the party on whose behalf the payment or communication is being made).
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Except as expressly contemplated by the Loan Documents and the Cash Management Agency Agreement, Borrower will not commingle their respective the funds and or other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Except as expressly contemplated by the Loan Documents with respect to the other Borrower and the Cross Borrower, Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy or hold out its credit as being available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability companycompany that satisfies all of the requirements of Section 3.1 ..24(o)(ii)), each general partner or managing member (each, an “SPC Party”) of Borrower shall be a corporation or single member limited liability company that satisfies all of the requirements of Section 3.1 ..24(o)(ii) whose sole asset is its a direct interest in Borrower of at least 0.5% (or 0.1% if Borrower is an entity formed under the laws of Delaware) and each such SPC Party will at all times comply, and will cause Borrower to comply, comply with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party (substituting the term “SPC Party” for the term ‘Borrower” throughout) and will cause Borrower to comply with this Section 3.1.24 (except for subsections (a), (b), (d), (n) and (x)). Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation constituent documents are substantially similar to those of such the withdrawing or disassociating SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners. If Borrower is a limited partnership, Borrower shall have at least one genera] partner. If Borrower is a limited liability company (other than a single-member limited liability company that satisfies all of the requirements of Section 3.1 .24(o)(ii)), Borrower shall have at least one (1) managing member. An SPC Party shall be organized for the sole purpose of owning a direct interest in the Borrower, shall own no other interests in any entity, and shall not incur indebtedness except as it may be liable for the debts of the Borrower in its capacity as general partner of the Borrower.
(ii) If Borrower is a single member Delaware limited liability company (“single member limited liability company” meaning a limited liability company having only one equity member), Borrower shall be a limited liability company organized under the laws of Delaware and shall have either (A) two (2) non-equity members or (B) at least two springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower or its SPC Party shall at all times cause there to be at least one (1) two duly appointed member of the board of directors or independent managers Independent Directors, who is are provided by a nationally recognized company that provides professional independent directors (eachdirectors, an of each SPC Party and of Borrower if Borrower is a single member limited liability company. As used herein, “Independent Director”) and professional independent managers (each, an “Independent Manager”) ” shall mean a natural person serving as a director of Borrower a corporation or any such SPC Party manager of a limited liability company who shall is not have been at the time of such individual’s appointment initial appointment, or at any time while serving as a director of such SPC Party or Borrowerserving, and may has not have been at any time during the preceding five (5) years years: (ia) a stockholder, stockholder or director (other than with the exception of serving as the Independent Director of Borrower or any SPC Party that is an Independent DirectorSPC Party or managing member of Borrower), trustee, officer, member, trustee, employee, partner, member, attorney or counsel of such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iib) a creditor, customer, supplier or other Person person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iiic) a Person person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, Person excluded from serving as Independent Director under subparagraph (a) or (ivb); or (d) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier Person excluded from serving as Independent Director under subparagraph (a) or -52- other Person(b). As used in this definition, the term “affiliate” means any person controlling, under common control with, or controlled by the person in question; and the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.
. A natural person who satisfies the foregoing definition other than subparagraph (eb) Borrower shall not cause be disqualified from serving as an Independent Director if such individual has been provided by a nationally-recognized company that provides professional independent directors. A natural person who otherwise satisfies the foregoing definition except for being the Independent Director of a “special purpose entity” affiliated with Borrower or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document shall not be disqualified from serving as an Independent Director of Borrower or SPC PartyParty if such “special purpose entity” does not own a direct or indirect equity interest in Borrower or in any co-borrower of Borrower and if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors. For purposes of this paragraph, requires a vote “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in Section 3.1.24 of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Directorthis Agreement.
Appears in 1 contract
Single Purpose. (a) Borrower and Operating Lessee hereby represents represent and warrants warrant to, and covenants thatcovenant with, once the date of Borrower’s formation Agent and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants Lenders that, as of the date hereof hereof, at all times prior hereto and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrowerfull or its property is no longer subject to the Lien securing the Debt:
(i) do It has not own owned and will not own any asset property or property any other assets other than (A) with respect to Borrower, the Property and (B) with respect to the Borrower and Operating Lessee incidental personal and intangible property relating to the ownership, leasing or operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;
(ii) do It was formed solely for the purpose of engaging in, and has not engaged and will not engage in in, any business other than the ownership ownership, leasing, management, financing and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;
(iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have It has not entered and will not enter into any contract or agreement with any Affiliateof its Affiliates (other than the Loan Documents and Operating Lease), any of its constituent party parties or any Affiliate of any constituent party, except contracts or agreements that are upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such partyparties;
(iv) have not incurred and It will not incur any Indebtednessindebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) ), other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred Permitted Indebtedness. Except as set forth in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00immediately preceding sentence, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, Property and no indebtedness other than the First Mezzanine Collateral Debt and the indebtedness described in clause (iii) of the definition of Permitted Indebtedness may be secured (subordinate or the Property, as applicablepari passu) by any personal property;
(v) have not made and Other than as provided in the Loan Documents, it will not make any loans or advances to to, and it will not pledge its assets for the benefit of, any third party other Person (including any Affiliate or constituent party or any Affiliate of any constituent party), and shall not acquire obligations or securities of its Affiliatesany Affiliate or constituent party or any Affiliate of any constituent party;
(vi) are It is and will remain solvent and it will pay its debts and liabilities (including, as applicable, shared personnel including employment and overhead expenses) from their respective its assets as the same shall become due;
(vii) have It has done or have caused to be done and will do all things necessary to observe organizational limited liability company formalities (in all material respects), as the case may be, and preserve each of their its existence, and it will not, to the extent possible under applicable law, nor will it permit or suffer any constituent party to, to amend, modify or otherwise change the its partnership certificate, partnership agreement, certificate of formation (except as required by law), limited liability company agreement, articles of incorporation and bylaws, certificate of formation, operating agreement trust or other organizational documents Organizational Documents or those of such constituent party without the prior consent of Lenderin a manner which would adversely affect its existence as a Single Purpose Entity;
(viii) It has and will maintain all of its books, books and records, financial statements and bank accounts as official records, separate and apart from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and it will file its own tax returns (b) such assets shall also be listed on except to the Borrower’sextent consolidation is required under GAAP, Mortgage Borrower’s and/or First Mezzanine Borrower’s own permitted for tax purposes or as a matter of law, provided that any consolidated financial statements contain a note indicating that it and its Affiliates are separate balance sheetlegal entities and maintain records, books of account and accounts separate and apart from any other Person);
(ix) It has and will be, and at all times has held and will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any of its Affiliates, any of its constituent parties or any Affiliate or of any constituent party), has and shall conduct business in its own name, has and shall exercise reasonable efforts to correct any known misunderstanding actually known to it regarding their status as its separate entitiesidentity, shall conduct business in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and has and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own nameand it will reasonably allocate any overhead that is shared with any Affiliate, including, but not limited to, paying for shared office space and services performed by any officer or employee of an Affiliate;
(x) It has and will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;
(xi) will not seek or effect To the fullest extent permitted by law, neither it nor permit any constituent party to has nor will seek Borrower’s or effect the liquidation, dissolution, Operating Lessee’s dissolution or winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) It does not and will not commingle their respective its funds and other assets with those of any Affiliate or constituent party or any Affiliate of any constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) It has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any Affiliate of any constituent party or any other Person;
(xiv) will not guarantee or become obligated for Except in its capacity as a co-obligor under the debts of any other Person and Note, it does not and will not hold themselves itself or its credit out to be responsible for or have their respective credit available to satisfy satisfy, and it has not guaranteed or otherwise become liable for, and has not and will not guarantee or otherwise become liable for, the debts debts, securities or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower If it is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, either (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”a) at least one of its members is and shall be a corporation Single Purpose Entity (the “SPE Member”) whose sole asset is assets are its interest in the applicable Borrower or Operating Lessee and each such SPC Party will at all times complythat has no less than a one percent (1%) membership interest in Obligor or Operating Lessee, and will cause Borrower or Operating Lessee shall be deemed hereby to comply, with have made each of the other representations, warranties, warranties and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, 3.36 with respect to the new SPC Party SPE Member, and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower the SPE Member shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d2) Borrower shall at all times cause there to be at least one (1) Independent Directors as duly appointed member members of the its board of directors or independent (b) it shall have two (2) Independent Directors on its board of managers who is provided by a nationally recognized company that provides professional independent or board of directors (eachas applicable);
(xvi) It has and shall, an “Independent Director”at all times, have a limited liability company agreement which provides that, for so long as the Loan is outstanding and the Property remains subject to the Lien securing the Debt, its board of directors (or (a) and professional independent managers (each, an “Independent Manager”) of if Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as Operating Lessee is a director of such SPC Party or Borrowerlimited liability company with a managing member SPE Member, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and the SPE Member or (b) if Borrower or Operating Lessee is a board managed limited liability company with two (2) Independent Directors on its board of directors) will not be permitted to take any action which, under applicable law or the terms of any certificate of incorporationincorporation or certificate of formation, limited liability company agreement, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Partystock, requires a the vote of the its board of directors or board of each SPC Party and Borrower managers, unless at the time of such action there shall be at least two members of such board who are Independent Directors; provided, however, that, subject to any applicable Legal Requirement, its board of directors (or if Borrower or Operating Lessee is a limited liability company and is not self managed, the board of directors of its SPE Member) may, at its discretion, be permitted to take any action without regard to the preceding clause of this sentence other than the following actions, which actions may not be taken: (A) to the fullest extent permitted by law, dissolve or liquidate, in whole or in part; (B) consolidate or merge with or into any other entity or convey or transfer all or substantially all of its properties and assets to any entity unless expressly permitted hereunder or unless Obligor is concurrently paying off the Loan in accordance with the terms herein; (C) engage in any business other than the ownership, maintenance and operation of the Property or, with respect to the SPE Member (if applicable), acting as a member of Borrower or Operating Lessee; (D) institute any proceeding to be adjudicated as bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition or answer or consent seeking reorganization or relief under the Bankruptcy Code or consent to the filing of any such petition or to the appointment of a receiver, rehabilitator, conservator, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of its SPE Member or Borrower or Operating Lessee or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, or make or consent to an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take any action in furtherance of any of the foregoing; (E) except as required by law, amend its SPE Member’s certificate of incorporation (if applicable) or the limited liability company agreement of Borrower or Operating Lessee, but only to the extent such amendment impacts the Company’s status as a Single Purpose Entity; (F) enter into any transaction with an Affiliate not in the ordinary course of Borrower’s or Operating Lessee’s business; or (G) withdraw the SPE Member, if applicable, or remove any Independent Director without simultaneously replacing with another Independent Director of Borrower or Operating Lessee; provided, however, clause (D) above may be taken with the affirmative consent of the two (2) Independent Directors;
(xvii) It has no liabilities, contingent or otherwise, other than those normal and incidental to the ownership, operation and leasing of the Property;
(xviii) Borrower and Operating Lessee shall conduct its business so that the assumptions made with respect to Borrower or Operating Lessee in that certain opinion letter dated the date hereof delivered by Xxxxxxx Coie LLP addressing substantive non-consolidation and other matters in connection with the Loan shall at all times be true and correct in all respects;
(xix) Neither Borrower or Operating Lessee will permit any Affiliate or constituent party independent access to its bank accounts;
(xx) Borrower and Operating Lessee have and shall pay the salaries of its own employees, if any, and maintain a sufficient number of employees in light of its contemplated business operations;
(xxi) Borrower and Operating Lessee have and shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred. Upon the withdrawal or the disassociation of the Independent Director from any constituent entity of any Obligor or Operating Lessee (or from a Obligor or Operating Lessee directly), such Obligor or Operating Lessee shall immediately appoint a new director or special member or cause such entity to appoint a new director or special member that satisfies the requirements of an Independent DirectorDirector under this Agreement; and
(xxii) Borrower and Operating Lessee are subject to and comply with all of the limitations on powers and separateness requirements set forth in its Organizational Documentation as of the Closing Date.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do not and incidental personal property necessary for the ownership, operation, leasing, management and/or maintenance of the Property.
(b) Borrower will not engage in any business other than the ownership ownership, financing, management, operation, leasing, maintenance and sale of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management other activities incidental thereto (in connection each case in accordance with the Condominium terms and provisions of this Agreement and the other Loan Documents;).
(iiic) except Except for capital contributions and or capital distributions (including dividends) permitted under the terms and conditions of this Agreement Borrower’s operating agreement and properly reflected on the books of and records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business in amounts not equipment and other personal property used on the Property; provided that (A) any Indebtedness incurred pursuant to exceed in the aggregate $2,000,000.00, subclause (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are ii) shall be (x) not more than sixty (60) days past the date incurredincurred and (y) incurred in the ordinary course of business, are and (B) any Indebtedness incurred pursuant to subclauses (ii) and (iii) in an aggregate amount not evidenced by a note and are paid when due; and no to exceed, at any one time, five percent (5%) of the original principal balance of the Loan. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;Affiliates except as otherwise expressly permitted in this Agreement.
(vif) are and Borrower will remain solvent and will not make any distributions so as to render Borrower insolvent or cause Borrower to be unable to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates (or its member’s Affiliates) provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns, except to the extent that (i) Borrower is treated as a disregarded entity for tax purposes and is not required to file tax returns under applicable law, or (ii) Borrower is allowed to file consolidated tax returns, in which case Borrower may include its taxable income, loss, deductions, gains or other items as part of a consolidated tax return, provided that each consolidated tax return will make clear that the assets of Borrower are not available to satisfy the liabilities of any other Person or that the assets of such Person are not available to satisfy the liabilities of Borrower. Borrower shall observe organizational formalities with respect to its books, records, resolutions and agreements.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party party, to the fullest extent permitted by law, will seek or effect the liquidation, termination, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member Delaware limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation or limited liability company whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation organizational documents are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two (2) springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower.
(dp) SPC Party or Borrower shall at all times cause there to be at least one (1) two duly appointed member managers of the board of directors SPC Party or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers Borrower (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director manager of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director or manager (other than as an Independent DirectorManager of SPC Party or Borrower), officer, memberemployee, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of themBorrower, (ii) a customer, creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of themBorrower, (iii) a Person or other entity controlling Controlling or under common control Control with any such stockholder, partner, customer, creditor, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, memberemployee, trustee, employeepartner, partnercustomer, creditor, customer, supplier or -52- other Person. A natural person who satisfies the foregoing definition other than subparagraph (ii) shall not be disqualified from serving as an Independent Manager of the SPC Party if such individual is an independent director or manager provided by a nationally recognized company that provides professional independent directors or managers and that also provides other corporate services in the ordinary course of its business. A natural person who otherwise satisfies the foregoing definition except for being the independent director or manager of a “special purpose entity” affiliated with the Borrower that does not own a direct or indirect equity interest in the Borrower or any co-borrower shall not be disqualified from serving as an Independent Manager of the SPC Party or Borrower, as applicable, if such individual is at the time of initial appointment, or at any time while serving as an Independent Manager, provided by a nationally recognized company that provides professional independent directors/managers and other corporate services in the ordinary course of its business. Notwithstanding the immediately preceding sentence, an Independent Manager may not simultaneously serve as Independent Manager of Borrower and independent manager or director of a special purpose entity that owns a direct or indirect equity interest in Borrower or a direct or indirect interest in any co-borrower with Borrower. As used in this definitionparagraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities and impose requirements intended to preserve its separateness that are substantially similar to those of Borrower, and provide, inter alia, that it (A) is organized for a limited purpose, (B) has restrictions on its ability to incur indebtedness, dissolve, liquidate, consolidate, merge and/or sell assets, (C) may not file voluntarily a bankruptcy petition without the consent of the Independent Manager and (D) shall conduct itself in accordance with certain “separateness covenants,” including, but not limited to, the term “control” means the possessionmaintenance of its books, directly records, bank accounts and assets separate from those of any other person or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwiseentity.
(eq) Borrower shall not cause or permit the board of directors or managers of any SPC Party and Borrower and/or Borrower, as applicable, to take any action which, under the terms of any certificate of incorporation, by-by laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC PartyParty (if any), as applicable, requires a vote of the board of directors or board of managers of each SPC Party (if any) and Borrower Borrower, as applicable, unless at the time of such action there shall be at least two (2) members who are each an Independent DirectorManager.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Affiliate) set forth in the Insolvency Opinion except as otherwise provided in Article VIII herein, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(s) Borrower will not permit any Affiliate (other than a property manager which is an Affiliate of Borrower or its members and then only in accordance with the terms and provisions of the applicable Management Agreement and this Agreement) or constituent party independent access to its bank accounts; provided, however, that certain authorized employees of THI who perform administrative duties with respect to the operation and management of bank accounts and in such capacity identify themselves as Borrower’s agent, under the supervision and direction of Borrower’s officers or members, may perform such duties with respect to Borrower’s bank accounts.
(t) Borrower shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower shall not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability, company or others) or hold any equity interest in any other entity.
(v) Borrower hereby represents and warrants that since the date of its formation to the date of its Amended and Restated Operating Agreement on April 30, 1999, the Borrower conducted no business other than preparing to acquire or acquiring the Property.
(w) Borrower has, at all times, complied with the provisions of its organizational documents then in effect in all respects material to the separateness of Borrower, including all of those provisions set forth in Section 11 of it’s Operating Agreement dated April 30, 1999.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and -------------- covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i) Borrower and each Individual Borrower do not own and will not own any asset or property other than (A) the Properties, and (B) incidental personal property necessary for the ownership or operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;Properties.
(ii) do not Borrower and each Individual Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Properties and Borrower and each Individual Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iii) except for capital contributions Borrower and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine each Individual Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of any Individual Borrower, any constituent party of any Individual Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarm's-length basis with third parties other than any such party;.
(iv) Borrower and each Individual Borrower have not incurred and will shall not incur any Indebtednessindebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) ), other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, Debt; (B) with unsecured trade payables and other unsecured indebtedness not evidenced by a note, equipment leases and endorsements of checks, incurred by Borrower or one or more Individual Borrowers for or in respect to Mortgage Borrower, of the Heritage Intercompany Loan and (C) liabilities incurred operation of the Properties in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, operating its business; (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60C) days past the date incurred, are unsecured indebtedness not evidenced by a note and are paid when duepayable or reimbursable to a tenant under a Lease on account of work performed or costs incurred by such tenant in connection with its occupancy of space at an Individual Property pursuant to the Lease, including costs for tenant improvement work; and (D) indebtedness relating solely to the financing of construction of capital improvements, tenant improvements or building equipment or leasing costs payable to third parties or any Manager in accordance with the Management Agreements and incurred with respect to one or more of the Individual Properties and costs associated with such indebtedness, either unsecured or secured only by subordinate liens and (i) which in the aggregate does not exceed an amount equal to five percent (5%) of the outstanding principal amount of the Loan at any time, (ii) the proceeds of which are not distributed to any Individual Borrower or any direct beneficial owner of an interest in any Individual Borrower, but are instead used to fund directly the costs of items described above, other than commissions and fees paid to any Manager or Natomas Manager in accordance with the Management Agreements or the Natomas Management Agreement, (iii) which is evidenced by a note or other written agreement having terms (other than the interest rate and repayment terms) no Indebtedness less favorable to Borrower than the terms of the Loan, (iv) the terms of which shall require that the principal amount of such indebtedness be repaid from Net Operating Income prior to any distributions to any direct beneficial owner of an interest in any Individual Borrower (other than for income, franchise, or other taxes imposed on Borrower for the privilege of doing business in the jurisdictions in which the Property is located) and (v) is subject to a subordination and standstill agreement satisfactory in form and substance to Lender. Except as set forth in the immediately preceding sentence, no indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) ---- ----- by the Collateral, the First Mezzanine Collateral or the Property, as applicable;Properties.
(v) have not No Individual Borrower has made and or will not make any loans or advances to any third party (including any Affiliate affiliate or constituent party), and no Individual Borrower shall not acquire obligations or securities of its Affiliates;.
(vi) are Each Individual Borrower is and will remain solvent and each Individual Borrower will pay its debts and liabilities (including, as applicable, shared personnel employment and overhead expenses) from their respective its assets as the same shall become due;, subject to Borrower's right to contest Taxes and Other Charges in accordance with Section 5.1(b) and Labor and Material Costs in -------------- accordance with Section 3.6(b) of the -50-
(vii) have Each Individual Borrower has done or have caused to be done and will do all things necessary to observe organizational partnership formalities and preserve each of their its existence, and each Individual Borrower will not, nor will any Individual Borrower permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement trust or other organizational documents of such Individual Borrower or such constituent party without the prior written consent of Lender;.
(viii) Borrower will maintain all books and records separate from those of its affiliates and any constituent party and each Individual Borrower will file its own tax returns. Each Individual Borrower shall maintain its books, records, financial statements resolutions and bank accounts agreements as official records, separate from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;.
(ix) Each Individual Borrower will be, and at all times will hold themselves out to the public as, be a legal entities entity separate and distinct from any other entity (including any Affiliate of any Individual Borrower or any constituent partyparty of any Individual Borrower), shall correct any known misunderstanding regarding their its status as a separate entities, entity and shall conduct business in their its own name; provided, shall not identify themselves or any of their Affiliates however that each Individual Borrower may use the word "Xxxxxxxx" as a division or part of the other such Individual Borrower's name, may describe itself as a "wholly-owned subsidiary" of Xxxxxxxx Properties Acquisition Partners, L.P. so long as such description is true and shall maintain correct and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;may permit its relationship with its Affiliates to be disclosed in order to comply with any public filing requirements applicable to Xxxxxxxx Properties Trust.
(x) Each Individual Borrower is adequately capitalized and will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xi) will not seek No Individual Borrower or effect nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, or consolidation or mergermerger in connection with an insolvency proceeding, in whole or in part, of any of them;Individual Borrower.
(xii) will not commingle their respective funds and other assets with those of any Affiliate or constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivxiii) will not guarantee or become obligated for the debts of any other Person and Each Individual Borrower does not and will not hold themselves itself out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate Person other than the debts or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to another Individual Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(ixiv) If each Individual Borrower is a limited partnership partnership, the general partner of each Individual Borrower is a corporation or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation company whose sole asset is its interest in Borrower one or more Individual Borrowers and each such SPC Party the general partner will at all times comply, and will cause the related Individual Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 4.1(ee) as if such --------------- representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity ownersgeneral partner.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower has not and will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower has and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have has not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) ), other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan trade and (C) liabilities operational indebtedness incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00with trade creditors, provided such indebtedness is (1) unsecured, (when combined with liabilities of Mortgage Borrower 2) not evidenced by a note, (3) on commercially reasonable terms and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses)conditions, which liabilities are and (4) due not more than sixty (60) days past the date incurredincurred and paid on or prior to such date, are not evidenced by a note and are paid when dueand/or (C) Permitted Equipment Leases; and no Indebtedness other than the Debt may be secured (subordinate, pari passu or otherwise) by the Collateralprovided however, the First Mezzanine Collateral or aggregate amount of the Property, as applicable;indebtedness described in ffil and .g shall not exceed at any time two percent (2%) of the outstanding principal amount of the Debt.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower has been, is and will remain solvent and Borrower has paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;; provided, that, in each such case, there exists sufficient cash flow from the Property to do so.
(viig) have Borrower has done or have caused to be done and will do or cause to be done all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower has not, will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender;
(viii) will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and Lender in any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;
(ix) will be, and at all times will hold themselves out to the public as, legal entities separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their status as separate entities, shall conduct business in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;
(x) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective size and character and in light of their respective contemplated business operations;
(xi) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) will not commingle their respective funds and other assets with those of any Affiliate or constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) has and will maintain their respective assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective individual assets from those of any Affiliate or constituent party or any other Person;
(xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a violates the single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and purpose covenants contained set forth in this Section 3.1.24 as if such representation3.1.24, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.or
Appears in 1 contract
Samples: Loan Agreement (Hartman Short Term Income Properties XX, Inc.)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower has not conducted any business other than in connection with this Agreement and will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed excess of Four Million and No/100 Dollars ($4,000,000.00) in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are incurred as to the matters in subclause (ii) above and not evidenced by a note more than sixty (60) days from the date due as to the matters in subclause (iii) above and are paid when due; and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;'s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower's assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s 's assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's own separate balance sheet;. Borrower will file its own tax returns (to the extent Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person. Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective credit make its assets available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), each general partner or managing member (each, an “"SPC Party”") shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower shall at all times cause there to be at least one (1) two duly appointed member members of the board of directors (or independent two special managers if Borrower is a limited liability company) who is are provided by a nationally nationally-recognized company that provides professional independent directors (each, an “"Independent Director”) and professional independent managers (each, an “Independent Manager”") of Borrower or any such each SPC Party and Borrower reasonably satisfactory to Lender who shall not have been at the time of such individual’s 's appointment or at any time while serving as a director or manager of such SPC Party or and Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. A natural person who otherwise satisfies the foregoing definition of Independent Director except for being the independent director, manager or special member of a "special purpose entity" affiliated with the Borrower that does not own a direct or indirect equity interest in the Borrower shall not be disqualified from serving as an Independent Director if such individual is at the time of initial appointment, or at any time while serving as an Independent Director, an Independent Director of a "special purpose entity" affiliated with the Borrower (other than any entity that owns a direct or indirect equity interest in the Borrower) if such individual is an independent manager, director or special member provided by a nationally-recognized company that provides professional independent managers, directors or special members. As used in this definition, the term “"control” " means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(eq) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors or managers of each SPC Party and Borrower unless at the time of such action there shall be at least two board members or managers who are each an Independent Director.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(s) Borrower will not permit any Affiliate or constituent party access to its bank accounts except as required for the conduct of Borrower's business.
(t) Borrower shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Single Purpose. (a) Notwithstanding anything to the contrary contained herein or otherwise, Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i) do Borrower has not owned, does not currently own and will not own any asset or property other than (A) the Property and (B) incidental personal property necessary for the ownership or operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;.
(ii) do Borrower has not engaged in and will not engage in any business other than the ownership ownership, development, management, leasing and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any Affiliate, any constituent party or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;
(iv) have has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) ), other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, Debt and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities unsecured trade debt incurred in the ordinary course of Borrower’s business relating to the ownership of the Property, none of which is or shall be at any time more than thirty (30) days past due (unless same is being contested in amounts accordance with applicable Legal Requirements and the Loan Documents and Lender has been notified in writing of the same) and does not to and shall not exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in at any time the ordinary course of their respective businessesMaximum Permitted Trade Payables. Except as permitted by Section 5.22(g), which liabilities are not more than sixty no constituent member, partner or shareholder of Borrower (60) days past the date incurreddirect or indirect, are not evidenced by a note and are paid when due; and no matter how remote) has incurred or will incur any Indebtedness secured (directly or indirectly) by such Person’s legal or beneficial ownership interest in Borrower or any constituent member, partner or shareholder of Borrower (direct or indirect, legal or beneficial, and no matter how remote). No Indebtedness other than the Debt may be secured (subordinatesuperior, subordinate or pari passu or otherwisepassu) by the CollateralProperty or any portion thereof. Notwithstanding the foregoing, Borrower shall be permitted to incur, subject to the First Mezzanine Collateral or prior written consent of Lender not to be unreasonably withheld, subordinate construction loan financing for the Property, as applicable;.
(viv) have Borrower has not made and will not make any loans or advances to any third party Person (including any Affiliate or constituent party), and has not acquired and shall not acquire obligations or securities of its Affiliates;any Borrower Party or any Affiliate of Borrower or any Borrower Party.
(viv) are Borrower is and will remain solvent and Borrower has at all times during its existence paid and will continue to pay its debts debts, liabilities and liabilities expenses (including, as applicable, shared personnel and overhead expenses) only from their respective Borrower’s assets as the same shall become due;.
(viivi) have Borrower has done or have caused to be done and will do all things necessary to observe limited liability company and other organizational formalities and preserve each of their existence, Borrower’s existence and has at all times complied with and will not, nor will permit continue to comply with the provisions of its Organizational Documents and the laws of the state of its organization and any constituent party to, amend, modify or otherwise change other state where laws govern the partnership certificate, partnership agreement, articles activities of incorporation and bylaws, certificate of formation, operating agreement or other organizational documents of such constituent party without the prior consent of Lender;Borrower.
(viiivii) Borrower has at all times during its existence maintained and will continue to maintain all of its Borrower’s books, records, financial statements and bank accounts as official records, separate from those of any other Person, and Borrower will file its Affiliates and any constituent party own tax returns. Borrower has at all times during its existence maintained and will not permit its assets continue to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage maintain Borrower’s books, records, resolutions and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, agreements as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;official records.
(ixviii) Borrower is and will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity Person (including any Affiliate of Borrower or any constituent partyparty of Borrower), has at all times conducted and will continue to conduct business in its own name, has at all times corrected and shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their own name, has not identified and shall not identify themselves or any of their Affiliates itself as a division or part of the any other Person and has maintained and shall continue to maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xix) Borrower has maintained and will continue to maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xix) will not seek or effect Neither Borrower nor permit any constituent party to of Borrower will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiixi) Borrower has not commingled and will not commingle their respective its funds and other assets with those of any Affiliate or constituent party or any other Person, and Borrower has not controlled and will hold all not control the decisions with respect to the daily affairs of their respective assets in its own name;any other Person.
(xiiixii) Borrower has maintained and will continue to maintain their respective its assets in such a manner that it will would not be costly or difficult to segregate, ascertain or identify their respective individual its assets from those of any Affiliate or constituent party of Borrower or any other Person;.
(xivxiii) will Borrower has not guarantee or become obligated for the debts of any other Person and held, does not currently hold and will not hold themselves itself out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;.
(xiv) Borrower has at all times during its existence held, and will continue to hold, all of its assets in its own name.
(xv) Borrower has not at any time during its existence guaranteed or become obligated for, and will not in the future guarantee or become obligated for, the debts of any other Person.
(xvi) Except as specifically provided in the Loan Documents, no other Person has ever guaranteed or become obligated for Borrower’s debts at any time during Borrower’s existence, and except as specifically provided in the Loan Documents, Borrower will not permit any Affiliate other Person to guarantee or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ become obligated for its debts at any employees of their own, will pay time in the salaries of any such employees from their own respective funds;future.
(xvii) will compensate each of their own consultants Borrower has not at any time during its existence held, and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets in the future hold, out Borrower’s credit as being available to secure satisfy the obligations of any other Person;.
(xviii) No other Person has ever held, and Borrower will not permit any other Person to hold, out Borrower’s credit as being available to satisfy the obligations of any other Person.
(xix) Borrower has not at any time during its existence bought or held, or will not formin the future buy or hold, acquire evidence of Indebtedness issued by any of its Affiliates or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other thanholders (direct or indirect, with respect to Borrower, First Mezzanine Borrower legal or Mortgage Borrower;beneficial).
(xx) Borrower has at all times during its existence allocated fairly and reasonably (and paid or charged for, as applicable), and will continue to allocate fairly and reasonably (and pay or charge for, as applicable), any overhead expenses that are shared with any affiliatean Affiliate of Borrower, including paying for shared office space provided by and for services performed by any employee of an affiliate;Affiliate of Borrower.
(xxi) Except as provided in the Loan Documents, Borrower has not at any time during its existence pledged, or will file their own respective tax returnsin the future pledge, except to its assets for the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;benefit of any other Person.
(xxii) No other Person has ever pledged, and Borrower will cause the managersnot permit any other Person to pledge, agents and Borrower’s assets for such other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; andPerson’s benefit.
(xxiii) No other Person has ever identified, and Borrower will not buy or hold evidence of indebtedness issued by permit any other Person (to identify, Borrower as a division of any other than cash or investment-grade securities)Person.
(ixxiv) If Borrower is a limited partnership or liability company, at least one member of Borrower shall be a Single Purpose Entity (the “SPE Member”), and only the SPE Member may be designated as managing member. If Borrower is a limited liability company, Borrower shall at all times either be member managed or be managed by a Board of Directors or Board of Managers and shall have at least one (other than a single 1) springing member limited liability company), each general partner or managing that will become the member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in of Borrower and each such SPC Party upon the dissolution of the last remaining member of Borrower. The SPE Member of Borrower will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, warranties and covenants contained in this Section 3.1.24 4.1.(s) as if such representation, warranty or covenant was made directly by such SPC Partythe SPE Member. Upon the withdrawal withdrawal, removal or the disassociation of an SPC Party the SPE Member from Borrower, Borrower shall immediately cause the SPE Member to appoint a new SPC Party member whose articles of incorporation or articles of organization are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity ownersSPE Member.
(iixxv) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of BorrowerIntentionally Omitted.
(dxxvi) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwiseIntentionally Omitted.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do not and incidental personal property necessary for the ownership, operation, leasing, management and/or maintenance of the Property.
(b) Borrower will not engage in any business other than the ownership ownership, financing, management, operation, leasing, maintenance and sale of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management other activities incidental thereto (in connection each case in accordance with the Condominium Documents;
(iii) except for capital contributions terms and capital distributions permitted under the terms provisions of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine other Loan Documents).
(c) Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement (other than the Exchange Documents) with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business in amounts not equipment and other personal property used on the Property; provided that (A) any Indebtedness incurred pursuant to exceed in the aggregate $2,000,000.00, subclause (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are ii) shall be (x) not more than sixty (60) days past the date incurredincurred and (y) incurred in the ordinary course of business, are and (B) any Indebtedness incurred pursuant to subclauses (ii) and (iii) in an aggregate amount not evidenced by a note and are paid when due; and no to exceed, at any one time, three percent (3%) of the original principal balance of the Loan. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
(vi) are and will remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective assets as the same shall become due;
(vii) have done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their existence, and will not, nor will permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement or other organizational documents of such constituent party without the prior consent of Lender;
(viii) will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;
(ix) will be, and at all times will hold themselves out to the public as, legal entities separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their status as separate entities, shall conduct business in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;
(x) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective size and character and in light of their respective contemplated business operations;
(xi) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) will not commingle their respective funds and other assets with those of any Affiliate or constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) has and will maintain their respective assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective individual assets from those of any Affiliate or constituent party or any other Person;
(xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Loan Agreement (Brookfield DTLA Fund Office Trust Investor Inc.)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants that, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i) do not own and will not own have or create any asset or property subsidiaries other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;
(ii) do not and will pursuant to a Permitted Reorganization. The General Partner shall not engage in any business or operate for any purpose other than the ownership as a general or limited partner of the Collateral, Borrower (provided that the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;
(iii) except for capital contributions and capital distributions General Partner may hold assets permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any Affiliate, any constituent party or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;
(iv) have not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness other than the Debt may be secured (subordinate, pari passu or otherwise) by the Collateral, proviso following clause (xiii) of the First Mezzanine Collateral or the Property, as applicable;
(vdefinition of "Single Purpose") have not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
(vi) are and will remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective assets as the same shall become due;
(vii) have done or have caused to at all times be done and will do all things necessary to observe organizational formalities and preserve each of their existence, and will not, nor will permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement or other organizational documents of such constituent party without the prior consent of Lender;
(viii) will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any a Single Purpose entity; provided, however, that Borrower’sit is understood that, Mortgage Borrower’s notwithstanding the provisions of clauses (ii), (iii), (v) and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (avi) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the definition of "Single Purpose" contained herein (as such clauses relate to the period from the date of formation of the General Partner and the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are to the date hereof), (A) separate financial statements for the General Partner have not available heretofore been produced on a regular basis, but the financial records of the General Partner have been and will remain adequate to satisfy the debts and other obligations permit production of such Affiliate or any other Person separate financial statements (including balance sheets and (bstatements of income and changes in financial position) for past periods if it hereafter becomes necessary to produce such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;
(ix) will befinancial statements, and separate financial statements for the General Partner will hereafter be prepared on an annual basis; (B) because of the limited nature of the General Partner's operations it has not at all times will hold themselves out to the public as, legal entities heretofore maintained separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their status as separate entities, shall conduct business deposit accounts in their its own name, shall but it has recently established and will maintain such accounts, consistent with the covenants contained in Section 5.10(i) hereof; (C) certain transaction and overhead costs incurred by the Borrower, the General Partner and/or Host Marriott may not identify themselves or any of their Affiliates as a division or part heretofore have been allocated, but such costs hereafter will be fairly allocated; (D) except for (1) obligations of the other Borrower for which it is liable in its capacity as General Partner and shall maintain (2) any accrued obligations to Affiliates in connection with the allocation of costs for shared overhead and utilize office expenses, the General Partner neither has nor expects to have any debt obligations, and (E) prior to 1989, the Borrower was not able to make all payments required under the Bank Debt as they became due, and the Borrower incurred approximately $13 million in liability to Host Marriott in connection with (or in lieu of) advances by Host Marriott under a separate telephone number guaranty of the Bank Debt, for which the Borrower remains liable and separate stationery, invoices and checks bearing their own name;
which constitutes Permitted Debt of the kind referred to in clause (xiv) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business definition of their respective size and character and in light of their respective contemplated business operations;
that term herein. Neither Borrower nor the General Partner will: (xii) will not seek or effect nor permit consent to any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation consolidation, merger or merger, in whole sale of all or in part, substantially all of its assets; (ii) fail to correct any of them;
known misunderstanding regarding its separate identity; (xiiiii) will not commingle their respective its funds and or other assets with those of any Affiliate other Person (except as specifically contemplated by the Cash Management Procedures); (iv) assume or constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) has and will maintain their respective assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective individual assets from those of any Affiliate or constituent party or any other Person;
(xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not or hold themselves out to be responsible for or have their respective its credit as being available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash as permitted by the Loan Documents); (v) acquire obligations or investment-grade securities).
securities of its partners or shareholders, as the case may be; (ivi) If Borrower is a limited partnership or a limited liability company, (pledge any of its assets for the benefit of any other Person other than the Lender (except for purchase money security interests or as otherwise permitted by the Loan Documents); (vii) make any loans to any other Person (except advances of Permitted Debt by the General Partner or its Affiliates to the Borrower); (viii) identify its partners or shareholders, as the case may be, or any of its Affiliates as a single member limited liability company), each general partner division or managing member part of it (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in except for inclusion of the Borrower and each such SPC Party will at all times comply, the General Partner in consolidated financial statements of Host Marriott); (ix) engage (either as transferor or transferee) in any material transaction with any Affiliate other than for fair value and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially on terms similar to those obtainable in arms-length transactions with unaffiliated parties, or engage in any transaction with any Affiliate involving any intent to hinder, delay or defraud any entity; (x) engage in any business activity or operate for any purpose other than as stated in Section 2.03 of such SPC Party its Partnership Agreement and deliver a new non-consolidation opinion to Article THIRD of the Rating Agency or Rating AgenciesGP Certificate, as applicable, with respect to in each case as in effect on the new SPC Party and date hereof or (xi) without the consent of all its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent all the directors (eachof its General Partner, an “Independent Director”) and professional independent managers (eachas applicable, an “Independent Manager”) including the consent of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney file a bankruptcy or counsel of such SPC Party, insolvency petition or otherwise institute bankruptcy proceedings. Borrower or will not acquire any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member assets not related to the business and operation of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwiseHotels.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Loan Agreement (Courtyard by Marriott Limited Partnership)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of (i) its property or its ownership interests interest in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;
and (ii) do not and incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed excess of Four Million and No/100 Dollars ($4,000,000.00) in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness other than the Debt may be secured (subordinate, pari passu or otherwise) by the Collateral, the First Mezzanine Collateral or the Property, incurred as applicable;
(v) have not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
(vi) are and will remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective assets as the same shall become due;
(vii) have done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their existence, and will not, nor will permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement or other organizational documents of such constituent party without the prior consent of Lender;
(viii) will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;
(ix) will be, and at all times will hold themselves out to the public as, legal entities separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their status as separate entities, shall conduct business matters in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;
(x) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective size and character and in light of their respective contemplated business operations;
(xi) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) will not commingle their respective funds and other assets with those of any Affiliate or constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) has and will maintain their respective assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective individual assets from those of any Affiliate or constituent party or any other Person;
(xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
subclause (ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon above and not more than sixty (60) days from the dissolution of such sole member or date due as to the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, matters in subclause (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.above and
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, BorrowerBorrower has not at any time, Mortgage Borrower does not presently, and First Mezzanine Borrowershall not:
(ia) do not own and will not own any asset or property other than (i) the Property and assets related to the acquisition, ownership, development, leasing, use, management or operation of its the Property and (ii) incidental personal property necessary for the acquisition, ownership, development, leasing, use, management or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or operation of the Property, as applicable;
(iib) do not and will not engage in any business other than unrelated to the ownership acquisition, ownership, development, leasing, use, management or operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;
(iiic) except for capital contributions the Permitted Encumbrances and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrowerother contracts or agreements disclosed in writing to Lender, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available in a comparable transaction on an arm’sarms-length basis with third parties other than any such party;
(ivd) have not incurred and will not incur any Indebtedness, secured Indebtedness or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) obligations under operating leases other than (Ai) the LoanDebt and all other sums due by Borrower under this Agreement or any other Loan Documents, (ii) unsecured trade payables, operating leases with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, Property and operational debt not evidenced by a note and in an aggregate amount not exceeding one percent (1%) of the Mortgage Loan, with respect to Mortgage Borroweroriginal principal amount of the Loan at any one time, (Biii) Indebtedness incurred in the financing of equipment and other personal property used on the Property with respect to Mortgage Borrower, annual payments not exceeding $5,000,000 in the Heritage Intercompany Loan aggregate; and (Civ) liabilities the obligation to make termination payments or reimburse rent payable by the tenants of the Property under the agreements entered into with existing or prospective tenants of the Property with Lender’s approval; and (v) tenant improvement allowances or similar concessions to tenants of the Property pursuant to Leases; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) paid within sixty (60) days of the date incurred and (y) incurred in the ordinary course of Borrower’s business and any obligations under operating leases which shall be paid in amounts not to exceed in the aggregate $2,000,000.00, (when combined accordance with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no terms. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;
(ve) have not except for advances made and will not to or for the benefit of Tenants for tenant improvement allowances or similar concessions pursuant to the Leases currently existing at the Property on the date hereof as disclosed on Schedule I attached hereto or Leases entered into after the date hereof in accordance with this Agreement, make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
(vif) are and will fail to remain solvent and will or fail to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become duedue to the extent it has adequate funds to do so;
(viig) have done or have caused fail to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender’s consent;
(viiih) will fail to maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower’s assets will not permit its assets to be listed as or list its assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;
(ixi) fail to file its own (or consolidated) tax returns (to the extent Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person, except where Borrower is required to file consolidated tax returns by applicable Legal Requirements.
(j) fail to maintain its books, records, resolutions and agreements as official records;
(k) fail to be, and at all times will or fail to hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate or any constituent partyparty of Borrower), shall fail to correct any known misunderstanding regarding their its status as a separate entitiesentity, shall fail to conduct business in their its own name, or fail to maintain and utilize separate stationery, invoices and checks bearing its own name, and Borrower shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own nameother;
(xl) will fail to use commercially reasonable efforts to maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations; provided, however, the foregoing shall not require the members of Borrower to make any additional capital contributions to Borrower;
(xim) will not seek or effect nor permit any constituent party to the fullest extent permitted by law, seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of Borrower nor permit any constituent party of Borrower to do any of themthe foregoing;
(xiin) will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or any constituent party of Borrower or any other Person, and will hold all of their respective its assets in its own name;
(xiiio) has and will fail to maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party of Borrower or any other Person;
(xivp) will not guarantee or become obligated for the debts of any other Person and does not and will not or hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), fail to cause each general partner or managing member (each, an “SPC Party”) shall to be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.;
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall fail to have at least two (2) springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dq) Borrower shall at all times fail to cause there to be at least one (1) two duly appointed member members of the board of directors or independent managers who is are provided by a nationally recognized company that provides professional independent directors or manager (each, an “Independent Director”) and professional independent managers (each, an ” or “Independent Manager”) of Borrower or any such each SPC Party and Borrower reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or and Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent DirectorDirector or Independent Manager), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of themthem (other than its fees and charges for serving as an Independent Director or Independent Manager of the SPC Party), (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other PersonPerson prohibited by clause (i) or (ii) above, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other PersonPerson prohibited by clause (i) or (ii) above. As used (For purposes of this subclause (o), the term “Affiliate” means any person controlling, under common control with, or controlled by the person in this definition, question; and the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.) A natural person who satisfies the foregoing definition other than subparagraph (ii) shall not be disqualified from serving as an Independent Director or Independent Manager of the SPC Party if such individual is an independent director or independent manager provided by a nationally-recognized company that provides professional independent directors or independent managers and that also provides other corporate services in the ordinary course of its business. A natural person who otherwise satisfies the foregoing definition except for being the independent director or independent manager of a “special purpose entity” affiliated with the borrower that does not own a direct or indirect equity interest in the borrower or any co-borrower shall not be disqualified from serving as an Independent Director or Independent Manager of the SPC Party if such individual is at the time of initial appointment, or at any time while serving as a Independent Director or Independent Manager of the SPC Party, an Independent Director or Independent Manager of a “special purpose entity” affiliated with the Borrower or the SPC Party (other than any entity that owns a direct or indirect equity interest in borrower or any co-borrower) if such individual is an independent director or independent manager provided by a nationally-recognized company that provides professional independent directors or independent managers. For purposes of this paragraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in the SPC Party’s organizational documents.
(er) Borrower shall not cause or permit the board of directors or managers of any SPC Party and or Borrower to take any action which, under the terms of any certificate of incorporation, by-laws by‑laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors or managers of each SPC Party and Borrower unless at the time of such action there shall be at least two (2) members of the board of directors or managers who are each an Independent DirectorDirector or Independent Manager.
(s) fail to conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(t) permit any Affiliate or constituent party of Borrower independent access to its bank accounts.
(u) fail to pay the salaries of its own employees (if any) from its own funds to the extent it has adequate funds to do so and maintain a sufficient number of employees (if any) in light of its contemplated business operations; provided, however, the foregoing shall not require the members of Borrower to may any additional contributions to Borrower.
(v) fail to compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
(ii) do not incidental personal property necessary for the ownership or operation of the Property and (iii) Permitted Investments, cash and cash equivalents.
(b) Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any such constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;, and Borrower represents and warrants that the terms and conditions of the Lease and Master Supervisory Agreement entered into between Borrower and one or more of its Affiliates relating to the health club facilities at the Property (collectively, the “Health Club Documents”) meet the requirements of this clause (c) in light of the economics of the health club facilities at the Property and the REIT rules affecting (directly or indirectly) Borrower.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business in amounts not equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to exceed in the aggregate $2,000,000.00, subclauses (when combined with liabilities of Mortgage Borrower ii) and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are (iii) shall be (x) not more than sixty (60) days past due, (y) incurred in the date incurred, are ordinary course of business and (z) not evidenced by a note and are paid when due; and no more than three percent (3%) of the outstanding principal amount of the Loan at any one time. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;except that any permitted equipment financing or equipment lease may be secured by such equipment.
(ve) have Borrower has not made and will not make any loans or advances to any third party other Person (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;Affiliates or owners.
(vif) are Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe all applicable organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower without the prior consent of Lender in any manner that (i) violates or is inconsistent with any of the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and other Person. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its any Affiliate provided that (ai) appropriate notation shall be made inclusion on such consolidated financial statements statement is in accordance with the requirements of GAAP (or such other accounting method reasonably acceptable to indicate Lender), (ii) such consolidated financial statement shall contain a footnote to the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate effect that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person owned by Borrower and (biii) such assets shall also be are listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns unless Borrower is a tax-disregarded entity not required to file tax returns under applicable law and if Borrower is a corporation will not file a consolidated federal income tax return with any other Person. Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall at all times have at least either a Delaware corporation or two (2) Independent Directors as Borrower’s springing members, each of member(s) which, upon the dissolution of such the sole member of Borrower or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member the sole member(s) of Borrower.
(dp) Borrower shall at all times cause there to be at least one (1) two duly appointed member members of the board of directors or independent of each SPC Party (if any) or, if Borrower is a single member Delaware limited liability company, at least two duly appointed managers of Borrower who is in each case are provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or manager of such Borrower, and may not have been at any time during the preceding five (5) years years
(i) a stockholder, director (other than as an Independent DirectorDirector of such SPC party), officer, membermanager (other than as Independent Director of Borrower, trusteeif Borrower is a single member limited liability company), employee, partner, member, attorney or counsel of such SPC Party, Borrower or any Affiliate of either any of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them (other than a Person provided to serve as Independent Director by a company that provides professional independent directors or other general corporate services to Borrower, such SPC Party or any Affiliate of either of them), (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise. A natural person who satisfies the foregoing definition except for being the independent director or manager of an Affiliate of Borrower and/or of a SPC Party shall not be disqualified from serving as an Independent Director of Borrower or SPC Party, as applicable, if such Affiliate is a special purpose entity that does not own a direct or indirect equity interest in Borrower or any co-borrower with Borrower, if any, and if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors. For purposes of this paragraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in this Section 3.1.24.
(eq) Borrower shall not cause or permit the board of directors of any SPC Party and or Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a unanimous vote of the board of directors of each SPC Party and and/or Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all material respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of Borrower and any SPC Party.
(s) Borrower will not permit any Affiliate or constituent party independent access to its bank accounts, other than Manager (including its authorized employees) in accordance with the Management Agreement.
(t) Borrower shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
(v) Borrower shall allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including for shared office space and for services performed by any employee of an Affiliate.
(w) Borrower shall not pledge its assets for the benefit of any other Person (other than (x) to Lender with respect to the Loan and (y) equipment secured by permitted equipment financings or equipment leases) and Borrower shall not engage in any sale or transfer of its assets outside the ordinary course of its business or in violation of this Agreement and the other Loan Documents.
(x) Borrower shall not buy or hold evidence of indebtedness issued by any other Person (other than cash and investment-grade securities).
(y) Borrower shall not form, acquire or hold any subsidiary or own any equity interest in any other entity.
(z) Neither Borrower nor SPC Party shall, without the affirmative vote of the managing member and the board of directors of Borrower or of such SPC Party, as applicable, including both Independent Directors of Borrower or of SPC Party, as applicable:
(i) File or consent to the filing of any bankruptcy, insolvency or reorganization case or proceeding; institute any proceedings under any applicable insolvency law or otherwise seek relief under any laws relating to the relief from debts or the protection of debtors generally, on behalf of Borrower or of SPC Party;
(ii) Seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for SPC Party or Borrower or a substantial portion of either of their properties;
(iii) Make any assignment for the benefit of the creditors of SPC Party or Borrower; or
(iv) Take any action in furtherance of any of the foregoing.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do not and incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed contemplated to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrowerunsecured trade payables and operational debt not evidenced by a note, the Heritage Intercompany Loan and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business in amounts not equipment and other personal property used on the Property provided that any Indebtedness incurred pursuant to exceed in the aggregate $2,000,000.00, subclauses (when combined with liabilities of Mortgage Borrower ii) and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are (iii) shall be (x) paid not more than sixty (60) days past from the date incurredincurred as to the matters in subclause (ii) above and not more than sixty (60) days from the date due and payable as to the matters in subclause (iii) above, are (y) incurred in the ordinary course of business and (z) not evidenced by in excess of $6,000,000 in the aggregate (which amount shall exclude the cost of any Capital Expenditures), and (iv) the obligations of Borrower pursuant to the Seller Sharing Agreement and the Tax Sharing Agreement and Borrower’s delivery to the City of Chicago of a note and are paid when due; and no $250,000 letter of credit required in connection with the assignment to Borrower of the Conduit Path Agreement. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will use commercially reasonable efforts to remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns and will not file a consolidated federal income tax return with any other Person unless, in each instance, Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law. Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Borrower will use commercially reasonable efforts to maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two one springing membersmember (a corporation 100% owned by the sole member of Borrower), each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower.
(dp) Borrower shall at all times cause there to be at least one (1) two duly appointed member members of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “are Independent Director”) and professional independent managers (each, an “Independent Manager”) Directors of Borrower or any such each SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power reasonably satisfactory to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwiseLender.
(eq) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all material respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, in all material respects, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(s) Borrower will not permit any Affiliate or constituent party independent access to its bank accounts.
(t) Borrower shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) Fee Borrower and Leasehold Borrower do not own and will not own any asset or property other than operation of its property or its ownership (i) their respective interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;
and (ii) do not and incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed excess of Four Million and No/100 Dollars ($4,000,000.00) in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are incurred as to the matters in subclause (ii) above and not evidenced by a note more than sixty (60) days from the date due as to the matters in subclause (iii) above and are paid when due; and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) Fee Borrower and Leasehold Borrower are and will remain solvent and Fee Borrower and Leasehold Borrower will pay its their respective debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;'s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower's assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s 's assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's own separate balance sheet;. Borrower will file its own tax returns (to the extent Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person. Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective credit make its assets available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If either of Fee Borrower or Leasehold Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), each general partner or managing member (each, an “"SPC Party”") shall be a corporation whose sole asset is its interest in Fee Borrower or Leasehold Borrower, as applicable, and each such SPC Party will at all times comply, and will cause Fee Borrower or Leasehold Borrower, as applicable, to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Fee Borrower or Leasehold Borrower, as applicable, Fee Borrower or Leasehold Borrower, as applicable, shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If either of Fee Borrower or Leasehold Borrower is a single member Delaware limited liability company, Fee Borrower or Leasehold Borrower, as applicable, shall have at least two springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Fee Borrower or Leasehold Borrower, as applicable, shall immediately become a the sole member of Fee Borrower or Leasehold Borrower, as applicable, and the other of which shall become the sole member of Fee Borrower or Leasehold Borrower, as applicable, if the first such springing member no longer is available to serve as such sole member.
(dp) Fee Borrower and Leasehold Borrower shall at all times cause there to be at least one (1) two duly appointed member members of the board of directors (or independent two special managers if Fee Borrower or Leasehold Borrower is a limited liability company) who is are provided by a nationally nationally-recognized company that provides professional independent directors (each, an “"Independent Director”) and professional independent managers (each, an “Independent Manager”") of each SPC Party, Fee Borrower or any such SPC Party and Leasehold Borrower reasonably satisfactory to Lender who shall not have been at the time of such individual’s 's appointment or at any time while serving as a director or manager of such SPC Party or Party, Fee Borrower and Leasehold Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Fee Borrower, Leasehold Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Fee Borrower, Leasehold Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. A natural person who otherwise satisfies the foregoing definition of Independent Director except for being the independent director, manager or special member of a "special purpose entity" affiliated with the Fee Borrower or Leasehold Borrower that does not own a direct or indirect equity interest in either Fee Borrower or Leasehold Borrower shall not be disqualified from serving as an Independent Director if such individual is at the time of initial appointment, or at any time while serving as an Independent Director, an Independent Director of a "special purpose entity" affiliated with either Fee Borrower or Leasehold Borrower (other than any entity that owns a direct or indirect equity interest in either Fee Borrower or Leasehold Borrower) if such individual is an independent manager, director or special member provided by a nationally-recognized company that provides professional independent managers, directors or special members. As used in this definition, the term “"control” " means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(eq) Borrower shall not cause or permit the board of directors of any SPC Party and Party, Fee Borrower or Leasehold Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Fee Borrower, Leasehold Borrower or SPC Party, requires a vote of the board of directors or managers of each SPC Party Party, Fee Borrower and Leasehold Borrower unless at the time of such action there shall be at least two board members or managers who are each an Independent Director.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(s) Borrower will not permit any Affiliate or constituent party access to its bank accounts except as required for the conduct of Borrower's business.
(t) Borrower shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants that, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single been formed for the sole purpose entity of owning and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents Collateral Asset. From and warrants, and covenants that, as of after the date hereof and until such time as the Debt Loan shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i) do Borrower has not own and will not own any asset or property other than (i) the Collateral Asset, and (ii) incidental personal property necessary for the ownership or operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;Collateral Asset.
(ii) do Borrower has not and will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Asset and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any Affiliate, any constituent party or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;
(iv) have has not incurred and will not incur any Indebtednessindebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) other than (AX) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower(Y) unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding $100,000 at any one time, and the Mortgage Loan, with respect to Mortgage Borrower, (BZ) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities indebtedness incurred in the ordinary course financing of Borrower’s business in amounts equipment and other personal property used on the Collateral Asset with annual payments not to exceed exceeding $100,000 in the aggregate $2,000,000.00aggregate, provided that any indebtedness incurred pursuant to subclauses (when combined with liabilities of Mortgage Borrower Y) and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are (Z) shall be (1) not more than sixty (60) days past due and (2) incurred in the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness ordinary course of business. No indebtedness other than the Debt Loan may be secured (subordinate, pari passu or otherwise) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;Asset.
(viv) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s length basis with third parties other than any such party and upon terms acceptable to Lender in its sole discretion.
(v) Borrower shall not acquire obligations or securities of its Affiliates;.
(vi) are As of the date hereof, Borrower is and will remain solvent and will is able to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(vii) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and will notneither party will, nor will it permit any constituent party to, amend, modify or - 29 - otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement agreement, trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender;Lender in any manner that violates the covenants set forth in this Section 6.14).
(viii) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Except for Guarantor, Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;Person.
(ix) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(x) will maintain Borrower maintains adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xi) will not seek or effect Neither Borrower, nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any Borrower, or transfer or otherwise dispose of them;all or substantially all of its assets.
(xii) Borrower will not commingle their respective its funds and other assets with those of any Affiliate or constituent party or any other PersonPerson (provided, however, property manager of the Collateral Asset may do so), and will hold all of their respective its assets in its own name;, other than as permitted under the Loan Documents.
(xiii) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xiv) Except for the Loan, Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;.
(xv) Borrower will not permit any Affiliate or constituent party independent access to their respective its bank accounts;.
(xvi) if they respectively employ any employees of their own, Borrower will pay the salaries of any such its own employees (if any) from their its own respective funds;funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(xvii) Borrower will compensate each of their own its consultants and agents from their funds generated by the Collateral Asset or from other sources for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities)Collateral Asset.
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Loan Agreement (Inland Diversified Real Estate Trust, Inc.)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do not and incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower will not engage in any business other than the ownership ownership, leasing, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business in amounts not equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to exceed in the aggregate $2,000,000.00, subclauses (when combined with liabilities of Mortgage Borrower ii) and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are (iii) shall be (x) not more than sixty (60) days past due subject to Borrower's right to contest same pursuant to Section 4.1.2 hereof, (y) not in excess of Ten Million and No/100 Dollars ($10,000,000.00) in the date incurred, are not evidenced by a note aggregate and are paid when due; and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;'s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower's assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s 's assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on in the footnotes to such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's own separate balance sheet;sheet although Borrower shall not be required to disclose with specificity Borrower's assets separately on the consolidated financial statements. Borrower will file its own tax returns (to the extent Borrower is required to file any such tax returns).
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;other.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;.
(xvo) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act shall at all times with respect to during the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance term of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall Loan be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, . Borrower shall have at least two springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower shall at all times cause there to be at least one (1) two duly appointed member members of the its board of directors or independent managers who is are provided by a nationally nationally-recognized company that provides professional independent directors (each, an “"Independent Director”) and professional independent managers (each, an “Independent Manager”") of Borrower or any such SPC Party reasonably satisfactory to Lender who shall not have been at the time of such individual’s 's appointment or at any time while serving as a director an Independent Director on the board of such SPC Party or directors of Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholderan equity holder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of themBorrower, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of themBorrower, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholderequity holder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. A natural person who satisfies the foregoing definition other than subsection (ii) shall not be disqualified from serving as an Independent Director if such individual is an independent manager provided by a nationally-recognized company that provides professional independent managers, directors or special members and that also provides other corporate services in the ordinary course of its business. A natural person who otherwise satisfies the foregoing definition of Independent Director except for being the independent director, manager or special member of a "special purpose entity" affiliated with the Borrower that does not own a direct or indirect equity interest in the Borrower shall not be disqualified from serving as an Independent Director if such individual is at the time of initial appointment, or at any time while serving as an Independent Director, an Independent Director of a "special purpose entity" affiliated with the Borrower (other than any entity that owns a direct or indirect equity interest in the Borrower) if such individual is an independent manager, director or special member provided by a nationally-recognized company that provides professional independent managers, directors or special members. As used in this definition, the term “"control” " means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(eq) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC PartyBorrower, requires a unanimous vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower.
(s) Borrower will not permit any Affiliate or constituent party independent access to its bank accounts.
(t) Borrower shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Samples: Loan Agreement (Kindercare Learning Centers Inc /De)
Single Purpose. (a) Borrower hereby represents ENTITY COVENANTS On and warrants to, and covenants that, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, as of the date hereof and until such time as the Debt shall be paid at all times while this Agreement or any Transaction hereunder is in fulleffect, Borrower, Mortgage Borrower and First Mezzanine Borrower:
Seller covenants that: (i) do not Seller shall own no assets, and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;
(ii) do not and will shall not engage in any business business, other than the ownership of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;
(iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrowerthe Purchased Assets (including Eligible Assets which Seller intends to sell to Purchaser subject to a Transaction hereunder), the Heritage Intercompany Loan, the Development Feethose Purchased Assets which have been repurchased from Purchaser by Seller (provided that such Purchased Assets are transferred promptly to an entity other than Seller after such repurchase), and other assets incidental to the Deferred -49- Development Feeorigination, have not acquisition, ownership, financing and will not enter into any contract or agreement with any Affiliate, any constituent party or any Affiliate disposition of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;
the Purchased Assets; (ivii) have not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness other than the Debt may be secured (subordinate, pari passu or otherwise) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;
(v) have not made and will Seller shall not make any loans or advances to any Affiliate or third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
Affiliates (viin each case, other than advances under the Purchased Assets (or Eligible Assets which Seller intends to sell to Purchaser subject to a Transaction hereunder) are and will remain solvent and will to Mortgagors or Mezzanine Borrowers or otherwise in connection therewith); (iii) Seller shall pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from their respective its own assets as the same shall become due;
; (viiiv) have done or have caused to be done and will Seller shall comply with the provisions of its organizational documents in all material respects; (v) Seller shall do all things necessary to observe its organizational formalities and to preserve each of their its existence, and will not, nor will permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement or other organizational documents of such constituent party without the prior consent of Lender;
; (viiivi) will Seller shall maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and will not permit its assets (except that such financial statements may be consolidated to be listed the extent consolidation is permitted or required under GAAP or as assets on the financial statement a matter of any entityRequirements of Law; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower Seller from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine BorrowerSeller’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine BorrowerSeller’s own separate balance sheet;
) and file its own tax returns, if any (ixexcept to the extent 54 consolidation is required or permitted under Requirements of Law, such as in the case of a disregarded entity); (vii) will Seller shall be, and at all times will shall hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate or any constituent partyAffiliate), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, and shall not identify themselves itself or any of their its Affiliates as a division or part of the other and other; (viii) Seller shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;
(x) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;
operations and shall remain solvent; provided, that the foregoing shall not require any member, partner or shareholder of Seller to make any additional capital contributions to Seller; (xiix) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) will Seller shall not commingle their respective its funds and or other assets with those of any Affiliate or constituent party or any other Person, Person and will hold all of their respective assets in shall maintain its own name;
(xiii) has properties and will maintain their respective assets in such a manner that it will would not be costly or difficult to segregateidentify, segregate or ascertain or identify their respective individual its properties and assets from those of any Affiliate or constituent party or any other Personothers; (x) Intentionally Omitted;
(xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Master Repurchase Agreement
Single Purpose. (a) Each Borrower and Operating Lessee hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants Lender that, as of the date hereof hereof, at all times prior hereto and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrowerfull or its property is no longer subject to the Lien securing the Debt:
(i) do It has not own owned and will not own any asset property or property any other assets other than (A) with respect to the Borrower, the Properties currently owned by it, and (B) with respect to the Borrower and the Operating Lessee, incidental personal and intangible property relating to the ownership, leasing or operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicableProperties;
(ii) do It was formed solely for the purpose of engaging in, and has not engaged and will not engage in in, any business other than the ownership ownership, leasing, management, financing and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium DocumentsProperties;
(iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have It has not entered and will not enter into any contract or agreement with any Affiliateof its Affiliates (other than the Loan Documents and the Operating Leases), any of its constituent party parties or any Affiliate of any constituent party, except contracts or agreements that are upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarm's-length basis with third parties other than any such partyparties;
(iv) have not incurred and It will not incur any Indebtednessindebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) ), other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred Permitted Indebtedness. Except as set forth in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00immediately preceding sentence, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by any Property and no indebtedness other than the Collateral, Debt and the First Mezzanine Collateral indebtedness described in clauses (iii) and (vi) of the definition of Permitted Indebtedness may be secured (subordinate or the Property, as applicablepari passu) by any personal property;
(v) have not made and Other than as provided in the Loan Documents, it will not make any loans or advances to to, and it will not pledge its assets for the benefit of, any third party other Person (including any Affiliate or constituent party or any Affiliate of any constituent party), and shall not acquire obligations or securities of its Affiliatesany Affiliate or constituent party or any Affiliate of any constituent party;
(vi) are It is and will remain solvent and it will pay its debts and liabilities (including, as applicable, shared personnel including employment and overhead expenses) from their respective its assets as the same shall become due;
(vii) have It has done or have caused to be done and will do all things necessary to observe organizational limited liability company formalities (in all material respects), as the case may be, and preserve each of their its existence, and it will not, nor will it permit or suffer any constituent party to, to amend, modify or otherwise change the its partnership certificate, partnership agreement, certificate of formation (except as required by law), limited liability company agreement, articles of incorporation and bylaws, certificate of formation, operating agreement trust or other organizational documents or those of such constituent party without the prior consent of Lenderin a manner which would adversely affect its existence as a Single Purpose Entity;
(viii) It has and will maintain all of its books, books and records, financial statements and bank accounts as official records, separate and apart from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and it will file its own tax returns (b) such assets shall also be listed on except to the Borrower’sextent consolidation is required under GAAP, Mortgage Borrower’s and/or First Mezzanine Borrower’s own permitted for tax purposes or as a matter of law, provided that any consolidated financial statements contain a note indicating that it and its Affiliates are separate balance sheetlegal entities and maintain records, books of account and accounts separate and apart from any other Person);
(ix) It has and will be, and at all times has held and will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any of its Affiliates, any of its constituent parties or any Affiliate or of any constituent party), has and shall conduct business in its own name, has and shall exercise reasonable efforts to correct any known misunderstanding actually known to it regarding their status as its separate entitiesidentity, shall conduct business in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and has and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own nameand it will reasonably allocate any overhead that is shared with any Affiliate, including, but not limited to, paying for shared office space and services performed by any officer or employee of an Affiliate;
(x) It has and will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;
(xi) will not seek or effect To the fullest extent permitted by law, neither it nor permit any constituent party to has nor will seek any Borrower's or effect the liquidation, dissolution, Operating Lessee's dissolution or winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) It does not and will not commingle their respective its funds and other assets with those of any Affiliate or constituent party or any Affiliate of any constituent party or any other PersonPerson except that each Borrower and Operating Lessee may commingle its funds with the funds of the other Borrowers and Operating Lessees in the Deposit Account, in the Holding Account, in the Tax and will hold all Insurance Escrow Account and in each of their respective assets in its own namethe other Reserve Accounts;
(xiii) It has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any Affiliate of any constituent party or any other Person;
(xiv) will not guarantee or become obligated for Except in its capacity as a co-obligor under the debts of any Notes together with the other Person and Borrowers, if applicable, it does not and will not hold themselves itself or its credit out to be responsible for or have their respective credit available to satisfy satisfy, and it has not guaranteed or otherwise become liable for, and has not and will not guarantee or otherwise become liable for, the debts debts, securities or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower If it is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, either (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”a) at least one of its members is and shall be a corporation Single Purpose Entity (the "SPE Member") whose sole asset is assets are its interest in the applicable Borrower or Operating Lessee and each such SPC Party will at all times complythat has no less than a one percent (1%) membership interest in the applicable Borrower or Operating Lessee, and will cause such Borrower or Operating Lessee shall be deemed hereby to comply, with have made each of the representations, warranties, warranties and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, 4.1(bb) with respect to the new SPC Party SPE Member, and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower the SPE Member shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d2) Borrower shall at all times cause there to be at least one (1) Independent Directors as duly appointed member members of the its board of directors or independent (b) it shall have two (2) Independent Directors on its board of managers who is provided by a nationally recognized company that provides professional independent or board of directors (eachas applicable);
(xvi) It has and shall, an “Independent Director”at all times, have a limited liability company agreement which provides that, for so long as the Loan is outstanding and the applicable Borrower's Property remains subject to the Lien securing the Debt, its board of directors (or (a) and professional independent managers (each, an “Independent Manager”) of if such Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as Operating Lessee is a director of such SPC Party or Borrowerlimited liability company with a managing member SPE Member, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and the SPE Member or (b) if such Borrower or Operating Lessee is a board managed limited liability company with two (2) Independent Directors on its board of directors) will not be permitted to take any action which, under applicable law or the terms of any certificate of incorporationincorporation or certificate of formation, limited liability company agreement, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Partystock, requires a the vote of the its board of directors of each SPC Party and Borrower directors, unless at the time of such action there shall be at least two members of such board who are Independent Directors; provided, however, that, subject to any applicable Legal Requirement, its board of directors (or if such Borrower or Operating Lessee is a limited liability company and is not self managed, the board of directors of its SPE Member) may, at its discretion, be permitted to take any action without regard to the preceding clause of this sentence other than the following actions, which actions may not be taken: (A) to the fullest extent permitted by law, dissolve or liquidate, in whole or in part; (B) consolidate or merge with or into any other entity or convey or transfer all or substantially all of its properties and assets to any entity unless the applicable Borrower is releasing that Property from the Lien of the Mortgage or paying off the Loan in accordance with the terms herein; (C) engage in any business other than the ownership, maintenance and operation of the Properties or, with respect to the SPE Member (if applicable), acting as a member of a Borrower or Operating Lessee; (D) institute any proceeding to be adjudicated as bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition or answer or consent seeking reorganization or relief under the Bankruptcy Code or consent to the filing of any such petition or to the appointment of a receiver, rehabilitator, conservator, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of its SPE Member or any Borrower or Operating Lessee or of any substantial part of their property, or ordering the winding up or liquidation of its affairs, or make or consent to an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take any action in furtherance of any of the foregoing; (E) except as required by law, amend its SPE Member's certificate of incorporation (if applicable) or the limited liability company agreement of the applicable Borrower or Operating Lessee, but only to the extent such amendment impacts the Company's status as a Single Purpose Entity; (F) enter into any transaction with an Affiliate not in the ordinary course of the applicable Borrower's or Operating Lessee's business; or (G) withdraw the SPE Member, if applicable, or remove the two (2) Independent Directors of a Borrower or Operating Lessee; provided, however, clause (D) above may be taken with the affirmative consent of the two (2) Independent Directors;
(xvii) It has no liabilities, contingent or otherwise, other than those normal and incidental to the ownership, operation and leasing of the Properties;
(xviii) Each Borrower and Operating Lessee shall conduct its business so that the assumptions made with respect to such Borrower or Operating Lessee in that certain opinion letter dated the date hereof delivered by Xxxxxxxxx Xxxxxxx, LLP addressing substantive non-consolidation and other matters in connection with the Loan shall at all times be true and correct in all respects;
(xix) No Borrower or Operating Lessee will permit any Affiliate or constituent party independent access to its bank accounts except that each Borrower and Operating Lessee may commingle its funds with the funds of the other Borrowers and Operating Lessees in the Deposit Account, in the Holding Account, in the Tax and Insurance Escrow Account and in each of the other Reserve Accounts;
(xx) Each Borrower and Operating Lessee has and shall pay the salaries of its own employees, if any, and maintain a sufficient number of employees in light of its contemplated business operations;
(xxi) Each Borrower and Operating Lessee has and shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred. Upon the withdrawal or the disassociation of the Independent Director from any constituent entity of any Borrower or Operating Lessee (or from a Borrower or Operating Lessee directly), such Borrower or Operating Lessee shall immediately appoint a new director or special member or cause such entity to appoint a new director or special member that satisfies the requirements of an Independent DirectorDirector under this Agreement; and
(xxii) Each Borrower and Operating Lessee is subject to and complies with all of the limitations on powers and separateness requirements set forth in its organizational documentation as of the Closing Date.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the PropertyIndividual Properties, as applicable;
and (ii) do not and incidental personal property necessary for the ownership or operation of the Individual Properties.
(b) Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;Individual Properties.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred any Indebtedness outstanding on the date 0hereof, and will not hereafter incur any Indebtedness, in each case, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities unsecured trade payables incurred in the ordinary course of Borrower’s business business, (iii) debt incurred in amounts connection with capital lease obligations and purchase money financing with respect to equipment and other personal property used on the Individual Properties, provided, however with respect to the Indebtedness referred to in subclauses (ii) and (iii), (A) the same is not to exceed secured by a lien or security interest in the Individual Properties (other than the personal property so financed) and (B) the amount of all Indebtedness in the aggregate incurred pursuant to subclauses (ii) and (iii), shall not exceed $2,000,000.0020,000,000 in the aggregate at any one time outstanding (the Indebtedness referred to in clauses (i), (when combined with liabilities of Mortgage Borrower ii) and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses(iii), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no "PERMITTED INDEBTEDNESS"). No Indebtedness other than the Debt may be secured (subordinate, pari passu subordinate or otherwisePARI PASSU) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;Individual Properties.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expensesexpenses of which Borrower will pay its allocated share) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender;.
(viiih) Except to the extent permitted under the Loan Documents, Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower will not permit prepare separate financial statements, showing its assets to be and liabilities separate and apart from those of any other Person, and not have its assets listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s 's assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's own separate balance sheet;
. Borrower will file its own tax returns (ix) will be, and at all times will hold themselves out to the public as, legal entities separate extent Borrower is required to file any such tax returns) and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their status as separate entities, shall conduct business in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;
(x) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective size and character and in light of their respective contemplated business operations;
(xi) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) will not commingle their respective funds and other assets file a consolidated federal income tax return with those of any Affiliate or constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) has and will maintain their respective assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective individual assets from those of any Affiliate or constituent party or any other Person;
(xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed unless required by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Loan Agreement (Hilton Hotels Corp)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower has not own owned and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
Property and (ii) do incidental personal property necessary for the ownership or operation of the Property; provided, however, Borrower previously owned the Other Property. Borrower hereby warrants and represents that (1) ownership of the Other Property has been transferred to another entity and Borrower has no direct or indirect ownership interest in the Other Property and (2) except as otherwise set forth herein, Borrower has no contingent liabilities in connection with the Other Property.
(b) Borrower has not and will not engage in any business other than the ownership, management and operation of the Property (other than the prior ownership of the Collateral, the First Mezzanine Collateral or the Other Property, as applicable, ) and Borrower has and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have has not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) ), other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (B) with respect that certain loan made on November 2, 2004, in the original principal amount of $6,000,000.00 made by Bank of Scotland to Mortgage BorrowerBorrower secured by the Property and the Other Property (the “Building Loan”), the Heritage Intercompany Loan and (C) liabilities the District Loan, (D) the Reimbursement Obligation (the Building Loan, the Bond Financing and the Reimbursement Obligation, collectively as, the “Prior Loan”), (D) trade and operational indebtedness incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00with trade creditors, provided such indebtedness is (1) unsecured, (when combined with liabilities of Mortgage Borrower 2) not evidenced by a note, (3) on commercially reasonable terms and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses)conditions, which liabilities are and (4) due not more than sixty (60) days past the date incurredincurred and paid on or prior to such date, are and/or (E) Permitted Equipment Leases; provided however, the aggregate amount of the indebtedness described in (D) and (E) shall not evidenced by a note and are paid when due; and no exceed at any time three percent (3%) of the outstanding principal amount of the Debt. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the CollateralProperty. With respect to the Prior Loan, Borrower hereby represents, warrants and covenants that (1) the First Mezzanine Collateral Prior Loan has been satisfied in full, and (2) neither Borrower nor Guarantor have any remaining liabilities or obligations in connection with the PropertyPrior Loan, as applicable;other than (x) environmental and other limited and customary indemnity obligations.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower has paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;; provided, that, in each such case, there exists sufficient cash flow from the Property to do so.
(viig) have Borrower has done or have caused to be done and will do or cause to be done all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower has maintained and will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party party. Borrower’s assets have not and will not permit its assets to be listed as assets on the financial statement of any entityother Person; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower has filed and will file its own tax returns (to the extent Borrower is required to file any such tax returns) and has not and will not file a consolidated federal income tax return with any other Person (it being understood and agreed that the inclusion of the Borrower’s taxable income and tax liabilities in its parent’s tax return, as a result of the Borrower being treated as a disregarded entity for tax purposes, shall not be deemed to be a prohibited consolidated federal income tax return under this subsection). Borrower has maintained and will maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower has been and will be, and at all times has and will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), has and shall correct any known misunderstanding regarding their its status as a separate entitiesentity, has and shall conduct business in their its own name, has not and shall not identify themselves itself or any of their its Affiliates as a division or part of the other and has and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Borrower has and will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;operations (provided that there exists sufficient cash flow from the Property to do so).
(xik) will not seek or effect Neither Borrower nor permit any constituent party to has or will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower has not and will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and has and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower has not and will not guarantee or become obligated for the debts of any other Person and does has not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(io) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability companyan Acceptable Delaware LLC), each general partner or managing member (each, an “SPC Party”) shall be a corporation (I) whose sole asset is its interest in Borrower Borrower, (II) which has not been and each shall not be permitted to engage in any business or activity other than owning an interest in Borrower; (III) which has not been and shall not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (IV) which has and will at all times own at least a 0.5% direct equity ownership interest in Borrower. Each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new nonNew Non-consolidation opinion Consolidation Opinion to the Rating Agency or Rating Agencies, as applicable, Lender with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(dp) Borrower shall at all times cause there to be at least one two (12) duly appointed member members of the board of directors or independent managers of SPC Party or Borrower (to the extent Borrower is a corporation or an Acceptable Delaware LLC) who is are provided by a nationally nationally-recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party reasonably satisfactory to Lender who shall not have been at the time of each such individual’s appointment or at any time while serving as a director or manager of such SPC Party or Borrower, Borrower (as applicable) and may not have been at any time during the preceding five (5) years (i) a stockholder, director or manager (other than than, in each case, as an Independent Director), officer, member, trustee, employee, partner, member, attorney or counsel of such SPC PartyParty (if any), Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC PartyParty (if any), Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling Controlling or under common control Control with any such stockholder, director, manager, officer, employee, partner, member, attorney or counsel, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, manager, officer, member, trustee, employee, partner, creditormember, attorney or counsel, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(eq) Borrower shall not (I) cause or permit the board of directors or managers of any SPC Party and or Borrower (as applicable) to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC PartyParty (as applicable), requires a vote of the board of directors or managers of each Borrower or SPC Party and Borrower (as applicable) unless at the time of such action there shall be at least two (2) members who are each an Independent Directors and (II) without the unanimous written consent of all of its partners or members, as applicable, and the written consent of 100% of the directors or managers of Borrower or each SPC Party (as applicable), including, without limitation, each Independent Director, (1) file or consent to the filling of any petition, either voluntary or involuntary, to take advantage of any state or federal; bankruptcy or insolvency laws, (2) seek or consent to the appointment of a receiver, liquidator or any similar official, (3) take any action that might cause such entity to become insolvent, or (4) make an assignment for the benefit of creditors.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(s) Borrower has not permitted and will not permit any Affiliate or constituent party independent access to its bank accounts.
(t) Borrower has paid and shall pay the salaries of its own employees (if any) from its own funds and has maintained and shall maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower has compensated and shall compensate each of its consultants and agents from its funds for services provided to it and has paid and shall pay from its own assets all obligations of any kind incurred.
(v) Borrower will not permit any of its constituent owners or Affiliates to guaranty or otherwise become obligated in connection with any Indebtedness or other liabilities incurred by Borrower (other than in connection with the guaranties entered into in connection with the closing of the Loan).
(w) Borrower will cause accurate records to be kept of all transactions between Borrower and any constituent owner or Affiliate of Borrower.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the PropertyIndividual Properties, as applicable;
and (ii) do not and incidental personal property or other assets necessary for the ownership or operation of the Individual Properties.
(b) Borrower will not engage in any business other than the ownership ownership, management and operation of the CollateralIndividual Properties, entering into the First Mezzanine Collateral or the Property, Loan as applicable, a co-borrower and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used at the Individual Properties; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) for each Individual Property, not in amounts not to exceed excess of three percent (3%) of the Allocated Loan Amount for such Individual Property in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurredincurred as to the matters in subclause (ii) above and not more than sixty (60) days from the date due as to the matters in subclause (iii) above, are not evidenced by subject only to Borrower’s right to diligently prosecute a note good faith dispute as to amounts due and are paid when due; payable in accordance with the provisions of this Agreement and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by any of the Collateral, the First Mezzanine Collateral or the Property, as applicable;Individual Properties.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entityother Person; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements (or the notes thereto) to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns (to the Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person except to the extent Borrower is a disregarded entity for federal income tax purposes. Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;other.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee guarantee, or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) ), as applicable, shall be a corporation or a Delaware single member limited liability company acceptable to Lender whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower or any SPC Party of Borrower is a single member Delaware limited liability company, Borrower or such SPC Party shall have at least two (2) springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from BorrowerBorrower or such SPC Party, shall immediately become a the sole member of BorrowerBorrower or such SPC Party, and the other of which shall become the sole member of Borrower or such SPC Party if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower shall at all times cause there to be at least one two (12) duly appointed member members of the board of directors or independent managers of each SPC Party and the Borrower who is are provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party which are reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or and Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of themthem (other than as an Independent Director), (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. A natural person who otherwise satisfies the foregoing definition of Independent Director except for being the independent director, manager or special member of a “special purpose entity” affiliated with the Borrower that does not own a direct or indirect equity interest in the Borrower shall not be disqualified from serving as an Independent Director if such individual is at the time of initial appointment, or at any time while serving as an Independent Director, is an independent manager, director or special member provided by a nationally-recognized company that provides professional independent managers, directors or special members. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(eq) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a unanimous vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Non-Consolidation Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Non-Consolidation Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(s) Borrower will not permit any Affiliate or constituent party independent access to its bank accounts other than a Manager approved by Lender, and then in such circumstances, only in accordance with the terms of its respective Management Agreement.
(t) Borrower shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Samples: Loan Agreement (Wells Real Estate Investment Trust Inc)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants that, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i) do not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;
(ii) do not and will not engage in any business other than the ownership of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;
(iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any Affiliate, any constituent party or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;
(iv) have not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness other than the Debt may be secured (subordinate, pari passu or otherwise) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;
(v) have not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
(vi) are and will remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective assets as the same shall become due;
(vii) have done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their existence, and will not, nor will permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement or other organizational documents of such constituent party without the prior consent of Lender;
(viii) will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;
(ix) will be, and at all times will hold themselves out to the public as, legal entities separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their status as separate entities, shall conduct business in their own name, shall not identify themselves or any of their Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;
(x) will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective size and character and in light of their respective contemplated business operations;
(xi) will not seek or effect nor permit any constituent party to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;
(xii) will not commingle their respective funds and other assets with those of any Affiliate or constituent party or any other Person, and will hold all of their respective assets in its own name;
(xiii) has and will maintain their respective assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective individual assets from those of any Affiliate or constituent party or any other Person;
(xiv) will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Second Mezzanine Loan Agreement (KBS Real Estate Investment Trust, Inc.)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i1) do Propco Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property and (2) Opco Borrower does not own and will not own any asset or property other than the personalty and other assets owned by it necessary for the operation of the Property.
(1) Propco Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, Property and (2) Opco Borrower will not engage in any business other than the First Mezzanine Collateral or management and operation of the Property, as applicable, and each Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable (taking into account all facts and circumstances) and either substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;party or a capital contribution or distribution.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed excess of 5% of the outstanding principal amount of the Loan in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are incurred as to the matters in subclause (ii) above and not evidenced by a note more than sixty (60) days from the date due as to the matters in subclause (iii) above and are paid when due; and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, Property other than Indebtedness of the First Mezzanine Collateral or type described in and subject to the Property, as applicable;requirements of clause (iii) of this clause (d).
(ve) have Except as expressly contemplated by the Loan Documents with respect to the other Borrower, Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of any of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay all of its debts and liabilities (including, as applicable, a fairly allocated portion of shared personnel and overhead expenses) only from their respective its own assets and as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities applicable to Borrower and preserve each of their Borrower’s existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower without the prior consent of Lender in any manner that (i) violates or makes such organizational documents inconsistent with the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements (it being acknowledged that the agent under the Cash Management Agency Agreement shall be continuously able to produce separate balance sheets of the Borrowers) and (except as contemplated in the Cash Management Agency Agreement) bank accounts as official records, separate from those of its Affiliates and from those of any constituent party and other Person. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be maybe, included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements (and/or in Annual Reports on Form 10-K filed with U.S. Securities and Exchange Commission in which such financial statements are contained) to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also are continuously able to be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns (to the extent Borrower is required to file tax returns). Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;name (except with respect to payments or communications made on behalf of the Borrower by the counterparty to the Cash Management Agency Agreement, in which event, such counterparty shall nevertheless identify the Borrower as the party on whose behalf the payment or communication is being made).
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Except as expressly contemplated by the Loan Documents and the Cash Management Agency Agreement, Borrower will not commingle their respective the funds and or other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Except as expressly contemplated by the Loan Documents with respect to the other Borrower, Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy or hold out its credit as being available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability companycompany that satisfies all of the requirements of Section 3.l.24(o)(ii)), each general partner or managing member (each, an “SPC Party”) of Borrower shall be a corporation or single member limited liability company that satisfies all of the requirements of Section 3.1.24(o)(ii) whose sole asset is its a direct interest in Borrower of at least 0.5% (or 0.1% if Borrower is an entity formed under the laws of Delaware) and each such SPC Party will at all times comply, and will cause Borrower to comply, comply with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party (substituting the term “SPC Party” for the term “Borrower” throughout) and will cause Borrower to comply with this Section 3.1.24 (except for subsections (a), (b), (d), (n) and (x)). Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation constituent documents are substantially similar to those of such the withdrawing or disassociating SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners. If Borrower is a limited partnership, Borrower shall have at least one general partner. If Borrower is a limited liability company (other than a single-member limited liability company that satisfies all of the requirements of Section 3.1.24(o)(ii)), Borrower shall have at least one (1) managing member. An SPC Party shall be organized for the sole purpose of owning a direct interest in the Borrower, shall own no other interests in any entity, and shall not incur indebtedness except as it may be liable for the debts of the Borrower in its capacity as general partner of the Borrower.
(ii) If Borrower is a single member Delaware limited liability company (“single member limited liability company” meaning a limited liability company having only one equity member), Borrower shall be a limited liability company organized under the laws of Delaware and shall have either (A) two (2) non-equity members or (B) at least two springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower or its SPC Party shall at all times cause there to be at least one (1) two duly appointed member of the board of directors or independent managers Independent Directors, who is are provided by a nationally recognized company that provides professional independent directors (eachdirectors, an of each SPC Party and of Borrower if Borrower is a single member limited liability company. As used herein, “Independent Director”) and professional independent managers (each, an “Independent Manager”) ” shall mean a natural person serving as a director of Borrower a corporation or any such SPC Party manager of a limited liability company who shall is not have been at the time of such individual’s appointment initial appointment, or at any time while serving as a director of such SPC Party or Borrowerserving, and may has not have been at any time during the preceding five (5) years years: (ia) a stockholder, stockholder or director (other than with the exception of serving as the Independent Director of Borrower or any SPC Party that is an Independent DirectorSPC Party or managing member of Borrower), trustee, officer, member, trustee, employee, partner, member, attorney or counsel of such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iib) a creditor, customer, supplier or other Person person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iiic) a Person person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, Person excluded from serving as Independent Director under subparagraph (a) or (ivb); or (d) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier Person excluded from serving as Independent Director under subparagraph (a) or -52- other Person(b). As used in this definition, the term “affiliate” means any person controlling, under common control with, or controlled by the person in question; and the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.
. A natural person who satisfies the foregoing definition other than subparagraph (eb) Borrower shall not cause be disqualified from serving as an Independent Director if such individual has been provided by a nationally-recognized company that provides professional independent directors. A natural person who otherwise satisfies the foregoing definition except for being the Independent Director of a “special purpose entity” affiliated with Borrower or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document shall not be disqualified from serving as an Independent Director of Borrower or SPC PartyParty if such “special purpose entity” does not own a direct or indirect equity interest in Borrower or in any co-borrower of Borrower and if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors. For purposes of this paragraph, requires a vote “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in Section 3.1.24 of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Directorthis Agreement.
Appears in 1 contract
Single Purpose. (a) Each Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt Obligations shall be paid and performed in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Such Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the applicable Individual Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of such Individual Property.
(b) Such Borrower has not engaged and will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, applicable Individual Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Such Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have has not and will not enter into any contract or agreement with any AffiliateAffiliate of any Borrower, any constituent party of any Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Such Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (i) the Debt, and (ii) unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding five percent (5.0%) of the original principal amount of the portion of the Loan relating to the applicable Individual Property at any one time; provided that any Indebtedness incurred pursuant to subclause (ii) shall be (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past due, and (B) incurred in the date incurredordinary course of business (the Indebtedness described in the foregoing 108 clauses (i) and (ii) is referred to herein, are not evidenced by a note and are paid when due; and no collectively, as "PERMITTED INDEBTEDNESS"). No Indebtedness other than the Debt may be secured (subordinate, pari passu subordinate or otherwisePARI PASSU) by the Collateral, the First Mezzanine Collateral or the any Individual Property, as applicable;.
(ve) have Such Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates;.
(vif) are Such Borrower is and will remain solvent and such Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Such Borrower has done or have caused to be done done, and will do do, all things necessary to observe organizational formalities and preserve each of their its existence, and such Borrower will notnot (i) terminate or fail to comply with the provisions of its organizational documents, nor will permit any constituent party toor (ii) unless (A) Lender has consented and (B) following a Securitization of the Loan, the applicable Rating Agencies have issued a Rating Agency Confirmation, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, its operating agreement or other organizational documents of such constituent party without the prior consent of Lender;documents.
(viiih) Such Borrower has maintained and will maintain all of its books, records, financial statements and bank accounts as official recordsaccounts, including, without limitation, the applicable Clearing Account, separate from those of its Affiliates and any constituent party and other Person, including without limitation, any other Borrower. Such Borrower's assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that such Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s 's assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements or the notes thereto to indicate the separateness of the Borrower, Mortgage such Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that such Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person Person, and (bii) such assets shall also be listed on the such Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's own separate balance sheet;. Such Borrower will file its own tax returns (to the extent such Borrower is required to file any tax returns) and will not file a consolidated federal income tax return with any other Person, unless required by any Legal Requirements, tax code or GAAP. Such Borrower has maintained and shall maintain its books, records, resolutions and agreements as official records.
(ixi) Such Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of such Borrower or any constituent partyparty of such Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Such Borrower has maintained and will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;. 109
(xik) will not seek or effect Neither such Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidationconsolidation, consolidation asset sale or merger, in whole or in part, of any of them;Borrower.
(xiil) Such Borrower has not and will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and has held and will hold all of their respective its assets in its own name;.
(xiiim) Such Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;, except as provided herein and in any other Loan Documents.
(xivn) Such Borrower has not and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;.
(xvo) will not permit any Affiliate The organizational documents of Borrower shall provide that the business and affairs of such Borrower shall be managed by or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees under the direction of their owna board of one or more directors designated by Sole Equity Member, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) there shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (12) duly appointed member of individuals on the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”"INDEPENDENT DIRECTOR") of such Borrower or any such SPC Party who are reasonably satisfactory to Lender and who shall not have been at the time of such individual’s 's appointment or at any time (except pursuant to an express provision in such Borrower's operating agreement providing for the appointment of such Independent Director to become a "special member" upon Sole Equity Member ceasing to be a member of such Borrower) while serving as a director of such SPC Party or Borroweran Independent Director, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC PartyBorrower, any Affiliate of such Borrower or any Affiliate direct or indirect parent of either of themsuch Borrower, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of themsuch Borrower, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “"control” " means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a such Person, whether through ownership of voting securities, by contract or otherwise.
(ep) The organizational documents of such Borrower shall not cause or permit provide that the board of directors of any SPC Party and such Borrower to shall not take any action which, under the terms of any certificate of incorporationformation, by-laws limited liability company operating agreement or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Partyagreement, requires a an unanimous vote of the board of directors of each SPC Party and such Borrower unless at the time of such action there shall be at least two (2) members of the board of directors who are each Independent Directors (and such Independent Directors have participated in such vote). Such Borrower will not without the unanimous written consent of its board of directors including the Independent Directors (i) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, (ii) seek or consent to the 110 appointment of a receiver, liquidator or any similar official, (iii) take any action that might cause such entity to become insolvent, or (iv) make an assignment for the benefit of creditors.
(q) The organizational documents of such Borrower shall provide that, as long as any portion of the Obligations remains outstanding, upon the occurrence of any event that causes Sole Equity Member to cease to be a member of such Borrower (other than (i) upon an assignment by Sole Equity Member of all of its limited liability company interest in such Borrower and the admission of the transferee, if permitted pursuant to the organizational documents of such Borrower and the Loan Documents, or (ii) the resignation of Sole Equity Member and the admission of an additional member of such Borrower, if permitted pursuant to the organizational documents of such Borrower and the Loan Documents), one of the persons acting as an Independent Director of such Borrower shall, without any action of any Person and simultaneously with Sole Equity Member ceasing to be a member of such Borrower, automatically be admitted as the Sole Equity Member of such Borrower (the "SPECIAL MEMBER") and shall preserve and continue the existence of such Borrower without dissolution. The organizational documents of such Borrower shall further provide that for so long as any portion of the Obligations is outstanding, no Special Member may resign or transfer its rights as Special Member unless (i) a successor Special Member has been admitted to such Borrower as a Special Member, and (ii) such successor Special Member has also accepted its appointment as an Independent Director.
(r) The organizational documents of such Borrower shall provide that, as long as any portion of the Obligations remains outstanding, except as expressly permitted pursuant to the terms of this Agreement, (i) Sole Equity Member may not resign, and (ii) no additional member shall be admitted to such Borrower.
(s) The organizational documents of such Borrower shall provide that, as long as any portion of the Obligations remains outstanding: (i) such Borrower shall be dissolved, and its affairs shall be wound up, only upon the first to occur of the following: (A) the termination of the legal existence of the last remaining member of such Borrower or the occurrence of any other event which terminates the continued membership of the last remaining member of such Borrower in such Borrower unless the business of such Borrower is continued in a manner permitted by its operating agreement or the Delaware Limited Liability Company Act (the "ACT"), or (B) the entry of a decree of judicial dissolution under Section 18-802 of the Act; (ii) upon the occurrence of any event that causes the last remaining member of such Borrower to cease to be a member of such Borrower or that causes Sole Equity Member to cease to be a member of such Borrower (other than (A) upon an assignment by Sole Equity Member of all of its limited liability company interest in such Borrower and the admission of the transferee, if permitted pursuant to the organizational documents of such Borrower and the Loan Documents, or (B) the resignation of Sole Equity Member and the admission of an additional member of such Borrower, if permitted pursuant to the organizational documents of such Borrower and the Loan Documents), to the fullest extent permitted by law, the personal representative of such last remaining member shall be authorized to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such member in such Borrower, agree in writing (I) to continue the existence of such Borrower, and (II) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of such Borrower, effective as of the occurrence of the event that terminated the continued membership of such member in such Borrower; (iii) the bankruptcy of Sole Equity Member or a Special Member shall not cause such Sole Equity Member or Special Member, respectively, to cease to be a member of such Borrower and upon the occurrence of such an event, the business of such Borrower shall continue without dissolution; (iv) in the event of the dissolution of such Borrower, such Borrower shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of such Borrower in an orderly manner), and the assets of such Borrower shall be applied in the manner, and in the order of priority, set forth in Section 18-804 of the Act; and (v) to the fullest extent permitted by law, each of Sole Equity Member and the Special Members shall irrevocably waive any right or power that they might have to cause such Borrower or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of such Borrower, to compel any sale of all or any portion of the assets of such Borrower pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of such Borrower.
(t) Such Borrower shall conduct its business so that the assumptions made with respect to such Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with the foregoing, such Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding such Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all of the representations, warranties and covenants in this SECTION 3.1.24, and (iii) all of the organizational documents of such Borrower.
(u) Such Borrower will not permit any Affiliate or constituent party (other than Manager) independent access to its bank accounts.
(v) Such Borrower has paid and shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(w) Such Borrower has compensated and shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
(x) Such Borrower has not, and without the unanimous consent of all of its directors or members (including all Independent Directors), as applicable, will not (i) file a bankruptcy, insolvency or reorganization petition or otherwise institute insolvency proceedings or otherwise seek any relief under any laws relating to the relief from debts or the protection of debtors generally, (ii) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for such entity or for all or any portion of such Borrower's properties, (iii) make any assignment for the benefit of such Borrower's creditors, or (iv) take any action that might cause Borrower to become insolvent.
(y) Such Borrower has maintained and will maintain an arm's-length relationship with its Affiliates.
(z) Such Borrower has allocated and will allocate fairly and reasonably shared expenses, including shared office space.
(aa) Except in connection with the Loan, such Borrower has not pledged and will not pledge its assets for the benefit of any other Person.
(bb) Such Borrower has and will have no obligation to indemnify its officers, directors, members or Special Members, as the case may be, or has such an obligation that is fully subordinated to the Debt and will not constitute a claim against it if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation.
(cc) Borrower and the Independent Directors will consider the interests of Borrower's creditors in connection with all limited liability company actions.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do not and incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower will not engage in any business other than the ownership ownership, development, repair, maintenance, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding $500,000 at any one time and (Ciii) liabilities Indebtedness incurred in the financing of equipment and other personal property used on the Property with annual payments not exceeding $500,000 in the aggregate; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall (x) not be outstanding more than thirty (30) days past the due date thereof and (y) be incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities applicable to Borrower and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;'s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and other person or entity. Borrower's assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s 's assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's own separate balance sheet;.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Loan Agreement (Corporate Property Associates 16 Global Inc)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i1) do Propco Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property and (2) Opco Borrower does not own and will not own any asset or property other than the personalty and other assets owned by it necessary for the operation of the Property.
(1) Propco Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, Property and (2) Opco Borrower will not engage in any business other than the First Mezzanine Collateral or management and operation of the Property, as applicable, and each Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable (taking into account all facts and circumstances) and either substantially similar to those that would be available on an arm’saim’s-length basis with third parties other than any such party;party or a capital contribution or distribution.
(ivd) have Borrower has not incurred incurred, and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed excess of 5% of the outstanding principal amount of the Loan in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are incurred as to the matters in subclause (ii) above and not evidenced by a note more than sixty (60) days from the date due as to the matters in subclause (iii) above and are paid when due; and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, Property other than Indebtedness of the First Mezzanine Collateral or type described in and subject to the Property, as applicable;requirements of clause (iii) of this clause (d).
(ve) have Except as expressly contemplated by the Loan Documents with respect to the other Borrower and the Cross Borrower, Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of any of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay all of its debts and liabilities (including, as applicable, a fairly allocated portion of shared personnel and overhead expenses) only from their respective its own assets and as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities applicable to Borrower and preserve each of their Borrower’s existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower without the prior consent of Lender in any manner that (i) violates or makes such organizational documents inconsistent with the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements (it being acknowledged that the agent under the Cash Management Agency Agreement shall be continuously able to produce separate balance sheets of the Borrowers) and (except as contemplated in the Cash Management Agency Agreement) bank accounts as official records, separate from those of its Affiliates and from those of any constituent party and other Person. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements (and/or in Annual Reports on Form 10-K filed with U.S. Securities and Exchange Commission in which such financial statements are contained) to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also are continuously able to be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns (to the extent Borrower is required to file tax returns). Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;name (except with respect to payments or communications made on behalf of the Borrower by the counterparty to the Cash Management Agency Agreement, in which event, such counterparty shall nevertheless identify the Borrower as the party on whose behalf the payment or communication is being made).
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Except as expressly contemplated by the Loan Documents and the Cash Management Agency Agreement, Borrower will not commingle their respective the funds and or other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Except as expressly contemplated by the Loan Documents with respect to the other Borrower and the Cross Borrower, Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy or hold out its credit as being available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability companycompany that satisfies all of the requirements of Section 3.1.24(o)(ii)), each general partner or managing member (each, an “SPC Party”) of Borrower shall be a corporation or single member limited liability company that satisfies all of the requirements of Section 3.1.24(o)(ii) whose sole asset is its a direct interest in Borrower of at least 0.5% (or 0.1% if Borrower is an entity formed under the laws of Delaware) and each such SPC Party will at all times comply, and will cause Borrower to comply, comply with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party (substituting the term “SPC Party” for the term “Borrower” throughout) and will cause Borrower to comply with this Section 3.1.24 (except for subsections (a), (b), (d), (n) and (x)). Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation constituent documents are substantially similar to those of such the withdrawing or disassociating SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners. If Borrower is a limited partnership, Borrower shall have at least one general partner. If Borrower is a limited liability company (other than a single-member limited liability company that satisfies all of the requirements of Section 3.1 .24(o)(ii)), Borrower shall have at least one (1) managing member. An SPC Party shall be organized for the sole purpose of owning a direct interest in the Borrower, shall own no other interests in any entity, and shall not incur indebtedness except as it may be liable for the debts of the Borrower in its capacity as general partner of the Borrower.
(ii) If Borrower is a single member Delaware limited liability company (“single member limited liability company” meaning a limited liability company having only one equity member), Borrower shall be a limited liability company organized under the laws of Delaware and shall have either (A) two (2) non-equity members or (B) at least two springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower or its SPC Party shall at all times cause there to be at least one (1) two duly appointed member of the board of directors or independent managers Independent Directors, who is are provided by a nationally recognized company that provides professional independent directors (eachdirectors, an of each SPC Party and of Borrower if Borrower is a single member limited liability company. As used herein, “Independent Director”) and professional independent managers (each, an “Independent Manager”) ” shall mean a natural person serving as a director of Borrower a corporation or any such SPC Party manager of a limited liability company who shall is not have been at the time of such individual’s appointment initial appointment, or at any time while serving as a director of such SPC Party or Borrowerserving, and may has not have been at any time during the preceding five (5) years years: (ia) a stockholder, stockholder or director (other than with the exception of serving as the Independent Director of Borrower or any SPC Party that is an Independent DirectorSPC Party or managing member of Borrower), trustee, officer, member, trustee, employee, partner, member, attorney or counsel of such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iib) a creditor, customer, supplier or other Person person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iiic) a Person person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, Person excluded from serving as Independent Director under subparagraph (a) or (ivb); or (d) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier Person excluded from serving as Independent Director under subparagraph (a) or -52- other Person(b). As used in this definition, the term “affiliate” means any person controlling, under common control with, or controlled by the person in question; and the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.
. A natural person who satisfies the foregoing definition other than subparagraph (eb) Borrower shall not cause be disqualified from serving as an Independent Director if such individual has been provided by a nationally-recognized company that provides professional independent directors. A natural person who otherwise satisfies the foregoing definition except for being the Independent Director of a “special purpose entity” affiliated with Borrower or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document shall not be disqualified from serving as an Independent Director of Borrower or SPC PartyParty if such “special purpose entity” does not own a direct or indirect equity interest in Borrower or in any co-borrower of Borrower and if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors. For purposes of this paragraph, requires a vote “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in Section 3.1.24 of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Directorthis Agreement.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i1) do Propco Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property and (2) Opco Borrower does not own and will not own any asset or property other than the personalty and other assets owned by it necessary for the operation of the Property.
(1) Propco Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, Property and (2) Opco Borrower will not engage in any business other than the First Mezzanine Collateral or management and operation of the Property, as applicable, and each Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable (taking into account all facts and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;party or a capital contribution or distribution.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan ii). unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed excess of 5% of the outstanding principal amount of the Loan in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are incurred as to the matters in subclause (ii) above and not evidenced by a note more than sixty (60) days from the date due as to the matters in subclause (iii) above and are paid when due; and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, Property other than Indebtedness of the First Mezzanine Collateral or type described in and subject to the Property, as applicable;requirements of clause (iii) of this clause (d).
(ve) have Except as expressly contemplated by the Loan Documents with respect to the other Borrower, Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of any of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay all of its debts and liabilities (including, as applicable, a fairly allocated portion of shared personnel and overhead expenses) only from their respective its own assets and as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities applicable to Borrower and preserve each of their Borrower’s existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower without the prior consent of Lender in any manner that (i) violates or makes such organizational documents inconsistent with the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements (it being acknowledged that the agent under the Cash Management Agency Agreement shall be continuously able to produce separate balance sheets of the Borrowers) and (except as contemplated in the Cash Management Agency Agreement) bank accounts as official records, separate from those of its Affiliates and from those of any constituent party and other Person. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements (and/or in Annual Reports on Form 10-K filed with U.S. Securities and Exchange Commission in which such financial statements are contained) to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also are continuously able to be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns (to the extent Borrower is required to file tax returns). Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;name (except with respect to payments or communications made on behalf of the Borrower by the counterparty to the Cash Management Agency Agreement, in which event, such counterparty shall nevertheless identify the Borrower as the party on whose behalf the payment or communication is being made).
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Except as expressly contemplated by the Loan Documents and the Cash Management Agency Agreement, Borrower will not commingle their respective the funds and or other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Except as expressly contemplated by the Loan Documents with respect to the other Borrower, Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy or hold out its credit as being available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability companycompany that satisfies all of the requirements of Section 3.1.24(o)(ii)), each general partner or managing member (each, an “SPC Party”) of Borrower shall be a corporation or single member limited liability company that satisfies all of the requirements of Section 3.1.24(o)(ii) whose sole asset is its a direct interest in Borrower of at least 0.5% (or 0.1% if Borrower is an entity formed under the laws of Delaware) and each such SPC Party will at all times comply, and will cause Borrower to comply, comply with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party (substituting the term “SPC Party” for the term “Borrower” throughout) and will cause Borrower to comply with this Section 3.1.24 (except for subsections (a), (b), (d), (n) and (x)). Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation constituent documents are substantially similar to those of such the withdrawing or disassociating SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners. If Borrower is a limited partnership, Borrower shall have at least one general partner. If Borrower is a limited liability company (other than a single-member limited liability company that satisfies all of the requirements of Section 3.l.24(o)(ii)), Borrower shall have at least one (1) managing member. An SPC Party shall be organized for the sole purpose of owning a direct interest in the Borrower, shall own no other interests in any entity, and shall not incur indebtedness except as it may be liable for the debts of the Borrower in its capacity as general partner of the Borrower.
(ii) If Borrower is a single member Delaware limited liability company (“single member limited liability company” meaning a limited liability company having only one equity member), Borrower shall be a limited liability company organized under the laws of Delaware and shall have either (A) two (2) non-equity members or (B) at least two springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower or its SPC Party shall at all times cause there to be at least one (1) two duly appointed member of the board of directors or independent managers Independent Directors, who is are provided by a nationally recognized company that provides professional independent directors (eachdirectors, an of each SPC Party and of Borrower if Borrower is a single member limited liability company. As used herein, “Independent Director”) and professional independent managers (each, an “Independent Manager”) ” shall mean a natural person serving as a director of Borrower a corporation or any such SPC Party manager of a limited liability company who shall is not have been at the time of such individual’s appointment initial appointment, or at any time while serving as a director of such SPC Party or Borrowerserving, and may has not have been at any time during the preceding five (5) years years: (ia) a stockholder, stockholder or director (other than with the exception of serving as the Independent Director of Borrower or any SPC Party that is an Independent DirectorSPC Party or managing member of Borrower), trustee, officer, member, trustee, employee, partner, member, attorney or counsel of such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iib) a creditor, customer, supplier or other Person person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iiic) a Person person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, Person excluded from serving as Independent Director under subparagraph (a) or (ivb); or (d) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier Person excluded from serving as Independent Director under subparagraph (a) or -52- other Person(b). As used in this definition, the term “affiliate” means any person controlling, under common control with, or controlled by the person in question; and the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.
. A natural person who satisfies the foregoing definition other than subparagraph (eb) Borrower shall not cause be disqualified from serving as an Independent Director if such individual has been provided by a nationally-recognized company that provides professional independent directors. A natural person who otherwise satisfies the foregoing definition except for being the Independent Director of a “special purpose entity” affiliated with Borrower or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document shall not be disqualified from serving as an Independent Director of Borrower or SPC PartyParty if such “special purpose entity” does not own a direct or indirect equity interest in Borrower or in any co-borrower of Borrower and if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors. For purposes of this paragraph, requires a vote “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in Section 3.1.24 of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Directorthis Agreement.
Appears in 1 contract
Single Purpose. ENTITY/SEPARATENESS. ---------------------------------- Borrower represents, warrants and covenants as follows:
(a) The purpose for which the Borrower hereby represents is organized shall be limited solely to (i) owning, holding, selling, leasing, transferring, exchanging, operating and warrants tomanaging the Properties, (ii) entering into this Agreement with the Lender, (iii) refinancing the Properties in connection with a permitted repayment of the Loan and covenants that(iv) transacting any and all lawful business for which a Borrower may be organized under its constitutive law that is incident, once reasonable and appropriate to accomplish the date of Borrower’s formation and until foregoing. Borrower shall conduct its business in accordance with the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreementforegoing purpose.
(b) Borrower hereby represents and warrants, and covenants that, as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i) do does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the PropertyProperties, as applicable;
and (ii) do not and incidental personal property necessary for the ownership or operation of the Properties. Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Properties and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower, the guarantors or any Affiliate of any constituent partyparty or guarantor, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-arms- length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, (ii) trade and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities operational debt incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not is outstanding for no more than sixty (60) days past with trade creditors and in amounts as are normal and reasonable under the date incurredcircumstances, are provided such debt is not evidenced by a note and are note, is paid when due; due and no such debt does not exceed at any one time one percent (1%) of the Release Amount for the applicable Individual Property, and (iii) debt incurred in the financing of equipment and other personal property located at the Properties which is not in any way deemed to be real property, secured solely by such equipment or personal property being financed, not to exceed at any one time two percent (2%) of the Release Amount for the applicable Individual Property. No Indebtedness other than the Debt Loan may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;Properties.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate affiliate or constituent party, any guarantor or any affiliate of any constituent party or guarantor), and shall not acquire obligations or securities of its Affiliates;affiliates or any constituent party.
(vif) are Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, or any guarantor to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party or guarantor without the prior written consent of Lender;.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and, to the extent required by law, Borrower will file its own tax returns. Borrower shall maintain its books, records, resolutions and will not permit its assets to be listed agreements as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower, any constituent party of Borrower, any guarantor or any Affiliate of any constituent partyparty or guarantor), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;checks.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, merger in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party, any guarantor, or any Affiliate of any constituent party or guarantor, or any other Person, and will hold all of their respective assets in its own name;person.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party, any guarantor, or any Affiliate of any constituent party or guarantor, or any other Person;person.
(xivn) will not guarantee or become obligated for the debts of any other Person and Borrower does not and will not hold themselves itself out to be responsible for or have their respective credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities)person.
(io) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “"SPC Party”PARTY") shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 8.28 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(dp) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”"INDEPENDENT DIRECTOR") of Borrower or any such each SPC Party in Borrower reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower's appointment, and may not have been at any time during the preceding five (5) years (i) a stockholdershareholder of, director (other than as or an Independent Director), officer, memberdirector, trustee, employee, partner, attorney partner or counsel of such SPC Partyemployee of, Borrower or any Affiliate of either of themits shareholders, subsidiaries or affiliates, (ii) a creditorcustomer of, customer, or supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Partyto, Borrower or any Affiliate of either of themits shareholders, subsidiaries or affiliates, (iii) a Person person or other entity controlling or under common control with any such stockholdershareholder, partner, customer, supplier or other Personcustomer, or (iv) a member of the immediate family by blood or marriage of any such stockholdershareholder, officer, director, officer, member, trusteepartner, employee, partner, creditor, customer, supplier or -52- other Personcustomer of Borrower. As used in this definitionherein, the term “"control” " means the possession, directly or indirectly, of the power to direct or cause the direction of the management, management and policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Loan Agreement (Winston Hotels Inc)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Lender that since Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants thatcreation, as of the date hereof and until such time as the Debt Obligations shall be paid and performed in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower has not owned, does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property.
(b) Borrower has not engaged, does not engage, and will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have has not entered and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan Debt and (Cii) liabilities unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding one percent (1%) of the original principal amount of the Loan at any one time; provided that any Indebtedness incurred in the ordinary course of Borrower’s business in amounts not pursuant to exceed in the aggregate $2,000,000.00, subclause (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are ii) shall be (x) not more than sixty (60) days past due and (y) incurred in the date incurredordinary course of business (the Indebtedness described in the foregoing clauses (i) and (ii) is referred to herein, are not evidenced by a note and are paid when due; and no collectively, as “Permitted Indebtedness”). No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will intends to remain solvent and will Borrower has and intends to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;; provided, however, the foregoing shall not be interpreted so as to require any member of Borrower or any constituent entity to contribute additional capital in connection therewith, it being expressly understood and agreed that this provision is solely for the purpose of preserving the bankruptcy remote aspects of Borrower.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will notnot terminate or fail to comply with the provisions of its organizational documents, nor will permit any constituent party to, or amend, modify or otherwise change the its partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party without the prior consent of Lender;documents.
(viiih) Borrower has maintained and will maintain all of its accounts, books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party other Person. Borrower’s assets have not been and will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person Person, and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower has and will file its own tax returns (to the extent Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person. Borrower has maintained and shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower has been and will be, and has and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), has and shall correct any known misunderstanding regarding their its status as a separate entitiesentity, has and shall conduct business in their its own name, has not and shall not identify themselves itself or any of their its Affiliates as a division or part of the other other, and has and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(xj) will Borrower has maintained and intends to maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;; provided, however, the foregoing shall not be interpreted so as to require any member of Borrower or any constituent entity to contribute additional capital in connection therewith, it being expressly understood and agreed that this provision is solely for the purpose of preserving the bankruptcy remote aspects of Borrower.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower has not and will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and has held and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower has not and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;.
(xvo) Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all the representations, warranties and covenants in this Section 3.1.24, and (ii) all the organizational documents of Borrower.
(p) Borrower has not permitted and will not permit any Affiliate or constituent party independent access to their respective its bank accounts;.
(xviq) if they respectively employ any employees of their own, will Borrower has paid and shall pay the salaries of its own employees (if any) from its own funds and has and shall maintain a sufficient number of employees (if any) in light of its contemplated business operations; provided, however, the foregoing shall not be interpreted so as to require any such employees from their own respective funds;member of Borrower or any constituent entity to contribute additional capital in connection therewith, it being expressly understood and agreed that this provision is solely for the purpose of preserving the bankruptcy remote aspects of Borrower.
(xviir) will Borrower has compensated and shall compensate each of their own its consultants and agents from their its funds for services provided to them it and pay from their its own assets all obligations of any kind incurred; provided, including shared overhead expenses;however, the foregoing shall not be interpreted so as to require any member of Borrower or any constituent entity to contribute additional capital in connection therewith, it being expressly understood and agreed that this provision is solely for the purpose of preserving the bankruptcy remote aspects of Borrower.
(xviiis) Borrower has not, and without the unanimous consent of all of its members, partners, directors or managers (including each Independent Director) will not pledge each of their assets not, take any action that might cause Borrower to secure the obligations of any other Person;become insolvent.
(xixt) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) has allocated and will allocate fairly and reasonably any overhead expenses that are shared with any affiliateexpenses, including for shared office space space.
(u) Except in connection with the Loan, Borrower has not pledged and will not pledge its assets for services performed the benefit of any other Person.
(v) Borrower either (i) has no, and will have no, obligation to indemnify its officers, directors, managers, members or partners, as the case may be, or (ii) if it has any such obligation, such obligation is fully subordinated to the Debt and will not constitute a claim against Borrower if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation.
(w) Borrower will consider the interests of Borrower’s creditors in connection with all limited liability company or limited partnership actions.
(x) Except as provided in the Loan Documents, Borrower has not and will not have any of its obligations guaranteed by any employee Affiliate.
(y) The organizational documents of an affiliateBorrower shall provide that except as may be expressly permitted herein as long as any portion of the Obligations remain outstanding, Borrower will not without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed:
(i) except in connection with a sale or other transfer permitted under the Loan Documents, sell all or substantially all of its assets;
(xxiii) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times amend its organizational documents with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained matters set forth in this Section 3.1.24 as if such representation3.1.24, warranty or covenant was made directly by such SPC Party. Upon without the withdrawal or the disassociation consent of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.Lender; or
Appears in 1 contract
Samples: Loan Agreement (O'Donnell Strategic Industrial REIT, Inc.)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, BorrowerBorrower has not at any time, Mortgage Borrower does not presently, and First Mezzanine Borrowershall not:
(ia) do not own and will not own any asset or property other than (i) the Property and assets related to the acquisition, ownership, development, leasing, use, management or operation of its the Property and (ii) incidental personal property necessary for the acquisition, ownership, development, leasing, use, management or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or operation of the Property, as applicable;
(iib) do not and will not engage in any business other than unrelated to the ownership acquisition, ownership, development, leasing, use, management or operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;
(iiic) except for capital contributions the Permitted Encumbrances and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrowerother contracts or agreements disclosed in writing to Lender, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available in a comparable transaction on an arm’sarms-length basis with third parties other than any such party;
(ivd) have not incurred and will not incur any Indebtedness, secured Indebtedness or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) obligations under operating leases other than (Ai) the LoanDebt and all other sums due by Borrower under this Agreement or any other Loan Documents, (ii) unsecured trade payables, operating leases with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, Property and operational debt not evidenced by a note and in an aggregate amount not exceeding one percent (1%) of the Mortgage Loan, with respect to Mortgage Borroweroriginal principal amount of the Loan at any one time, (Biii) Indebtedness incurred in the financing of equipment and other personal property used on the Property with respect to Mortgage Borrower, annual payments not exceeding $5,000,000 in the Heritage Intercompany Loan aggregate; and (Civ) liabilities the obligation to make termination payments or reimburse rent payable by the tenants of the Property under the agreements entered into with existing or prospective tenants of the Property with Lender’s approval; and (v) tenant improvement allowances or similar concessions to tenants of the Property pursuant to Leases; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) paid within sixty (60) days of the date incurred and (y) incurred in the ordinary course of Borrower’s business and any obligations under operating leases which shall be paid in amounts not to exceed in the aggregate $2,000,000.00, (when combined accordance with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no terms. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;
(ve) have not except for advances made and will not to or for the benefit of Tenants for tenant improvement allowances or similar concessions pursuant to the Leases currently existing at the Property on the date hereof as disclosed on Schedule I attached hereto or Leases entered into after the date hereof in accordance with this Agreement, make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
(vif) are and will fail to remain solvent and will or fail to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become duedue to the extent it has adequate funds to do so;
(viig) have done or have caused fail to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender’s consent;
(viiih) will fail to maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower’s assets will not permit its assets to be listed as or list its assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;
(ixi) fail to file its own (or consolidated) tax returns (to the extent Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person, except where Borrower is required to file consolidated tax returns by applicable Legal Requirements.
(j) fail to maintain its books, records, resolutions and agreements as official records;
(k) fail to be, and at all times will or fail to hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate or any constituent partyparty of Borrower), shall fail to correct any known misunderstanding regarding their its status as a separate entitiesentity, shall fail to conduct business in their its own name, or fail to maintain and utilize separate stationery, invoices and checks bearing its own name, and Borrower shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own nameother;
(xl) will fail to use commercially reasonable efforts to maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations; provided, however, the foregoing shall not require the members of Borrower to make any additional capital contributions to Borrower;
(xim) will not seek or effect nor permit any constituent party to the fullest extent permitted by law, seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of Borrower nor permit any constituent party of Borrower to do any of themthe foregoing;
(xiin) will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or any constituent party of Borrower or any other Person, and will hold all of their respective its assets in its own name;
(xiiio) has and will fail to maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party of Borrower or any other Person;
(xivp) will not guarantee or become obligated for the debts of any other Person and does not and will not or hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), fail to cause each general partner or managing member (each, an “SPC Party”) shall to be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.;
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall fail to have at least two (2) springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dq) Borrower shall at all times fail to cause there to be at least one (1) two duly appointed member members of the board of directors or independent managers who is are provided by a nationally recognized company that provides professional independent directors or manager (each, an “Independent Director”) and professional independent managers (each, an ” or “Independent Manager”) of Borrower or any such each SPC Party and Borrower reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or and Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent DirectorDirector or Independent Manager), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of themthem (other than its fees and charges for serving as an Independent Director or Independent Manager of the SPC Party), (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other PersonPerson prohibited by clause (i) or (ii) above, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other PersonPerson prohibited by clause (i) or (ii) above. As used (For purposes of this subclause (o), the term “Affiliate” means any person controlling, under common control with, or controlled by the person in this definition, question; and the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.) A natural person who satisfies the foregoing definition other than subparagraph (ii) shall not be disqualified from serving as an Independent Director or Independent Manager of the SPC Party if such individual is an independent director or independent manager provided by a nationally-recognized company that provides professional independent directors or independent managers and that also provides other corporate services in the ordinary course of its business. A natural person who otherwise satisfies the foregoing definition except for being the independent director or independent manager of a “special purpose entity” affiliated with the borrower that does not own a direct or indirect equity interest in the borrower or any co-borrower shall not be disqualified from serving as an Independent Director or Independent Manager of the SPC Party if such individual is at the time of initial appointment, or at any time while serving as a Independent Director or Independent Manager of the SPC Party, an Independent Director or Independent Manager of a “special purpose entity” affiliated with the Borrower or the SPC Party (other than any entity that owns a direct or indirect equity interest in borrower or any co-borrower) if such individual is an independent director or independent manager provided by a nationally-recognized company that provides professional independent directors or independent managers. For purposes of this paragraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in the SPC Party’s organizational documents.
(er) Borrower shall not cause or permit the board of directors or managers of any SPC Party and or Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors or managers of each SPC Party and Borrower unless at the time of such action there shall be at least two (2) members of the board of directors or managers who are each an Independent DirectorDirector or Independent Manager.
(s) fail to conduct its business so that the assumptions made with respect to Borrower in the Insolvency Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(t) permit any Affiliate or constituent party of Borrower independent access to its bank accounts.
(u) fail to pay the salaries of its own employees (if any) from its own funds to the extent it has adequate funds to do so and maintain a sufficient number of employees (if any) in light of its contemplated business operations; provided, however, the foregoing shall not require the members of Borrower to may any additional contributions to Borrower.
(v) fail to compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants that, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single been formed for the sole purpose entity of owning and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents Collateral Asset. From and warrants, and covenants that, as of after the date hereof and until such time as the Debt Loan shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i) do Borrower has not own and will not own any asset or property other than (i) the Collateral Asset, and (ii) incidental personal property necessary for the ownership or operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;Collateral Asset.
(ii) do Borrower has not and will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Asset and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any Affiliate, any constituent party or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;
(iv) have has not incurred and will not incur any Indebtednessindebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) other than (AX) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower(Y) unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding $100,000 at any one time, and the Mortgage Loan, with respect to Mortgage Borrower, (BZ) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities indebtedness incurred in the ordinary course financing of Borrower’s business in amounts equipment and other personal property used on the Collateral Asset with annual payments not to exceed exceeding $100,000 in the aggregate $2,000,000.00aggregate, provided that any indebtedness incurred pursuant to subclauses (when combined with liabilities of Mortgage Borrower Y) and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are (Z) shall be (1) not more than sixty (60) days past due and (2) incurred in the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness ordinary course of business. No indebtedness other than the Debt Loan may be secured (subordinate, pari passu or otherwise) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;Asset.
(viv) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s length basis with third parties other than any such party and upon terms acceptable to Lender in its sole discretion.
(v) Borrower shall not acquire obligations or securities of its Affiliates;.
(vi) are As of the date hereof, Borrower is and will remain solvent and will is able to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(vii) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and will notneither party will, nor will it permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, operating agreement agreement, trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender;Lender in any manner that violates the covenants set forth in this Section 6.14).
(viii) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Except for Guarantor, Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (b) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;Person.
(ix) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate or any constituent party), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;.
(x) will maintain Borrower maintains adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xi) will not seek or effect Neither Borrower, nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any Borrower, or transfer or otherwise dispose of them;all or substantially all of its assets.
(xii) Borrower will not commingle their respective its funds and other assets with those of any Affiliate or constituent party or any other PersonPerson (provided, however, property manager of the Collateral Asset may do so), and will hold all of their respective its assets in its own name;, other than as permitted under the Loan Documents.
(xiii) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xiv) Except for the Loan, Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;.
(xv) Borrower will not permit any Affiliate or constituent party independent access to their respective its bank accounts;.
(xvi) if they respectively employ any employees of their own, Borrower will pay the salaries of any such its own employees (if any) from their its own respective funds;funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(xvii) Borrower will compensate each of their own its consultants and agents from their funds generated by the Collateral Asset or from other sources for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities)Collateral Asset.
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: Loan Agreement (Inland Diversified Real Estate Trust, Inc.)
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(i1) do Propco Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
and (ii) do incidental personal property necessary for the ownership or operation of the Property and (2) Opco Borrower does not own and will not own any asset or property other than the personalty and other assets owned by it necessary for the operation of the Property.
(1) Propco Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, Property and (2) Opco Borrower will not engage in any business other than the First Mezzanine Collateral or management and operation of the Property, as applicable, and each Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair commercially reasonable (taking into account all facts and circumstances) and either substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;party or a capital contribution or distribution.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used on the Property; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) not in amounts not to exceed excess of 5% of the outstanding principal amount of the Loan in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurred, are incurred as to the matters in subclause (ii) above and not evidenced by a note more than sixty (60) days from the date due as to the matters in subclause (iii) above and are paid when due; and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by the Collateral, Property other than Indebtedness of the First Mezzanine Collateral or type described in and subject to the Property, as applicable;requirements of clause (iii) of this clause (d).
(ve) have Except as expressly contemplated by the Loan Documents with respect to the other Borrower, Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of any of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay all of its debts and liabilities (including, as applicable, a fairly allocated portion of shared personnel and overhead expenses) only from their respective its own assets and as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities applicable to Borrower and preserve each of their Borrower’s existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower without the prior consent of Lender in any manner that (i) violates or makes such organizational documents inconsistent with the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements (it being acknowledged that the agent under the Cash Management Agency Agreement shall be continuously able to produce separate balance sheets of the Borrowers) and bank (except as contemplated in the Cash Management Agency Agreement) xxxx accounts as official records, separate from those of its Affiliates and from those of any constituent party and other Person. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements (and/or in Annual Reports on Form 10-K filed with U.S. Securities and Exchange Commission in which such financial statements are contained) to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also are continuously able to be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns (to the extent Borrower is required to file tax returns). Borrower shall maintain its hooks, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;name (except with respect to payments or communications made on behalf of the Borrower by the counterparty to the Cash Management Agency Agreement, in which event, such counterparty shall nevertheless identify the Borrower as the party on whose behalf the payment or communication is being made).
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Except as expressly contemplated by the Loan Documents and the Cash Management Agency Agreement, Borrower will not commingle their respective the funds and or other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Except as expressly contemplated by the Loan Documents with respect to the other Borrower, Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy or hold out its credit as being available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability companycompany that satisfies all of the requirements of Section 3.1.24(o)(ii)), each general partner or managing member (each, an “SPC Party”) of Borrower shall be a corporation or single member limited liability company that satisfies all of the requirements of Section 3.1.24(o)(ii) whose sole asset is its a direct interest in Borrower of at least 0.5% (or 0.1% if Borrower is an entity formed under the laws of Delaware) and each such SPC Party will at all times comply, and will cause Borrower to comply, comply with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party (substituting the term “SPC Party” for the term Borrower” throughout) and will cause Borrower to comply with this Section 3.1.24 (except for subsections (a), (b), (d), (n) and (x)). Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation constituent documents are substantially similar to those of such the withdrawing or disassociating SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) . If Borrower is a single member Delaware limited liability companypartnership, Borrower shall have at least one general partner. If Borrower is a limited liability company (other than a single-member limited liability company that satisfies all of the requirements of Section 3.1.24(o)(ii)), Borrower shall have at least one (1) managing member. An SPC Party shall be organized for the sole purpose of owning a direct interest in the Borrower, shall own no other interests in any entity, and shall not incur indebtedness except as it may be liable for the debts of the Borrower in its capacity as general partner of the Borrower.
(ii) if Borrower is a single member limited liability company (“single member limited liability company” meaning a limited liability company having only one equity member), Borrower shall be a limited liability company organized under the laws of Delaware and shall have either (A) two (2) non-equity members or (B) at least two springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower or its SPC Party shall at all times cause there to be at least one (1) two duly appointed member of the board of directors or independent managers Independent Directors, who is are provided by a nationally recognized company that provides professional independent directors (eachdirectors, an of each SPC Party and of Borrower if Borrower is a single member limited liability company. As used herein, “Independent Director”) and professional independent managers (each, an “Independent Manager”) ” shall mean a natural person serving as a director of Borrower a corporation or any such SPC Party manager of a limited liability company who shall is not have been at the time of such individual’s appointment initial appointment, or at any time while serving as a director of such SPC Party or Borrowerserving, and may has not have been at any time during the preceding five (5) years years: (ia) a stockholder, stockholder or director (other than with the exception of serving as the Independent Director of Borrower or any SPC Party that is an Independent DirectorSPC Party or managing member of Borrower), trustee, officer, member, trustee, employee, partner, member, attorney or counsel of such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iib) a creditor, customer, supplier or other Person person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate affiliate of either of them, ; (iiic) a Person person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, Person excluded from serving as Independent Director under subparagraph (a) or (ivb); or (d) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier Person excluded from serving as Independent Director under subparagraph (a) or -52- other Person(b). As used in this definition, the term “affiliate” means any person controlling, under common control with, or controlled by the person in question; and the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Personperson or entity, whether through ownership of voting securities, by contract or otherwise.
. A natural person who satisfies the foregoing definition other than subparagraph (eb) Borrower shall not cause be disqualified from serving as an Independent Director if such individual has been provided by a nationally-recognized company that provides professional independent directors. A natural person who otherwise satisfies the foregoing definition except for being the Independent Director of a “special purpose entity” affiliated with Borrower or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document shall not be disqualified from serving as an Independent Director of Borrower or SPC PartyParty if such “special purpose entity” does not own a direct or indirect equity interest in Borrower or in any co-borrower of Borrower and if such individual is an independent director provided by a nationally-recognized company that provides professional independent directors. For purposes of this paragraph, requires a vote “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities substantially similar to those set forth in Section 3.1.24 of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Directorthis Agreement.
Appears in 1 contract
Single Purpose. (a) Borrower hereby represents and warrants to, and covenants that, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, to Lender that as of the date hereof and covenants with Lender that until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:full (unless otherwise hereafter consented to by Lender after receiving a Rating Agency Confirmation):
(ia) do Borrower does not own and will not own any asset or property other than operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or (i) the Property, as applicable;
(ii) do not incidental personal property necessary for the ownership or operation of the Property, and (iii) the Permitted Investments, cash and cash equivalents.
(b) Borrower will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, Property and Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management operated in connection with the Condominium Documents;all material respects.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have not incurred Borrower has no outstanding Indebtedness for borrowed money and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and in an aggregate amount not exceeding $2,500,000 at any one time and (Ciii) liabilities Indebtedness incurred in the financing of equipment and other personal property used on the Property in an aggregate amount not exceeding $500,000 at any one time; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be not more than ninety (90) days past due and incurred in the ordinary course of Borrower’s business in amounts not to exceed in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no business. No Indebtedness other than the Debt may be secured (subordinate, pari passu subordinate or otherwisePARI PASSU) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;except that any permitted equipment financing may be secured by such equipment.
(ve) have Borrower has not made and will not make any loans or advances in the nature of loans to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of such constituent party Borrower or the SPC Party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan or the Mezzanine Loan is outstanding or by its terms cannot be modified without Lender;'s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and will not permit its assets to be listed as assets on the financial statement of any entityparty; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s 's assets may be included in a consolidated financial statement of its Affiliate provided that Affiliates if (ai) appropriate notation shall be made inclusion on such a consolidated financial statement is required to comply with the requirements of GAAP, (ii) such consolidated financial statements shall contain a footnote to indicate the separateness of the effect that Borrower's assets are owned by Borrower, Mortgage Borrower and/or First Mezzanine Borrower from such Affiliate and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (biii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s 's own separate balance sheet;. Except as permitted under the preceding sentence, Borrower's assets will not be listed as assets on the financial statement of any other entity; provided, however, that such restriction shall not preclude any Person from listing its ownership interests in Borrower as an asset on its financial statement. Borrower will file its own tax returns and will not file a consolidated federal income tax return with any other Person unless specifically mandated by applicable law or unless Borrower is treated as a disregarded entity. Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number (which may be a telephone number at the Property) and separate stationery, invoices and checks bearing their its own name;.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;.
(xvo) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, Each entity comprising Borrower is a Delaware limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If has Mezzanine Borrower as its only member and (ii) has a non-member manager that is a limited partnership or a limited liability company, Delaware corporation (other than a single member limited liability companythe "SPC PARTY"), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such . The SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such the SPC Party, except that the SPC Party shall not be required to maintain a separate telephone number from that utilized by Borrower. Upon the withdrawal or the disassociation of an the SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such the SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(dp) Borrower shall at all times cause there to be at least one (1) two duly appointed member members of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”"INDEPENDENT DIRECTOR") of Borrower or any such the SPC Party reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower's appointment, and may not have been at any time during the preceding five (5) years years, (i) a stockholder, director (other than as an Independent Director)director, officer, member, trustee, employee, partner, attorney or counsel of such SPC Partycorporation, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Partycorporation, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Single Purpose. (a) Each Borrower hereby represents and warrants to, and covenants thatwith, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, Lender that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do Borrower does not own and will not own any asset or property other than (i) its Individual Property(ies), and (ii) incidental personal property or other assets necessary for the ownership or operation of its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;Individual Property(ies).
(iib) do not and Borrower will not engage in any business other than the ownership ownership, management and operation of the CollateralIndividual Properties, entering into the First Mezzanine Collateral or the Property, Loan as applicable, a co-borrower and such Borrower will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have not and will not enter into any contract or agreement with any AffiliateAffiliate of Borrowers, any constituent party of Borrowers or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;.
(ivd) have Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage BorrowerDebt, (Bii) with respect to Mortgage Borrower, the Heritage Intercompany Loan unsecured trade payables and operational debt not evidenced by a note and (Ciii) liabilities Indebtedness incurred in the ordinary course financing of Borrower’s business equipment and other personal property used at the Individual Property(ies) that it owns; provided that any Indebtedness incurred pursuant to subclauses (ii) and (iii) shall be (x) for each Individual Property, not in amounts not to exceed excess of three percent (3%) of the Allocated Loan Amount for such Individual Property in the aggregate $2,000,000.00aggregate, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are y) paid not more than sixty (60) days past from the date incurredincurred as to the matters in subclause (ii) above and not more than sixty (60) days from the date due as to the matters in subclause (iii) above, are not evidenced by subject only to such Borrower’s right to diligently prosecute a note good faith dispute as to amounts due and are paid when due; payable in accordance with the provisions of this Agreement and no (z) incurred in the ordinary course of business. No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by any of the Collateral, Individual Properties except with respect to the First Mezzanine Collateral or Guaranty of Other Loans and the Property, as applicable;Guaranty Security Documents delivered by each Borrower in connection therewith.
(ve) have Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;.
(vif) are Borrower is and will remain solvent and such Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Borrower has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and Borrower will not, nor will Borrower permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents of Borrower or such constituent party without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender;’s consent.
(viiih) Borrower will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party. Borrower’s assets will not permit its assets to be listed as assets on the financial statement of any entityother Person; provided, however, that Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (ai) appropriate notation shall be made on such consolidated financial statements (or the notes thereto) to indicate the separateness of the Borrower, Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person and (bii) such assets shall also be listed on the Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;. Borrower will file its own tax returns (to the Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person except to the extent Borrower is a disregarded entity for federal income tax purposes. Borrower shall maintain its books, records, resolutions and agreements as official records.
(ixi) Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent partyparty of Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves itself or any of their its Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;other.
(xj) Borrower will maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of them;Borrower.
(xiil) Borrower will not commingle their respective the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and will hold all of their respective its assets in its own name;.
(xiiim) Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Borrower will not guarantee guarantee, other than as set forth in the Guaranty of Other Loans, or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xv) will not permit any Affiliate or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees of their own, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, company (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) ), as applicable, shall be a corporation or a Delaware single member limited liability company acceptable to Lender whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower or any SPC Party of Borrower is a single member Delaware limited liability company, Borrower or such SPC Party shall have at least two (2) springing members, each one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from BorrowerBorrower or such SPC Party, shall immediately become a the sole member of BorrowerBorrower or such SPC Party, and the other of which shall become the sole member of Borrower or such SPC Party if the first such springing member no longer is available to serve as such sole member.
(dp) Borrower shall at all times cause there to be at least one two (12) duly appointed member members of the board of directors or independent managers of each SPC Party and the Borrower who is are provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party which are reasonably satisfactory to Lender who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or and Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of themthem (other than as an Independent Director), (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. A natural person who otherwise satisfies the foregoing definition of Independent Director except for being the independent director, manager or special member of a “special purpose entity” affiliated with the Borrower that does not own a direct or indirect equity interest in the Borrower shall not be disqualified from serving as an Independent Director if such individual is at the time of initial appointment, or at any time while serving as an Independent Director, is an independent manager, director or special member provided by a nationally-recognized company that provides professional independent managers, directors or special members. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(eq) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a unanimous vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
(r) Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Non-Consolidation Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply with or cause the compliance with, (i) all of the facts and assumptions (whether regarding the Borrower or any other Person) set forth in the Non-Consolidation Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24, and (iii) all the organizational documents of the Borrower and any SPC Party.
(s) Borrower will not permit any Affiliate or constituent party independent access to its bank accounts other than a Manager approved by Lender, and then in such circumstances, only in accordance with the terms of its respective Management Agreement.
(t) Borrower shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.
(u) Borrower shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.
Appears in 1 contract
Samples: Loan Agreement (Wells Real Estate Investment Trust Inc)
Single Purpose. (a) Each Borrower hereby represents and warrants to, and covenants thatwith, once the date of Lender with regard to itself only and no other Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, that as of the date hereof and until such time as the Debt Obligations shall be paid and performed in full, Borrower, Mortgage Borrower and First Mezzanine Borrower:
(ia) do not own and None of Borrowers owns or will not own any asset or property other than operation of (i) its property or its ownership interests in Mortgage Borrower or First Mezzanine Borrower or the Property, as applicable;
respective Property and (ii) do not and incidental personal property necessary for the ownership or operation of such Property.
(b) None of Borrowers has engaged or will not engage in any business other than the ownership ownership, management and operation of the Collateral, the First Mezzanine Collateral or the Property, as applicable, its respective Property and each of Borrowers will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;.
(iiic) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have has not entered and will not enter into any contract or agreement with any AffiliateAffiliate of any Borrower, any constituent party of any Borrower or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’sarms-length basis with third parties other than any such party;.
(ivd) have Such Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) Indebtedness other than (Ai) the LoanDebt, with respect to and (ii) unsecured trade payables and short term operational debt not evidenced by a note and in an aggregate amount, including such trade payables and debt of any other Borrower, the First Mezzanine Loan, with respect to First Mezzanine Borrower, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred in the ordinary course of Borrower’s business in amounts not to exceed exceeding $5,000,000.00 in the aggregate $2,000,000.00, at any one time; provided that any Indebtedness incurred pursuant to subclause (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are ii) shall be (A) outstanding not more than sixty (60) days past days, and (B) incurred in the date incurredordinary course of business (the Indebtedness described in the foregoing clauses (i) and (ii) is referred to herein, are not evidenced by a note and are paid when due; and no collectively, as "Permitted Indebtedness"). No Indebtedness other than the Debt may be secured (subordinate, subordinate or pari passu or otherwisepassu) by any of the CollateralProperties. Notwithstanding the foregoing, so long as no Event of Default shall have occurred and remain uncured under this Agreement, Borrowers shall be allowed to borrow Permitted Mezzanine Debt subsequent to the First Closing Date; provided that, prior to consummating any such proposed Permitted Mezzanine Collateral Debt, (i) Borrowers shall provide written notice to Lender of any proposed Permitted Mezzanine Debt financing, including a summary of the material terms and conditions thereof, (ii) if the Loan has not been securitized, Borrowers shall obtain Lender's prior written consent, which shall not be unreasonably withheld or delayed, and if the PropertyLoan has been securitized, as applicable;Borrowers shall obtain a "No Downgrade" letter from the Rating Agencies, (iii) the holder of such Permitted Mezzanine Debt shall enter into an intercreditor agreement with Lender, reasonably satisfactory to Lender in form and substance, and (iv) Borrowers shall provide Lender with true and complete copies of all loan documents entered into in connection with any such Permitted Mezzanine Debt. Nothing contained in this Agreement of the other Loan Documents shall be deemed to prohibit any indirect owner of any Borrower from incurring indebtedness; provided that any such indebtedness is not secured by any direct interest in any of the Properties or any Borrower.
(ve) have Such Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates;.
(vif) are Such Borrower is and will remain solvent and, except as contemplated by this Agreement wherein Borrowers are jointly and severally liable, such Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;.
(viig) have Such Borrower has done or have caused to be done done, and will do do, all things necessary to observe organizational formalities and preserve each of their its existence, and such Borrower will notnot (i) terminate or fail to comply with the provisions of its organizational documents, nor will permit any constituent party toor (ii) unless (A) Lender has consented and (B) following a Securitization of the Loan, the applicable Rating Agencies have issued a Rating Agency Confirmation, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formation, its operating agreement or other organizational documents of such constituent party without the prior consent of Lender;in any material respect, provided that any amendment or modification to provisions required to be included in Borrowers' organizational documents pursuant to this Agreement shall be deemed material.
(viiih) Such Borrower will maintain all of its separate books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and other Person. Such Borrower's assets will not permit its assets to be listed as assets on the financial statement of any entity; other Person, provided, however, that such Borrower’s, Mortgage Borrower’s and First Mezzanine Borrower’s 's assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of such Borrower. Such Borrower will file its own tax returns (to the Borrower, Mortgage extent such Borrower and/or First Mezzanine Borrower from such Affiliate is required to file any tax returns) and to indicate that Borrower’s, Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, are will not available to satisfy the debts and other obligations of such Affiliate or file a consolidated federal income tax return with any other Person unless permitted or required by applicable law or requirement. Such Borrower has maintained and (b) such assets shall also be listed on the Borrower’smaintain its books, Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;records, resolutions and agreements as official records.
(ixi) Such Borrower will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any Affiliate of such Borrower or any constituent partyparty of such Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, shall conduct business in their its own name, shall not identify themselves or any of their Affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their own name;.
(xj) will Such Borrower has maintained and intends to maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;.
(xik) will not seek or effect Neither such Borrower nor permit any constituent party to will seek or effect the liquidation, dissolution, winding up, liquidationconsolidation, consolidation asset sale or merger, in whole or in part, of any of them;such Borrower.
(xiil) Except as contemplated by this Agreement, wherein Borrowers are jointly and severally liable, and further, pursuant to the Clearing Account Agreement, such Borrower has not and will not commingle their respective the funds and other assets of such Borrower with those of any Affiliate or constituent party or any other Person, and has held and will hold all of their respective its assets in its own name;.
(xiiim) Such Borrower has and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;.
(xivn) Except as contemplated by this Agreement, such Borrower has not and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;.
(xvo) will not permit any Affiliate The organizational documents of such Borrower shall provide that the business and affairs of such Borrower shall be managed by or constituent party independent access to their respective bank accounts;
(xvi) if they respectively employ any employees under the direction of their owna board of one or more directors or managers designated by Sole Member, will pay the salaries of any such employees from their own respective funds;
(xvii) will compensate each of their own consultants and agents from their funds for services provided to them and pay from their own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) there shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (12) duly appointed member of individuals on the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors against Borrower (each, an “"Independent Director”) and professional independent managers (each, an “Independent Manager”") of such Borrower or any such SPC Party who shall not have been at the time of such individual’s 's appointment or at any time (except pursuant to an express provision in such Borrower's operating agreement providing for the appointment of such Independent Director to become a "special member" upon Sole Member ceasing to be a member of such Borrower) while serving as a director of such SPC Party or Borroweran Independent Director, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC PartyBorrower, any Affiliate of such Borrower or any Affiliate direct or indirect parent of either such Borrower, except to the extent such Independent Director serves in such capacity in respect of themany other Borrower, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of themsuch Borrower, (iii) a Person or other entity controlling Controlling or under common control Control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Single Purpose. (a) Each Borrower hereby represents and warrants toto Lender, and covenants that, once the date of Borrower’s formation and until the date hereof, Borrower has operated as a single purpose entity and has complied with all provisions of Borrower’s limited liability company operating agreement, including, without limitation, the special purpose provisions contained in Section 9(j) of such agreement.
(b) Borrower hereby represents and warrants, and covenants that, that as of the date hereof and until such time as the Debt shall be paid in full, Borrower, Mortgage Borrower and First Mezzanine such Borrower:
(i) do has not owned, does not own and will not own any asset or property other than operation of its property or (A) its ownership interests interest in its respective Mortgage Borrower or First Mezzanine Borrower or the PropertyBorrower, as applicableand (B) incidental personal property necessary with respect thereto;
(ii) do has not engaged, does not engage and will not engage in any business other than the ownership of the Collateral, the First Mezzanine Collateral or the Property, as applicable, and will conduct and operate its business as presently proposed to be conducted and operated, subject to expanded operations and management in connection with the Condominium Documents;
(iii) except for capital contributions and capital distributions permitted under the terms of this Agreement and properly reflected on the books of records of Borrower, First Mezzanine Borrower and/or Mortgage Borrower and, with respect to Mortgage Borrower, the Heritage Intercompany Loan, the Development Fee, and the Deferred -49- Development Fee, have has not and will not enter into any contract or agreement agreement, with any AffiliateAffiliate of any Borrower Party, any constituent party of any Borrower Party or any Affiliate of any constituent party, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with third parties other than any such party;
(iv) have has not incurred and will not incur any Indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation) other than (A) the Loan, with respect to Borrower, the First Mezzanine Loan, with respect to First Mezzanine BorrowerDebt, and the Mortgage Loan, with respect to Mortgage Borrower, (B) with respect to Mortgage Borrower, the Heritage Intercompany Loan and (C) liabilities incurred in the ordinary course of Borrower’s business relating to that Collateral in amounts not to exceed $10,000.00 in the aggregate $2,000,000.00, (when combined with liabilities of Mortgage Borrower and Second Mezzanine Borrower incurred in the ordinary course of their respective businesses), which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a note and are paid when due; and no Indebtedness other than the Debt may be secured (subordinate, pari passu or otherwise) by the Collateral, the First Mezzanine Collateral or the Property, as applicable;
(v) have has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and shall not acquire obligations or securities of its Affiliates;
(vi) are is and will intends to remain solvent and has paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from their respective its assets as the same shall become due;
(vii) have has done or have caused to be done and will do all things necessary to observe organizational formalities and preserve each of their its existence, and will not, nor not and will not permit any constituent party to, to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, certificate of formationoperating agreement, operating agreement trust or other organizational documents Organizational Documents of such constituent party the applicable Borrower without the prior written consent of Lender;
(viii1) has maintained and will maintain all of its books, records, financial statements and bank accounts as official records, separate from those of its Affiliates and any constituent party and party, (2) will not permit its assets to be listed as assets on the financial statement of any entityother Person; provided, however, that Borrower’s, a Mortgage Borrower’s and First Mezzanine Borrower’s assets may be included in a consolidated financial statement of its Affiliate Affiliates provided that (aA) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower, such Mortgage Borrower and/or First Mezzanine Borrower from and such Affiliate Affiliates and to indicate that Borrower’s, such Mortgage Borrower’s and/or First Mezzanine Borrower’s assets and credit, as applicable, credit are not available to satisfy the debts and other obligations of such Affiliate Affiliates or any other Person Person, and (bB) such assets shall also be listed on the Borrower’s, such Mortgage Borrower’s and/or First Mezzanine Borrower’s own separate balance sheet;; and (3) has maintained and will maintain its own books, records, financial statements and bank accounts separate from any other Person.
(ix) has filed and will file its own tax returns (to the extent that it is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person, unless permitted to do so under the Code;
(x) has been, will be, and at all times will hold themselves itself out to the public as, a legal entities entity separate and distinct from any other entity (including any of Affiliate of Borrower or any constituent partyparty of any Borrower), shall correct any known misunderstanding regarding their its status as a separate entitiesentity, has conducted and shall conduct business in their its own name, has not identified and shall not identify themselves itself or any of their its Affiliates as a division or part of the other other, and has maintained and utilized and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks bearing their its own name;
(xxi) will has maintained and intends to maintain adequate capital and a sufficient number of employees for the normal obligations reasonably foreseeable in a business of their respective its size and character and in light of their respective its contemplated business operations;
(xixii) will not seek or effect nor permit any of its constituent party parties to seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of any of themit;
(xiixiii) except with respect to another Borrower as contemplated by the Loan Documents, has not commingled and will not commingle their respective its funds and other assets with those of any Affiliate or constituent party or any other Person, and has held and will hold all of their respective its assets in its own name;
(xiiixiv) except with respect to another Borrower as contemplated by the Loan Documents, has maintained and will maintain their respective its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify their respective its individual assets from those of any Affiliate or constituent party or any other Person;
(xivxv) except, with respect to another Mortgage Borrower as contemplated by the Loan Documents, has not guaranteed or become obligated for and will not guarantee or become obligated for the debts of any other Person and has not, does not and will not hold themselves itself out to be responsible for or have their respective its credit available to satisfy the debts or obligations of any other Person;
(xvxvi) will not permit any Affiliate or constituent party of any Borrower independent access to their respective its bank accounts;
(xvixvii) if they respectively employ any employees except in the case of their owna Mortgage Borrower only, with respect to another Mortgage Borrower as contemplated by the TIC Agreement, has paid and will pay the salaries of any such its own employees (if any) from their its own respective funds;funds and will maintain a sufficient number of employees in light of its contemplated business operations; and
(xviixviii) has compensated and will compensate each of their own its consultants and agents from their its funds for services provided to them it and has paid and will pay from their its own assets all obligations of any kind incurred, including shared overhead expenses;
(xviii) will not pledge each of their assets to secure the obligations of any other Person;
(xix) will not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity other than, with respect to Borrower, First Mezzanine Borrower or Mortgage Borrower;
(xx) will allocate fairly and reasonably any overhead expenses that are shared with any affiliate, including for shared office space and for services performed by any employee of an affiliate;
(xxi) will file their own respective tax returns, except to the extent Borrower, Mortgage Borrower or First Mezzanine Borrower is a “disregarded entity” for tax purposes;
(xxii) will cause the managers, agents and other representatives of the Borrower, First Mezzanine Borrower and/or Mortgage Borrower, as applicable to act at all times with respect to the First Mezzanine Borrower, Mortgage Borrower and/or Borrower, as applicable in furtherance of the foregoing and in the best interests of the Borrower, First Mezzanine Borrower and Mortgage Borrower; and
(xxiii) will not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities).
(i) If Borrower is a limited partnership or a limited liability company, (other than a single member limited liability company), each general partner or managing member (each, an “SPC Party”) shall be a corporation whose sole asset is its interest in Borrower and each such SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, Borrower shall immediately appoint a new SPC Party whose articles of incorporation are substantially similar to those of such SPC Party and deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies, as applicable, with respect to the new SPC Party and its equity owners.
(ii) If Borrower is a single member Delaware limited liability company, Borrower shall have at least two springing members, each of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become a member of Borrower.
(d) Borrower shall at all times cause there to be at least one (1) duly appointed member of the board of directors or independent managers who is provided by a nationally recognized company that provides professional independent directors (each, an “Independent Director”) and professional independent managers (each, an “Independent Manager”) of Borrower or any such SPC Party who shall not have been at the time of such individual’s appointment or at any time while serving as a director of such SPC Party or Borrower, and may not have been at any time during the preceding five (5) years (i) a stockholder, director (other than as an Independent Director), officer, member, trustee, employee, partner, attorney or counsel of such SPC Party, Borrower or any Affiliate of either of them, (ii) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with such SPC Party, Borrower or any Affiliate of either of them, (iii) a Person or other entity controlling or under common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a member of the immediate family by blood or marriage of any such stockholder, director, officer, member, trustee, employee, partner, creditor, customer, supplier or -52- other Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
(e) Borrower shall not cause or permit the board of directors of any SPC Party and Borrower to take any action which, under the terms of any certificate of incorporation, by-laws or any voting trust agreement with respect to any common stock or under any organizational document of Borrower or SPC Party, requires a vote of the board of directors of each SPC Party and Borrower unless at the time of such action there shall be at least two members who are each an Independent Director.
Appears in 1 contract
Samples: First Mezzanine Loan Agreement (KBS Real Estate Investment Trust, Inc.)