CREDIT AGREEMENT
Exhibit 10.1
THIS CREDIT AGREEMENT (this "Agreement") dated June 13, 2022, is by and between MDR GREENBRIER, LLC, a Delaware limited liability company, MDR LANCER, LLC, a Delaware limited liability company, and MDR SALISBURY, LLC, a Delaware limited liability company (jointly and severally, whether one or more in number, in any combination, "Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank").
Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein. For the avoidance of doubt, the defined term “Borrower” shall not mean Medalist Diversified REIT, Inc., a Maryland corporation (hereinafter referred to as “Guarantor”).
ARTICLE I
(a) Term Loan. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make a loan to Borrower in the principal amount of Eighteen Million Six Hundred Nine Thousand Five Hundred and No/100 Dollars ($18,609,500.00) ("Term Loan"), the proceeds of which shall be used to refinance existing debt, acquire certain new property and provide net cash proceeds to Borrower. Borrower's obligation to repay the Term Loan shall be evidenced by that certain Term Note of even date herewith (as the same may have been modified, amended or restated from time to time, the "Term Note").
(b) Repayment. Principal and interest on the Term Loan shall be repaid in accordance with the provisions of the Term Note. Principal and interest on the Term Note shall be repaid in accordance with the provisions of the Term Note.
(c) Prepayment. Borrower may prepay principal on the Term Loan solely in accordance with the provisions of the Term Note. Borrower may prepay principal on the Term Loan solely in accordance with the provisions of the Term Note.
(a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up through the maturity date set forth in the Note, not to exceed at any time the aggregate principal amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) ("Line of Credit", taken together collectively with the Term Loan, whether one or more in number, the “Loan”), the proceeds of which shall be used for Borrower’s general working capital purposes. Borrower's obligation to repay advances under the Line of Credit shall be evidenced by a promissory note of even date herewith (as the same may have been modified, amended or restated from time to time, the "Line of Credit Note", taken together collectively with the Term Note, whether one or more in number, the “Note”).
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(b) Borrowing and Repayment. Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth herein.
(c) Notwithstanding the foregoing, Borrower shall maintain a zero balance on advances under the Line of Credit for a period of at least thirty (30) consecutive days during each fiscal year.
(a) Interest. The outstanding principal balance of each credit subject hereto shall bear interest at the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith. The promissory notes or other instruments or documents executed in connection with the credit(s) subject to this Agreement may calculate interest at a rate equal to the sum of an index rate of interest plus a margin rate of interest. In the event any index rate of interest would be less than zero percent (0.0%), then the index rate of interest shall be deemed to be zero percent (0.0%) and the applicable promissory note or other instrument or document shall bear interest at a rate equal to the margin rate of interest.
(b) Computation and Payment. Interest shall be computed on the basis set forth in each promissory note or other instrument or document required hereby. Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.
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SECTION 1.5. Reappraisals of real estate; Additional Collateral. Borrower agrees that, after the second anniversary of the date of this Agreement., Bank shall have the option from time to time during the term of the Note at Borrower's cost, to require new appraisals of any Real Property Collateral securing the Note, which appraisals shall be issued by an appraiser or appraisers acceptable to Bank, and which shall be in form and substance and reflect values satisfactory to Bank, in its discretion; provided, however, that prior to an Event of Default, Bank shall be not be entitled to exercise the rights contemplated by this Section 1.5 more frequently than once during the life of the Note. If any such new appraisals obtained by Bank reflect a Loan to Value Ratio greater than 75%, then Borrower shall either:
(a) within 30 calendar days following written demand from Bank, prepay the outstanding aggregate principal balance of the Term Note and Line of Credit Note in an amount sufficient to meet said Loan to Value Ratio; or
(b) pledge such additional collateral to Bank, of a type and pursuant to documentation in form and substance satisfactory to Bank, as Bank shall require to provide collateral support for the Term Note that, in Bank's determination, is substantially equivalent to said Loan to Value Ratio.
For purposes hereof, the term “Loan to Value Ratio” shall mean, cumulatively, as of any date of determination, the outstanding principal balance of the Term Note and Line of Credit Note, including any undrawn amount available thereunder (as applicable), divided by the sum of the most recent appraised value of the Real Property Collateral.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank, on the date hereof, on the date of Borrower’s execution hereof, and on the date of each subsequent request for any extension of credit hereunder (including, without limitation, the issuance of any product under any subfeature contained herein, to the extent applicable), which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.
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SECTION 2.12 SANCTIONS, ANTI-MONEY LAUNDERING AND ANTI-CORRUPTION LAWS. (a) each member of the Borrowing Group has instituted, maintains and complies with policies, procedures and controls reasonably designed to assure compliance with Anti-Money Laundering Laws and Anti-Corruption Laws (each as defined below), and Sanctions; and (b) to the best of Borrower’s knowledge, after due care and inquiry, no member of the Borrowing Group is under investigation for an alleged violation of any Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws by a governmental authority that enforces such laws. As used herein: “Anti-Corruption Laws” means: (i) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (ii) the U.K. Xxxxxxx Xxx 0000, as amended; and (iii) any other anti-bribery or anti-corruption laws, regulations or ordinances in any jurisdiction in which the Borrower or any member of the Borrowing Group is located or doing business. “Anti-Money Laundering Laws” means applicable laws or regulations in any jurisdiction in which the Borrower or any member of the Borrowing Group is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.
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(a) All taxes, governmental assessments, insurance premiums, and water, sewer and municipal charges, and rents (if any) which previously became due and owing in respect thereof have been paid as of the date hereof.
(b) To the best of Borrower’s knowledge, except as set forth in a commitment or policy of title insurance delivered to Bank prior to the date hereof, there are no construction, mechanics' or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to any such lien) which affect all or any interest in any such Real Property Collateral and which are or may be prior to or equal to the lien thereon in favor of Bank.
(c) To the best of Borrower’s knowledge, except as set forth in a survey, plat or commitment or policy of title insurance delivered to Bank prior to the date hereof, none of the improvements which were included for purpose of determining the appraised value of any such Real Property Collateral lies outside of the boundaries and/or building restriction lines thereof, and no improvements on adjoining properties materially encroach upon any such Real Property Collateral.
(d) There is no pending, or to the best of Borrower's knowledge threatened, proceeding for the total or partial condemnation of all or any portion of any such Real Property Collateral, and all such Real Property Collateral is in good repair and free and clear of any damage that would materially and adversely affect the value thereof as security and/or the intended use thereof.
ARTICLE III
(a) Approval of Bank Counsel. All legal matters incidental to the effectiveness of this Agreement shall be satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed by all parties:
(i) | This Agreement and each promissory note or other instrument or document required hereby; |
(ii) | Term Note; |
(iii) | Revolving Line of Credit Note; |
(iv) | Continuing Guaranty Agreement; |
(v) | Credit Line Deed of Trust; |
(vi) | Mortgage and Assignment of Rents and Leases; |
(vii) | Deed of Trust and Assignment of Rents and Leases; |
(viii) | Security Agreement; |
(ix) | Assignment of Property and Related Documents; |
(x) | Appraisals |
(xi) | Title Insurance; |
(xii) | Tax Service Contract; |
(xiii) | Certificates of Insurance; and |
(xiv) | Such other documents as Bank may require in a Bank-prepared closing checklist and/or under any other Section of this Agreement. |
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(c) Satisfaction of Regulatory and Compliance Requirements. In addition to any requirements set forth above, and notwithstanding Borrower’s execution or delivery of this Agreement or any other Loan Document, all regulatory and compliance requirements, standards and processes shall be completed to the satisfaction of Bank.
(d) Appraisals. Bank shall have obtained, at Borrower's cost, an appraisal of any Real Property Collateral required hereby, and all improvements thereon, issued by an appraiser acceptable to Bank and in form, substance and reflecting values satisfactory to Bank, in its discretion.
(e) Title Insurance. Bank shall have received a title policy insuring Bank's lien on all Real Property Collateral required hereby to be of first priority, as Bank may in its discretion require and subject only to such exceptions as Bank shall approve in its discretion, with all costs thereof to be paid by Borrower. As used herein, “title policy” shall mean, at Bank’s election, a Loan Policy of Title Insurance, or, with respect to any Real Property Collateral located in any jurisdiction in which such policies are not available, an abstract of title together with a lawyer's title opinion and title guaranty thereon (or any comparable title protection acceptable to Bank in its sole discretion), in each case with such endorsements as Bank may require, issued by a company and in form and substance satisfactory to Bank, in such amount as Bank shall require.
(f) Tax Service Contract. Bank shall have procured, at Borrower's cost, such tax service contract as Bank shall require for any Real Property Collateral required hereby, to remain in effect as long as such Real Property Collateral secures any obligations of Borrower to Bank as required hereby.
(a) Compliance. The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.
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(b) Documentation. Bank shall have received all additional documents which may be required in connection with such extension of credit, including, but not limited to, an executed wire request form if requested by Bank.
(c) Payment of Fees. Bank shall have received payment in full of any fee required by any of the Loan Documents to be paid at the time such credit extension is made.
(d) Financial Condition. There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower or Guarantor hereunder, if any, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower or Guarantor.
ARTICLE IV
Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:
(a) not later than 90 days after and as of the end of each fiscal year, a financial statement of Borrower, prepared by Borrower, including, without limitation, a balance sheet, income and expense statement, with supporting schedules; and summary of leases, as applicable; all in reasonable detail, prepared on a basis consistent with that of the preceding year; and
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(b) not later than 90 days after and as of the end of each fiscal year, either Guarantor’s Form 10-K or an unqualified audited financial statement of Guarantor, prepared by a certified public accountant acceptable to Bank, to include balance sheet, income statement, statement of cash flows, and source and application of funds statement; and
(c) not later than 60 days after and as of the end of each fiscal quarter, either Guarantor’s Form 10-Q or a financial statement of Guarantor, prepared by Guarantor, to include balance sheet, income statement, statement of cash flows, and source and application of funds statement; and
(d) within 30 days after filing, but in no event later than each November 15, copies of Borrower's filed federal income tax returns for such year, together with all schedules thereto, including, without limitation all K-1 statements, each of which shall be signed and certified by Borrower to be true and complete copies of such returns; and
(e) contemporaneously with each annual and quarterly financial statement of Borrower or Guarantor required hereby, a certificate of the president or chief financial officer, a general partner or a member of Borrower, as applicable, that said financial statements are accurate, that Borrower is in compliance with all financial covenants in this Agreement (as evidenced by detailed calculations attached to such certificate), and that there exists no Event of Default nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default; and
(f) not later than 60 days after and as of the end of each quarter of each fiscal year as well as the end of each fiscal year, a rent roll report prepared by Borrower, in reasonable detail, prepared on a basis consistent with that of the preceding year; and
(g) not later than 60 days after and as of the end of each quarter of each fiscal year as well as the end of each fiscal year, a property schedule report prepared by Guarantor, in reasonable detail, prepared on a basis consistent with that of the preceding year; and
(h) as soon as available but no less frequently than annually, copies of all renewed or updated lease agreements or lease amendment pertaining to the Real Property Collateral.
(i) from time to time such other information as Bank may request for the purpose of enabling Bank to fulfill its regulatory and compliance requirements, standards and processes.
(a) Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower's continued existence; comply with the requirements of all laws, rules, regulations and orders of any jurisdiction in which the Borrower is located or doing business, or otherwise is applicable to Borrower; and
(b) comply with, and cause each member of the Borrowing Group to comply with, all Sanctions, Anti-Money Laundering Laws, and Anti-Corruption Laws.
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(a) maintain the financial condition of the Real Property Collateral so that such real property has a Debt Service Coverage Ratio of not less than 1.50 to 1.00 on an annual basis, determined as of each fiscal year end, with “Debt Service Coverage Ratio” defined as the aggregate of gross income received by Borrower from the Real Property Collateral, less all expenses (excluding depreciation and interest expense) paid by Borrower during any fiscal year divided by the aggregate of all principal and interest required to be paid on the Term Note during such fiscal year (subtracting any payments required to be made by Bank, or adding any payments made to Bank, as applicable, under any interest rate swap agreement or similar interest rate hedging arrangement entered into with Bank relating to the Term Note during such fiscal year).
(b) maintain a Global Debt Yield (as defined below) of not less than 9.5% on a semi-annual basis (calculated on a trailing twelve months basis). If at any time Bank determines that the Global Debt Yield is less than the percentage described herein as of each June 30 and December 31, Borrower shall either:
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(i) within thirty (30) calendar days following written notice from Bank, prepay the outstanding principal balance of the Term Note, in an amount sufficient to meet the minimum required Global Debt Yield, without any prepayment penalty or premium being due or payable notwithstanding anything contained in the Term Note to the contrary; or
(ii) pledge such additional collateral to Bank, of a type and pursuant to documentation in form and substance satisfactory to Bank, as Bank shall require to provide collateral support for the Term Note that, in Bank’s determination, is sufficient to satisfy said Global Debt Yield.
Borrower further acknowledges and agrees that nothing herein is intended to alter any terms or provisions of, or any of Bank’s rights or remedies in connection with, any interest rate swap agreement between Borrower and Bank relating to the Term Note, if any, including, without limitation, any provision in any such swap agreement that would obligate Borrower to pay an early termination fee to Bank if such a swap is terminated. “Global Debt Yield” as used herein shall mean the combined Net Operating Income of the Real Property Collateral, on a combined basis, divided by the total outstanding principal balance under the Term Note. “Net Operating Income” as used herein for purposes of calculating the Global Debt Yield shall mean the aggregate of gross income received by Borrower from the real property securing the Term Note less all expenses (excluding depreciation, capital expenses and interest expense) paid by Borrower in connection with such real property during any fiscal year.
(c) maintain a Guarantor Global Debt Yield (as defined below) of not less than 9.5% on a semi-annual basis (calculated on a trailing twelve months basis) tested as of each June 30 and December 31. “Guarantor Global Debt Yield” as used herein shall mean the combined Net Operating Income of the Guarantor, on an aggregate basis, divided by the total outstanding principal balance under all indebtedness of Guarantor.
(d) maintain or cause to be maintained Unencumbered Liquid Assets held on deposit in one or more accounts held exclusively with Bank (each, a “Liquid Asset Account”) by Guarantor, by any Borrower or by any subsidiary of Guarantor that has (i) opened an account with Bank in the future, and (ii) executed a pledge for Bank’s benefit in substance similar to pledge and grant of a security interest set forth in this paragraph (each, a “Qualified ULA Subsidiary”), with an aggregate fair market value not at any time less than One Million Five Hundred Thousand Dollars ($1,500,000.00) tested quarterly based on the financial reports required by Section 4.3 hereof. As used herein, “Unencumbered Liquid Assets” shall mean cash, cash equivalents and/or publicly traded/quoted marketable securities acceptable to Bank in its sole discretion, free of any lien or other encumbrance. Retirement account assets may not be included in the determination of the amount of Unencumbered Liquid Assets. By execution and acknowledgement below, Guarantor and each Borrower hereby grants and pledges a continuing security interest in and to its respective Liquid Asset Account as security for the Loan, accompanied by all rights and remedies conferred by the Uniform Commercial Code in effect in the Commonwealth of Virginia as of the date hereof; provided, however, that Bank shall not exercise any right or remedy available to it in connection with any Liquid Asset Account unless or until an uncured Event of Default shall have occurred and be continuing.
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ARTICLE V
Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank's prior written consent:
SECTION 5.1. USE OF FUNDS. SOURCES OF REPAYMENT AND COLLATERAL.
(a) Use, or permit any member of the Borrowing Group to use, any of the proceeds of any credit extended hereunder except for the purposes stated in Article I hereof, or directly or indirectly use any such proceeds to fund, finance or facilitate any activities, business or transactions: (i) that are prohibited by Sanctions; (ii) that would be prohibited by Sanctions if conducted by Bank or any of Bank’s affiliates; or (iii) that would be prohibited by any Anti-Money Laundering Laws or Anti-Corruption Laws.
(b) Fund any repayment of the obligations hereunder or under any other Loan Document with proceeds, or provide any property as collateral for any such obligations, or permit any third party to provide any property as collateral for any such obligations, that is directly or indirectly derived from any transaction or activity that is prohibited by any Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws, or that could otherwise cause Bank or any of Bank’s affiliates to be in violation of any Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws.
SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank, and (b) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof.
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ARTICLE VI
SECTION 6.1. The occurrence of any of the following shall constitute an "Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents within ten (10) days after the due date thereof.
(b) Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with: (1) any collateral value requirement set forth herein or in any other Loan Document; (2) any negative covenant set forth in Article V hereof; (3) any affirmative covenant set forth in Article IV hereof requiring the delivery of financial statements and other information to Bank; or (4) any obligation, agreement or other provision contained herein or in any other Loan Document related to Sanctions, Anti-Money Laundering Laws, or Anti-Corruption Laws.
(d) Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document and, with respect to such default(s) that by their nature can be cured, as reasonably determined by Bank, such default shall continue for a period of twenty (20) days from its occurrence; provided that the foregoing cure period shall only be available once during each 12 month period for each such obligation, agreement or provision.
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(e) Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower has incurred any debt or other liability to any person or entity, including Bank.
(f) Borrower or Guarantor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or Guarantor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time ("Bankruptcy Code"), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or Guarantor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or Guarantor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or Guarantor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.
(g) The filing of a notice of judgment lien against Borrower; or the recording of any abstract or transcript of judgment against Borrower in any county or recording district in which Borrower has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower; or the entry of a judgment against Borrower; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or Guarantor.
(h) Intentionally deleted.
(i) Intentionally deleted.
(j) The dissolution, division, or liquidation of Borrower or Guarantor; or Borrower or Guarantor, or any of its directors, stockholders, partners or members, shall take action seeking to effect the dissolution, division, or liquidation of Borrower or Guarantor.
(k) The withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any change in control of Borrower or any entity or combination of entities that directly or indirectly control Borrower, with “control” defined as ownership of an aggregate of twenty-five percent (25%) or more of the common stock, members' equity or other ownership interest (other than a limited partnership interest).
(l) The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary, involuntary or by operation of law, without Bank's prior written consent, of all or any part of or interest in any Real Property Collateral required hereby.
(m) The terminations of the lease agreements between Borrower and Food Lion, Floco Foods (d/b/a KJ’s Market) and/or Big Lots during the term of any Loan; provided, however, that this clause (m) shall not constitute an Event of Default hereunder if (i) Borrower shall have notified Bank of any verbal or written notice (whether issued by Borrower or received from a tenant) of any pending, threatened or actual termination of any such lease agreement immediately upon its receipt of knowledge of the same, (ii) Borrower shall have obtained a replacement tenant for such terminated or to-be-terminated lease agreement upon terms satisfactory to Bank in its sole discretion, which terms shall include, without limitation, the replacement tenant’s assumption of rental payments no later than one hundred eighty (180) days after the effective date of the prior tenant’s lease termination, and (iii) the replacement tenant shall have executed a replacement lease, together with any estoppels and/or subordination, non-disturbance and attornment agreements reasonably requested by Bank.
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ARTICLE VII
BANK: | Xxxxx Fargo Bank, National Association |
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
BORROWER: | MDR Greenbrier, LLC |
Three Xxxxx Center
0000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
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MDR Lancer, LLC
Three Xxxxx Center
0000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
MDR Salisbury, LLC
Three Xxxxx Center
0000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.
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SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia (such State, Commonwealth or District is referred to herein as the “State”), but giving effect to federal laws applicable to national banks, without reference to the conflicts of law or choice of law principles thereof.
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(a) Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit provided, however, that nothing herein shall preclude or limit the Bank's right to confess judgment pursuant to a warrant of attorney provision set forth in any Loan Document; and provided, further, that no party shall have the right to demand binding arbitration of any claim, dispute or controversy seeking to (i) strike-off or open a judgment obtained by confession pursuant to a warrant of attorney contained in any Loan Document, or (ii) challenge the waiver of a right to prior notice and a hearing before judgment is entered, or after judgment is entered, but before execution upon the judgment. In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.
(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location in the Virginia selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.
(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.
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(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in Virginia or a neutral retired judge of the state or federal judiciary of Virginia, in either case with a minimum of ten years’ experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of Virginia and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the corresponding rules of civil practice and procedure applicable in Virginia or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.
(e) Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.
(f) Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.
(g) Payment of Arbitration Costs and Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.
(h) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.
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(i) Small Claims Court. Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.
[SIGNATURE PAGES FOLLOW]
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[SIGNATURE PAGE]
BORROWER:
MDR GREENBRIER, LLC, | ||
a Delaware limited liability company | ||
By: | /s/ Xxxxxxx X. Xxxxxxx | (SEAL) |
Name: | Xxxxxxx X. Xxxxxxx | |
Title: | Authorized Signatory | |
MDR LANCER, LLC, | ||
a Delaware limited liability company | ||
By: | /s/ Xxxxxxx X. Xxxxxxx | (SEAL) |
Name: | Xxxxxxx X. Xxxxxxx | |
Title: | Authorized Signatory | |
MDR SALISBURY, LLC, | ||
a Delaware limited liability company | ||
By: | /s/ Xxxxxxx X. Xxxxxxx | (SEAL) |
Name: | Xxxxxxx X. Xxxxxxx | |
Title: | Authorized Signatory |
Seen and agreed: | |||
GUARANTOR: | |||
MEDALIST DIVERSIFIED REIT, INC., | |||
a Maryland corporation, | |||
By: | /s/ Xxxxxxx X. Xxxxxxx | (SEAL) | |
Name: | Xxxxxxx X. Xxxxxxx | ||
Title: | President |
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[SIGNATURE PAGE]
BANK:
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: | /s/ Xxxxxxx Xxxxxxx | (SEAL) |
Name: | Xxxxxxx Xxxxxxx | |
Title: | SVP |
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